Streamlined Foreign Offshore Procedure For Us Expats For many US citizens born outside the US, or who left with their families at a young age, they don't realize that they need to file US tax returns each year. One of the main hurdles for that is that you need a social security number (SSN) to file the returns with the IRS.
Social security number and card If you don't have a social security number, you can apply at your nearest US Embassy or SSA offices. Even if you had a SSN before, the tax office can provide a replacement social security card. Once you have the SSN card, then you can move on to be compliant with your US taxes.
Streamlined filing compliance procedure Citizens of the United States are required to file US tax returns each year, reporting their worldwide income. If you just found out that you need to file, or you are behind, you can use the streamlined foreign offshore procedure to catch up. The main benefit of the streamlined process is that there are no penalties! The steps to catch up are: 1 - File the last 3 federal tax returns with the IRS - all tax returns before this are waived, the IRS does not want them 2 - File form 14653, explaining that you just found out that you needed to file (or another reason for your situation) and you also need one year out of the last 3 where you spent less than 35 days in the US 3 - File 6 years of foreign bank account reporting (FBAR)
Last 3 overdue tax returns Normally there would be failure to file penalties, by using the streamlined filing procedure there are no penalties. You report worldwide income, even if that income has already been taxed overseas. You can claim foreign tax credit on foreign income or the foreign earned income exclusion. If you only have foreign income and the tax rate in that country is the same as the US or higher, there should be no US tax to pay. Even if the foreign tax rate is lower than the US, you can use the foreign exclusion for over $100,000 of foreign income and there will be no US tax on that income - the foreign income can only be salary, wages and self-employed income.
Foreign bank account reporting The FBAR is filed separately to the US tax return, filed online with the US Treasury. Normally there are FBAR penalties for filing after the deadline - April 15 also extended to October 15 - but with the streamlined filing procedure, there are no penalties for delinquent FBARs. You need to report all foreign accounts and financial accounts each year - reporting the highest balance on each account at any time between January and December. There is no tax and penalty, it is purely a disclosure to the US.
Amended tax returns You can also use the streamlined foreign offshore procedure if you have not included all your foreign income or foreign bank accounts. It is the same process of 3 tax returns, form 14653 and 6 years of FBARs.
Finally
You used to be able to use the offshore voluntary disclosure program - the IRS has closed that now and the streamlined procedure actually offers more protection to US expats. Once you have your social security number, also referred to as a taxpayer identification number, you will be ready to file your US taxes.