# Streamlined Foreign Offshore Procedure



## ting33

As a US born national living as a permanent resident in the UK for 13yrs. My income has been from full time employment, recently self employment, some years both. I have not exceeded the threshold for foreign earned income exclusion so…

I will be getting 'compliant' through the 'Non Wilful Streamlined Foreign Offshore Filing Compliance Procedure' - as described here:

irs.gov/Individuals/International-Taxpayers/U-S-Taxpayers-Residing-Outside-the-United-States]U.S. Taxpayers Residing Outside the United States

As far as I can see I must complete the past 3yrs of tax returns, 6yrs of FBAR and provide a Certificate of Coverage from HMRC for contributions exclusion.

I have had quotes for help by US/UK tax accountants ranging from $3,000 - $14,000 so I intend to do it myself!


Some initial questions I have are:

1- Beyond 3yrs ago I submitted a return in light of a us federal student loan interest statement - does this mean I need to submit the 1040X instead of 1040 or is that just for amending a year?
2- Should I complete the current year 2013-14 tax return and FBAR, or must I first complete the compliance procedure?
3- Can I use the online 'irs freefile' method for the current tax year, I believe I have to file a paper return for Streamlined procedure in order to "Include at the top of the first page of each delinquent or amended tax return and at the top of each information return "Streamlined Foreign Offshore" written in red to indicate that the returns are being submitted under these procedures.This is critical to ensure that your returns are processed through these special procedures."
4- Do you have to file the Tax Return and FBAR in any order or together, or are they just separate procedures?
5- I've heard the Certificate of Coverage' usually takes a number of months to receive therefore delaying any submitting - with the June extension deadline approaching should I file if I do not receive this in time?
6- When entering and converting amounts in the returns must I use exchange rates from the corresponding year - if so what specific time of that year?
7- How helpful is the US embassy in London in regards to this, can I just download all the forms online and do it from home?

Any help at all would be greatly appreciated and hopefully helps others caught up in this bureaucratic nightmare!


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## civicsir

I assumed that you for the last 13 years you never or notice need to file tax return to IRS. You case seems some what simple and some what complicated. I think the best way is to file 6 years FBAR first then try to figure out individual tax return later because you need some time to organize it. Seeking a professional accountant can help a lot. Hope this little advise can help you out or others can explain to you in more detail regarding to this streamlined procedures.


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## Bevdeforges

File the back FBARs first. They take only a few minutes and have to be filed electronically at any rate.

For the tax returns, you may want to look at TaxAct. They have what appear to be the cheapest back-year software ($15 a year) and the software for the current year is free. (Go directly to their website - not through the IRS Free-file page.) Have heard tell that TaxSlayer has a similar offer (also from their own website) but am not sure the pricing on their back year packages.

You should be able to prepare your back filings on the software and then simply print off the forms. (Not all of the Free File sites allow you to print the forms without paying.) 

Don't worry about amending anything you may have filed pre-2011. The clock has run on that.

You have until June 15th to get your 2014 returns in "on time" - I wouldn't wait for the Certificates to file that one at least. By the time the IRS asks for anything additional you'll have it in hand. 
Cheers,
Bev


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## BBCWatcher

I cannot find a price for TaxSlayer.com's Free Basic Edition for prior tax years, and they do support the current year plus three prior years (same as TaxAct.com). TaxSlayer.com's instructions suggest their Free Basic Edition is free for all the tax years they still support, but perhaps somebody can confirm that. (TaxSlayer.com also refers to a $4.95 "archive" fee, but that appears to be the fee if you want to pull up a prior year return you already prepared in TaxSlayer.com and you haven't already signed up for any of the other fee-based editions.)

It looks like TaxAct.com charges $13.99 or $13.95 depending on which prior tax year you're working with. That appears to be a charge per year, though I'm not sure about that. (Perhaps someone can check that, too.)

Either way these two sites at least offer low cost options. Unfortunately neither supports tax year 2010 (as I write this) and prior, so you'll have to work with the IRS's PDFs if you have to go back that far.


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## Bevdeforges

To answer the original question (which I just re-read)


> 1- Beyond 3yrs ago I submitted a return in light of a us federal student loan interest statement - does this mean I need to submit the 1040X instead of 1040 or is that just for amending a year?


The 1040X is only for filing amended returns. For the 3 back years you need to file under the streamlined program (assuming you filed nothing for those years) you do need to get the forms for the appropriate years.

I'm not even sure they'll accept an amended return for anything older than 3 years back.
Cheers,
Bev


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## ting33

Thanks Bev super helpful!

So from what you say I should be using TaxAct/Taxslayer to help me complete the returns electronically then send off printed versions so I can add the "Streamlined Complicance Pr....." heading on the covers. 
Do you think I need to add this heading on the current year, and should I send the past 3yrs + the current year all together? Also does this mean the software will definitely use correct annual currency rates for the responding year?




Bevdeforges said:


> File the back FBARs first. They take only a few minutes and have to be filed electronically at any rate.
> 
> For the tax returns, you may want to look at TaxAct. They have what appear to be the cheapest back-year software ($15 a year) and the software for the current year is free. (Go directly to their website - not through the IRS Free-file page.) Have heard tell that TaxSlayer has a similar offer (also from their own website) but am not sure the pricing on their back year packages.
> 
> You should be able to prepare your back filings on the software and then simply print off the forms. (Not all of the Free File sites allow you to print the forms without paying.)
> 
> Don't worry about amending anything you may have filed pre-2011. The clock has run on that.
> 
> You have until June 15th to get your 2014 returns in "on time" - I wouldn't wait for the Certificates to file that one at least. By the time the IRS asks for anything additional you'll have it in hand.
> Cheers,
> Bev


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## ting33

Hi Bev 

Could you please help me clarify which specific years I need to complete, I'll be filing this years tax return (2014-2015) and then the past 3 years... 2011-12, 2012-13, 2013-14?

- Also when a return date is mentioned, for instance '2011 Return'... does this mean 01 Jan 2011 - 01 Jan 2012? 

- I am mostly confused about the 'calendar' year reference - when filing must I work out my income for the US calendar year - being Jan-Dec? I submit my returns/accounts here in the UK from April-April?!

Thanks so much fo your time


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## Bevdeforges

At the moment, 2014 is still considered the "current" filing year, so you file 2014, plus three back year, 2013, 2012, 2011. These are always calendar years, i.e. Jan 1 through Dec 31.

Technically speaking, yes, you are supposed to work out your calendar year income (basically subtract Jan through Mar of the "current" year and add back Jan through Mar of the prior year). Same applies to interest income and other sources reported to you on the UK tax year.
Cheers,
Bev


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## ting33

Sorry... so I must definitely work out new amounts for Jan-Dec, I can't specify somewhere on the forms my reporting period is April to April which I already have figures for, which I submit in the UK!?


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## ting33

It seems when accounting periods are mentioned in instructions its quite vague, even with FBARS. But you may specify a 'fiscal year' reporting period/accounting. If this is consistent with the FBARS and the Fed Tax Returns this should be alright no?


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## BBCWatcher

Individuals generally cannot adopt a fiscal year for IRS/U.S. Treasury purposes that differs from the calendar year. See IRS Publication 538 and IRS Form 1128 for more information.

Note that even if you do somehow qualify for a tax year that differs from the calendar year I don't necessarily recommend making that choice. Non-calendar year tax years add complexity, especially for individuals. Yes, you have to "translate" some reporting from the U.K., but that's actually a better option overall in most cases than trying to make the calendars line up across tax systems. U.S. complexities associated with non-calendar year reporting include short tax years, more rigorous record keeping requirements, a lot of ongoing translation of due dates (and potential or actual confusion), and likely problems taking advantage of tax preparation software, especially the free editions that aren't likely to support oddball fiscal years. You're also likely to encounter added complexities when/if you move from the U.K. to another country with a globally typical calendar year tax system.


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## ting33

Sorry to go on Bev!
The FBARS make you file for the US calendar. It seems possible to specify your own reporting period for Fed Returns so I'll be using my UK details ls for them.
One thing I could do with your help on - is if I need to include my 2014 return with the other 3 prior years (2011, 2012, 2013) I'm sending/reporting as part of the Streamlined Procedure? 
Or can I file 2014 electronically/separately, without the need to write in red at the top etc? 

....Or should I actually just be sending 2012, 2013, 2014?!

All I see is " citizens or lawful permanent residents, meet the applicable non-residency requirement if, in any one or more of the most recent three years for which the U.S. tax return due date (or properly applied for extended due date) has passed..."

- U.S. Taxpayers Residing Outside the United States


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## ting33

Thanks for your advice. I'm really not sure what to do now. Somewhere it's mentioned that it's ok when its your first time reporting?


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## Bevdeforges

What you could do is use the April to April information you have, but file it as a 2014 calendar year return. I think in the long run that would be the easiest approach. (They don't have any way to check whether the amounts you are reporting are actually adjusted for the calendar year or not.) Or just ball park it. If you got a raise in June, say, then you take 7 months at your new salary, and 5 at the old rate. 

As far as which returns to file - 2014 is still the "current year" so for the streamlined program it's 2014 plus the 3 prior years: 2013, 2012, 2011. You can try e-filing for 2014 but it's not going to be possible (I don't think) to "flag" the 2014 form as being part of your streamlined filing. If you're trying to get current, it might be safer to file the whole package on paper, just to make sure things get linked up properly.
Cheers,
Bev


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## BBCWatcher

Here's what Publication 538 says: "Generally, individuals must adopt the calendar year as their tax year. An individual can adopt a fiscal year provided that the individual maintains his or her books and re- cords on the basis of the adopted fiscal year."

So it's up to you, but I'd be very cautious about heading down that particular path. I tend to think it's a good idea to let each tax system be its "natural self." I'm afraid U.S. tax and financial reporting isn't going to be as simple as copying and pasting numbers from U.K. documents (and vice versa) even if you line up the reporting periods.

Perhaps others have some views on this.


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## P123

I was hoping someone on this thread could help clarify something for me: 

I filed the Streamline procedure in April of 2015 and have not heard anything back which I'd like to hope is positive as my understanding is that if my submission is accepted then my failure to file income taxes (3 years) and fbars (6 years) would be waived. Is this accurate? I live in Austria and it's not easy phoning through to the IRS--I have tried several times and have never gotten through to a real human. I know I can request a transcript but I am not sure if they send it overseas.

Basically, can anyone tell me if I could technically owe any money even if my Streamlined has been accepted?


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## Bevdeforges

On the streamlined procedure, no news really IS good news. Officially, they have something like 4 years to raise any issues. But unless they spot something really egregious, they normally just check your math, and tick off the box (wherever) to say you've filed and are "up to date." But don't expect to hear any kind of confirmation from them. (That's actually the best possible outcome.)

Congratulations.
Cheers,
Bev


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## P123

Thanks Bev for your reply. I am still not clear on one thing: If I owe any outstanding fees will the IRS notify me or is my only way to find out by requesting a transcript?

I filed my income tax in the Streamlined submission for the last 3 years showing I had no income...


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## Bevdeforges

If your forms as filled out showed you owing nothing, then the IRS will notify you if they disagree with anything you filed. Otherwise, you can assume that they accepted your account of the situation as filed.
Cheers,
Bev


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## BBCWatcher

Order a tax transcript if you wish, though.


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## texuk

*Do it Yourself?*

So, according to any expertls floating around these pages, is it a good idea to take on the offshore streamlined procedures yourself?

CPA's are asking for a huge amount of money.

If I follow the IRS FAQ, is it reasonable to assume that things should go through without incident?

I'm in the UK with a middle income that would never have been subject to actual tax.

Thanks!


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## BBCWatcher

Find your favorite tax preparation software and give it a try. Ask some follow-up questions if you like. In the fairly unlikely event you still cannot manage, then you might consider hiring somebody to help.


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## Bevdeforges

Personally, I find it outrageous that you have to pay big $$$ to file tax forms just to prove that you owe nothing. But that's me. On the other hand, how comfortable are you mucking around with US tax forms?

Let me just add one thought here: there is no one "right" way to fill out US tax forms in any specific situation. There is no penalty, nor will they even bother to notify you if you make a small error or have misunderstood something on the form - unless it results in your owing taxes somehow (and even then, they won't bother with it unless you owe some "material" amount). Even then, the first step will be for them to send you a "bill" for whatever it is they think you owe. At that point, you can still contact them to explain yourself (because even the IRS sometimes makes mistakes).

Now, if you regularly make lots of "mistakes" (or seem to), you'll run up your score and may find yourself subject to an audit. But even there, if it's a legitimate misunderstanding, you'll still have an opportunity to explain yourself and your understanding - though if it sticks, you'll have to pay the back taxes with interest. (The penalties can, and often are, waived if you can show your "good faith.")

So, take a stab at it (with or without tax preparation software) and if you don't get hopelessly bogged down on the first set of forms, then you probably can do it yourself. 
Cheers,
Bev


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## jbr439

texuk said:


> So, according to any expertls floating around these pages, is it a good idea to take on the offshore streamlined procedures yourself?
> 
> CPA's are asking for a huge amount of money.
> 
> ...
> 
> Thanks!


I think 2 complicating factors for DIYers are 'foreign trusts' and PFICs (non-US domiciled mutual funds & ETFs, etc). These result in forms 3520, 3520A, and 8621.

If you don't have these, you *may* have reasonably straightforward filing.


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