# Anyone making use of the Streamlined Tax Filing Compliance Procedure to get on track?



## ljksmith

Hi,

I was just wondering if anyone is using this current amnesty to get up-to-date with their tax returns?

I have lived in the UK for 10 years and wasn't aware that it was necessary to still file. I have a very modest income and tripling my income wouldn't even make me liable for US tax on the basis of the Foreign Income Exclusion.

Don't even get me started about this FBAR thing. Where the heck did that come from?? I have never even heard of it, but looks like at least one year I may have to file for it because I had a bank loan deposit into my account before I could use it to pay of credit cards a few days later. This would have brought me over the 10000 dollar threshold in any one year for reporting. Seriously?

Anyway, I was just wondering if there are any other Americans out there that are going to do this? If so, how are you going to get records of past earnings? As the tax year is different it seems that the only accurate way would be to add up payslips from Jan to Dec of each year.

Well, that would be great if I had them, but I don't. It would be ok if i had a regular income for those three years so I could look at one payslip and know what an average month was. 

I am totally stressing myself out! It is a shame that I will be passing this stress onto my future children as they will be dual citizens and never have lived in the US, but will still be required to file. argh



-L


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## Bevdeforges

Actually, most overseas Americans who find out about the filing requirement after a number of years of not filing do "most" of what they are now calling the "streamline filing." (That is, file three years back in addition to the current year.) And that seems to keep the IRS happy, even without the "questionnaire" they say they want now. 

The FBAR has been around for quite some time now (only it was called "that Treasury form" until they came up with the clever acronym). Honestly, if you only exceeded the $10,000 total (that's cumulative for all your non-US accounts, by the way) for just a few days, I'd blow the whole thing off. The IRS doesn't have unlimited access to overseas bank accounts - and in any event, they allow you to report only the highest "regular statement" balance, so if your windfall was mid-month or between statements, you can legitimately claim that your accounts never exceeded the threshold for reporting.

As far as the back filings are concerned, guesstimate the amounts - based on your UK filings or whatever you have available. The IRS doesn't require you to provide any sort of paperwork to support the amounts you report - until and unless they question the amounts. But if everything looks "reasonable" they won't question them. They also allow you to choose whatever "reasonable" rate you want for converting from sterling into US$, so they aren't expecting accuracy to the penny. 

Make a good faith estimate of the amounts involved, and as long as it comes down to $0 taxes due, you can sleep at nights, safe in the knowledge that you won't be bothered by the long arm of the IRS.
Cheers,
Bev


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## BBCWatcher

Send in the FBAR (also) and calm down. You're exactly the sort of person the IRS had in mind for this program.


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## canook4

I want to use the new streamlined process but having trouble figuring out how to fill out the 1040. I was self-employed last year but I also worked as a bookkeeper for a friend (I have a T4 for that). So I started with form 2555 and filled in the 'earned' income but there is no spot for self-employed information so I have just been going in circles.  Any help/advice would be appreciated.

(I was born in Canada...moved to US became naturalized there...moved back to Canada)


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## Bevdeforges

You can just add your self-employment income to line 7 on the 1040 or to the employment income on the appropriate line of the 2555 (there are a couple different versions of the 2555, so I can't give you the precise line number). You don't need your T4 at all. When the IRS asks for W-2's they mean literal W-2's. Any other document doesn't count and should NOT be included with your tax returns.

If the total of your "earned" income (employment plus self-employment) is under the FEIE limits, just list both employers on the 2555. (Or indicate somewhere on the form that you were "self-employed" for part of the year.) As long as you paid into the Canadian social insurances, you don't have to worry about US "self-employment tax" (which is nothing but social security). 
Cheers,
Bev


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## canook4

Thanks Bev 
So if I add my SE income as part of line 7 on the 1040, I assume I do not do schedule C (business income or loss) line 12 of the 1040. In other words just treat the SE income/loss as regular earnings?


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## canook4

I owned a little retail shop... never made much money at it and even lost money one year. I owned it as sole propri (can't spell it....where is spell check!) from Sept 2008-Sept 2012.


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## Bevdeforges

canook4 said:


> Thanks Bev
> So if I add my SE income as part of line 7 on the 1040, I assume I do not do schedule C (business income or loss) line 12 of the 1040. In other words just treat the SE income/loss as regular earnings?


Officially, you probably should fill out a Schedule C - HOWEVER, I've been told that if you file a schedule C, the FEIE is applied to your gross revenues BEFORE you take your expenses out. (I'm not entirely sure of that advice, but I'm not real familiar with schedule C.) If your gross revenues are less than the $95K limit for the FEIE, I wouldn't bother with the schedule C because it's a whole lot of extra work for no good reason. (They certainly aren't going to penalize you if you declare MORE income than you have to, especially if it all falls under the FEIE anyhow.)

As long as you are paying into the local social insurance system (through your self-employment and/or your employer), you shouldn't be liable for "self-employment" tax (i.e. social security).
Cheers,
Bev


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## canook4

I am paying CPP here and I do believe there is a treaty between the US & Canada about that...so I would not have to pay the $400 US Self-employment tax anyways.

My income from part-time bookkeeper and running a small retail store was less than the $92,900.00 (2011 max FEIE) so I think I will just put the total taxable income (from my Canadian tax return) into line 7 on the 1040 and be done with it. I am such a small fish in the sea that I can't see the IRS even looking twice at my returns.  

So with that decided I should look and see if I can use the 2555-EZ form now.

Thanks again for all you help!


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## canook4

Just thought of something else... I had a bank account that was for my retail store so I could accept debit & credit cards. If on the FBAR I must list all accounts then that would be one of them. It was a business account in my name (& my store's name). I closed it in Oct 2012 (my store burned to the ground in Sept 2012) but it was open from 2008. So if I don't do the schedule c but report a business account, it might raise a red flag? Or don't do a schedule c and don't put down the business account and just cross my fingers. Or do the schedule c, report the business account and not fret about it.

The other thing is the FBARs... I put the insurance money in the account for less than a day & then moved it to my home equity credit line. So because it was there (even for a few hours) I must report that amount on the FBAR because it states "maximum value of account during calendar year"?


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## Bevdeforges

Don't overthink the whole FBAR thing. Yes, you should include your business account. There is a special section for reporting "Information on Financial Accounts Where Filer has Signature Authority but No Financial Interest in the Accounts" - and this is where you are supposed to put accounts that you can sign on but which belong to your employer. In fact, if you read through the instructions, there is even a "modified" procedure for reporting these accounts that may allow you to simply name your employer and not have to include the account numbers or the maximum balances. If it applies, it's the perfect way to report the account. Or, you can give them the account number and balance information if you prefer.

They don't really have the power to scrutinize what you report on the FBAR filings that closely, so better that you report the account in some form, even if the details are a bit fuzzy. Unless something looks really really "bizarre" they aren't going to match up your FBARs with your income tax returns, certainly not in any level of detail.
Cheers,
Bev


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## Verdande

*Streamlined or 6 yrs back?*

Is there any difference between choosing to file via the Streamlined IRS program for non residents or just doing it the "older way" which is filing current year plus 6 years back filing? I owe no tax and would like to get this over with, but don't know which way to go. My friend suggested sending the returns and Fbars both Streamlined and 6 yrs. back - a bit expensive to post but probably assurance that they would get there...and I could get on with enjoying life.


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## BBCWatcher

If you qualify for the streamlined procedure pick that and only that. If not, use the non-streamlined approach.


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## Bevdeforges

Whatever you do, don't do both. Pick one approach or the other and stick with it.
Cheers,
Bev


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