# IRS Streamlined Filing question.



## Fredd (Feb 19, 2015)

Hello,

I am a US citizen who became self-employed in Poland several years ago and I have not filed any tax returns (or FBARs) with the IRS since leaving my US-based employer. All of my self-employment income has been reported to the Polish tax authority and I have paid all due income (19%) and social security taxes in Poland. I recently became aware of the IRS filing requirement after starting the US naturalization process for my wife.

The Streamlined Foreign Offshore Procedures state that only the last three years of late tax returns must be filed (2011, 2012, and 2013 in my case). Does this mean that I am not obligated to file tax returns for 2010 and before?

Do I have to calculate my self-employment expenses as if I was operating my business in the US? The majority of my expenses are travel-related and fairly easy to calculate, but calculating the costs associated with business use of a vehicle is a bit more complicated. Is the IRS standard mileage deduction used even though most costs associated with operating a vehicle are higher in Europe?

Thank you


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## Bevdeforges (Nov 16, 2007)

OK, basically, your understanding is correct. As long as you don't owe the IRS anything (or very much) you just file the 3 past years, plus the current one (i.e. 2014) and all is forgiven. (Well, within the limits of the program.)

You are expected to calculate your self-employment income according to the US tax rules in order to arrive at the net taxable income. (Schedule C) But, depending on the level of revenue you're talking about, it's not absolutely necessary to take every deduction you'd be entitled to in the US if you fall under the FEIE (assuming you're taking that). Self-employment income is considered to be "earned income" as long as it can be considered compensation for your services to the business. (I.e. rather than paying out dividends to yourself or other "investment" type income, which is considered passive and thus not subject to the FEIE.)

The other approach would be to consider just how you are set up for Polish tax purposes. If you have a business registration that pays its own taxes to the Polish government, it may be possible to characterize your draw from the business as your "salary" and just report it as such for US tax purposes. (I don't know enough about Polish tax or business practices to tell you much more than this.)

As far as the IRS standard mileage allowance goes, you can always opt to use "actual costs" if you have the records to support that.
Cheers,
Bev


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