# Streamline Option - advice



## GeneM (Mar 12, 2014)

It seems this option could be beneficial but not knowing the details I'm a bit in the dark. Please help with the following:

- What specific forms (or samples) are used? I believe the filing is online.
- I believe I must also file FABR and FATCA forms is that correct?
- Any other forms?

I understand the Streamline option requires the last 3 years of income, etc.

FABR requires the last 6 years of "banking" information. What forms?

And then FATCA filing what forms?

Once the Streamline is submitted I presume the following tax year I complete new forms? 

Once complete and submitted it is automatically accepted? Any other issues with pursuing this option besides the cumbersome filing? 

If on the FABR form I noted a bank balance (for example) of $1 million in year 6 and the current year was $500,000 would this cause any concerns or issues such as where did the money come from?

I think that is enough questions and answers to digest for now. Again thanks for your feedback.

Gene


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## Bevdeforges (Nov 16, 2007)

> - What specific forms (or samples) are used? I believe the filing is online.
> - I believe I must also file FABR and FATCA forms is that correct?
> - Any other forms?


The Streamlined Option actually consists of two separate "filings" - the first is your income tax filings for the current year, plus three back years. At the moment that means income tax returns for 2016, then for 2015, 2014 and 2013. If you wait until after the turn of the year, you'll start with 2017 as the current year and only go back to 2014. Only the "current" year filing can be done online. The back filings must be filed on paper and sent in together. What forms you need to file depend on your exact tax situation. Always a 1040, plus Schedule B, plus possibly 2555 (FEIE) and/or 1116 (Foreign Tax Credit) and any other forms required by your circumstances (Schedule C for a personal business, Schedule D for investment gains and losses, etc.).

The second filing is the FBAR, which is a separate operation and must be done for 6 years back. These can ONLY be done online at the FinCEN site.

Any FATCA forms are part of the regular income tax filing and again, depend entirely on your particular circumstances and what you are or aren't declaring.



> If on the FABR form I noted a bank balance (for example) of $1 million in year 6 and the current year was $500,000 would this cause any concerns or issues such as where did the money come from?


Generally speaking, they don't look all that carefully at the FBAR forms unless they notice something "odd" on your income tax return that year. In the example you give, the obvious explanation is that you spent $500,000 on something - or possibly that you transferred that amount to another account. (Because you report the high balance, it is very likely that you are double reporting at times. This is completely normal.)
Cheers,
Bev


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## GeneM (Mar 12, 2014)

Thanks Bev, I have actually been drawing down on my investment for living costs. When I get back from an "African" bush trip next month I will get started on this and I'm sure more questions will arise. Thanks again.


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## Sendrigo (Feb 15, 2017)

GeneM said:


> - What specific forms (or samples) are used? I believe the filing is online.
> - I believe I must also file FABR and FATCA forms is that correct?
> - Any other forms?


I think Bev provided terrific information on this, but here's my two cents.

The Streamlined Foreign Offshore procedures involve filing the last 3 years of taxes for which the deadline or the extended deadline has passed. These cannot be filed online, they must be prepared in a very specific way, and mailed in.

For the current year (assuming the deadline has not passed), you could file online.

FATCA is a federal law, and not a specific form. FBAR is indeed a form that must be filed, and you would file the last 6 years of FBAR forms.

As for the forms required for your tax returns, as Bev mentioned, there could be numerous forms in addition to your 1040, such as Form 8938 (Statement of Foreign Financial Assets), Form 1116 (Foreign Tax Credit), Form 2555 (Foreign Earned Income), and more. This depends on one's personal situation.



GeneM said:


> FABR requires the last 6 years of "banking" information. What forms?


As mentioned above, the FBAR is the name of the form (Report of Foreign Bank and Financial Accounts), and you would file the last 6 years.



GeneM said:


> Once the Streamline is submitted I presume the following tax year I complete new forms?


Once you submit your taxes via the Streamlined Foreign Offshore procedures, you are, in a sense, all caught up. The following year, you would file your taxes via the normal procedures (not Streamlined), and you would be able to do this online. 



GeneM said:


> Once complete and submitted it is automatically accepted? Any other issues with pursuing this option besides the cumbersome filing?


Unlike filing the current year online, you do not get an automatic notification from the IRS. However, I would say the majority of my new clients get in touch with me because they need to get caught up with taxes, and we normally go with the Streamlined procedures, and I have yet to have a problem doing it this way. 

As long as you pay what you owe, the IRS generally leaves you alone. In a sense, this is a program to get people who have not filed in a long time, to file, and to "come clean". In return, you will not be subject to failure-to-file, failure-to-pay, or accuracy-related penalties.


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## GeneM (Mar 12, 2014)

Hi Quantage, 
Thanks for the reply, just returned from a long trip traveling Southern Africa but now I must focus on the Streamlined Method. I watched the IRS webinar and in addition to the cumbersome filing procedures two points became apparent in my circumstances:

1. Our year end in South Africa is February. So all financials are from 1 March to 28 February which means all forms of verifiable income including interest, capital gains, medical insurance costs. etc. for the year are calculated and provided based on our financial year end which is the end of Feb. It will be extremely complicated to attempt to adjust this to December. 

2. The "Non Will Statement" declaration whether it it is good news or bad news much be accurately declared. A few what if scenarios only for example to assist me in appreciating the importance come to mind this is one: What if there was no capital gains tax in South Africa (unfortunately there is at 20%) and I had a capital gain of $1,000,000 20 years ago which I must declare to provide justification for a bank balance today of let's say $500,000. So I declare the reason I have a $500,000 bank balance is due a capital gain made 20 years ago. Would this trigger and consequences or further reporring and investigation?


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## Bevdeforges (Nov 16, 2007)

You need to be very careful not to overthink this stuff. Assuming you use the Streamline process, you really only file the 3 years back (for taxes) and the 6 years back for the FBAR statements. Barring any massive back taxes discovered in this process, that lets you off the hook for anything you may have done (willfully or not) prior to that.



GeneM said:


> 1. Our year end in South Africa is February. So all financials are from 1 March to 28 February which means all forms of verifiable income including interest, capital gains, medical insurance costs. etc. for the year are calculated and provided based on our financial year end which is the end of Feb. It will be extremely complicated to attempt to adjust this to December.


Once you get the hang of the principle, making the adjustment for the difference in the tax years is actually pretty simple. Basically, you just subtract your Jan/Feb results (earnings, interest, salary, whatever) from your SA tax year base and add back what you subtracted last time. 

So, for 2016, you'd have SA results for the year ending Feb 28, 2017. Subtract Jan and Feb 2017, and add back Jan and February 2016 (from your prior SA annual statement). 



> 2. The "Non Will Statement" declaration whether it it is good news or bad news much be accurately declared. A few what if scenarios only for example to assist me in appreciating the importance come to mind this is one: What if there was no capital gains tax in South Africa (unfortunately there is at 20%) and I had a capital gain of $1,000,000 20 years ago which I must declare to provide justification for a bank balance today of let's say $500,000. So I declare the reason I have a $500,000 bank balance is due a capital gain made 20 years ago. Would this trigger and consequences or further reporring and investigation?


What you did 20 years ago is completely irrelevant here. They don't require you to justify the bank balances you declare on the FBARs and for the income taxes, they're only interested in the interest or other earnings on the bank accounts. As long as you report those accounts, they don't ever concern themselves with where the balances came from.

The non-willfulness statement is only concerned with why you haven't been filing US tax returns up to now. Not where any of the money you are reporting came from. The point is to keep it simple and keep it truthful. There has been very little publicity concerning the US filing obligation for overseas citizens until recent years where FATCA has become such a threat and banks have started denying US citizens accounts just to avoid the reporting hassles. But it was 2014 before FATCA became a "widely known" issue outside the US. Assuming you've been living outside the US since about 2010 or so, it's entirely likely that you would have no knowledge of the filing obligation.
Cheers,
Bev


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## GeneM (Mar 12, 2014)

Bev,
Thanks for your reply. My capital gains schedule is in alphabetical order by company so I will just have to analyse each trade during the year and exclude Jan and Feb and remember to include them next year. Interest income should be easy and any minor over or under stated will be caught the following year. Thanks again. 
Gene


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