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Discussion Starter · #1 ·
Hi All,

Like so many Americans living out in the world, I've not fully understood my filing requirements for a number of years, have more or less suddenly stumbled across what I was meant to have been doing, and am now quickly looking to make things right with the IRS.

I've spoken to them, and they've told me to back file 6 years of returns (2009-2014).

I'm in the process of doing the returns right now, and a few things have come up that are confusing me, and the IRS instructions don't explain clearly (or at all) what to do.

During the period of time I'm back filing for I've moved house mid-tax year (from one UK location to another), and my job has moved to a different facility (also mid-tax year, also from one UK location to another).

This is creating some confusion on the 2555-EZs I need to fill out, in reference to the address and tax home lines.

So my questions are this:

1) What do I put on the address section (part 2, line 4) on the 2555-EZ? My current address now, or the address that was current during the tax year I'm filing for? And what would I do for the year I moved?

2) What city/country do I use for line 11a on 2555-EZ (tax home)? The business' current city/country, or the city/country that was current during the tax year I'm filing for? And what would I do for the year of the site change? Would I give an end date for the site we left?

My owed tax is £0 for all the years involved because I don't earn very much, but I'm still terrified of going to jail/getting fined for filing late (everyone tells me I'm being hysterical, but, hey, I'm a hysterical person by nature), and I want to decrease my audit chances as much as possible, so I want my returns to be as correct as possible.

Any help that this community can give me would be most appreciated.

Cheers,


Jacob
 

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Don't get all terrified about this. You're certainly not the first.

And it's "odd" that they've told you to file 6 years of back taxes. Under the streamlined compliance procedures Streamlined Filing Compliance Procedures you only have to do 3 years of back taxes (plus 6 years of back FBARs - but those are much simpler).

Anyhow, for your specific questions:

1. use your current address (on all your back filings)

2. your tax home is the country in which you pay taxes - you don't need to indicate a city. If you pay taxes in the UK, just indicate UK and be done with it.

The fact that you owe no taxes means that it's highly unlikely that they'll do anything other than note that your returns have been filed and do a cursory check to make sure the math all works out. They have the streamlined program for a reason - you're far from the first, and won't be the last to have discovered the filing obligation after many years of blissful ignorance.
Cheers,
Bev
 

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Discussion Starter · #3 ·
Hi Bev,

Thanks very much for your speedy reply.

I've been very confused regarding the 'tax home' question, as all the guidance for the form that's generally available shows city/country/date. Good to know it can be simplified.

I've looked at the Streamline Process, and it's not that different from what the IRS advised me to do, except for filing the 3 extra years. Possibly a statute of limitations thing? They did suggest I send in a cover letter as well, confirming why I'm filing late.

The IRS also recommended that I submit each return in a separate envelope so they don't get confused as duplicates. Should I submit a copy of my cover letter in each, or just in the first year I submitted a return for (in this case 2009)?

Or should I put each return in its own envelope and send them all in one larger package with a single copy of the cover letter?

Is there any particularly formal statement I need to include in the letter?

Sorry for all the questions, I just find this all very daunting.

Thanks,


Jacob
 

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You have to be careful because any information the IRS gives you over the phone isn't necessarily binding. The streamline process actually takes care of the statute of limitations (which is 4 years, not six, for tax returns). Actually, the "streamline process" is nothing more than a sort of codification of what the IRS policy has been for years on getting expats up to date on their tax filings. (Though years ago, they didn't bother with the FBAR/FinCen part of it.)

Your cover letter for the back filings doesn't have to be anything elaborate - just mention that you only just discovered that you are supposed to be filing. The only penalties for late filing are a % of what you owe - and in your case 0 is 0 so your "fine" can only be 0.
Cheers,
Bev
 

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Discussion Starter · #5 ·
Thanks again. I've started the returns for 2009 to 2012 already, so I'll probably send them in anyway for thoroughness' sake. They're pretty easy to do because my situation is pretty straightforward. Any recommendations on how to package the letter and the returns together for sending to the IRS?
 

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Check what the Streamlined program requirements are. IIRC, they want you to send the back filings in all together, with a notation on the top page of each one that these are for the streamlined program. I think they also ask you to send them to a particular address, too. Following that advice, even if you're submitting more than the minimum required, is probably the safest way to go.
Cheers,
Bev
 

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Discussion Starter · #7 ·
Hi Bev,

When I spoke to the IRS, they didn't actually mention/promote/advocate Streamline Process. The agent jumped straight to filing six years of returns. I didn't give my name or SSN on the call so I don't imagine the recommendation was tailored to me specifically. As the Streamline Process instructions are pretty specific regarding the number of returns to submit (3), I'd look to submit 3 only. Time wasted on the ones I've already completed, but no big loss. I'm not sure on the FBAR requirement, though. If I have no foreign accounts that need an FBAR filed (I've never had $10,000 set aside ANYWHERE) do I not need to file FBARs as part of Streamline?

Sorry for asking so many questions!

Cheers,

Jacob
 

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Discussion Starter · #9 ·
Hi Bev,

Thanks again for the advice. The only major wrinkle coming up is this line from form 14653, the Certification by US Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures, that you have to fill in to apply for Streamline:

'I failed to report income from one or more foreign financial assets during the above period.'

This doesn't apply to me as I didn't receive income from foreign financial assets, only my wages from my employment, but I'd still have to sign the document to say I did, which would be a false statement.

Does this prevent me from doing Streamlined?

Cheers,


Jacob
 

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Discussion Starter · #11 ·
Hi Bev,

Thanks again for your ongoing assistance on this, very close to a solution.

As I've never chosen the exclusion for foreign earned income, and the return is late, the instructions in Publication 54 say to include the statement 'Filed pursuant to section 1.911-7(a)(2)(i)(D)' at the top of the 1040 if you're choosing the exclusion for the first time on a late return. The instructions for Streamlined also require a statement at the top of the returns. Do I need to put both statements at the top of the return?

Cheers,

Jacob
 

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That's actually a good question. If you're making use of the Streamlined program, then yeah, I'd do it. If you want to file them simply as late returns, I don't think it's absolutely critical - but hey, anything that helps you sleep at night.
Cheers,
Bev
 

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Discussion Starter · #13 ·
No - just strike out the line before you sign the form.
Cheers,
Bev
Is there a precedent for this working and being accepted by the IRS? It seems like it should be fine, but I need to be absolutely sure before I do this. Streamlined Process seems directed very much towards people who haven't reported income from investments/financial accounts rather than people who simply haven't reported wages.
 

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The Streamlined process is for people living overseas who didn't realize they were supposed to file. (They only recently extended it to US residents - well, in the last few years.) With a few technical changes, it's the same procedures they've used for the past 20 or 30 years for long-time overseas residents to get "caught up" on their taxes.

The one catch is that they most probably will simply accept your filings and you'll near nothing about it ever again. They don't actually send you any "confirmation" that you're off the hook. But this is the ultimate in "no news is good news."
Cheers,
Bev
 

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If you wish you can verify that the IRS processed your tax returns by ordering a tax transcript using IRS Form 4506-T. Wait about 90 days after sending your tax returns, then send that completed form. There is no cost for the transcript other than postage to mail your request.
 
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