If you are one of the many expats out there who doesn’t always stay up to date on the latest tax and filing obligations (and let’s face it, who does), you’re not alone. Fortunately, that’s where I come in; always willing to brave the storm that is expat taxes and come out with my sails only a little worse for wear. I will even let you take the credit for it (because we all know you are going to want to tell your friends about this). “Oh, how do I know? I did some deep research on taxation for the American Expatriate in my spare time.” I imagine it would be a good pick up line…
On June 26th 2012 the IRS announced some big changes in the way that they handle expat tax returns. The IRS has put in place a series of common sense steps that allow individuals to get caught up on any delinquent tax returns. They are even offering advice to those with foreign retirement issues.
This new system would allow those with little to no tax obligation (such as those whose income is less than $95,100 a year) to come forward without facing penalties or heavy fees. This is fantastic for individuals who have been avoiding doing your taxes (meanwhile falling further behind every year).
There is more good news! Not only can you come forward with little to no penalty, but the IRS is making it easier than ever to come forward with their new Streamlined Process. () Previously, to be considered caught up, you would have to file six to eight years of delinquent taxes. Under these new regulations, qualified expats only have to file 3 years of returns and six years of FBAR’s. There is currently no end date to this program, which means it could end at any time, so late filers are encouraged to file as soon as possible to take advantage of the new program. The new regulations also covered topics such as foreign retirement plans and pension issues.
The IRS also marked changes to their Offshore Voluntary Disclosure Program (OVDP). This once temporary program has been extended until further notice. The OVDI is designed to allow individuals hiding of money in offshore accounts to come forward, pay a fine and avoid criminal prosecution. Although its original intentions were good, a lot of Expats have been caught in the crossfire of the new rules, individuals with legitimate overseas savings who failed to report them to the Treasury Department. The OVDP will allow these individuals to come forward, legitimize their foreign assets and face reduced penalties and no jail time. In many cases, expats have not faced any penalty at all.
Contact us today to learn more about the great opportunities available and how to catch up on your US expat taxes.
This article is written by Greenback Expat Tax Services. Greenback Expat Tax Services provides best-in-class, expert expatriate tax services at an honest price for Americans living overseas.