Back Taxes For US Expats –

How Many Years Back Can You File?

It’s quite common for US expats to fall behind in filing their US tax returns while living abroad – whether thinking they no longer need to file, since they’ve established residency in another country paying taxes there, or simply being busy trying to adjust to a completely different culture, living and work environment abroad.

However, by falling out of compliance with their US tax filing obligations year over year, expats increasingly run the risk of catching the IRS’s eye.  The IRS, and the US Department of the Treasury as a whole, have in recent years greatly stepped up enforcement of US income tax compliance for US taxpayers abroad via a US law called the Foreign Account Tax Compliance Act (FATCA),  FATCA affects US expats in two ways:

  • Expats with foreign financial accounts and assets above a certain threshold amount must report them when they file their federal tax returns, on Form 8938 – Statement of Specified Foreign Financial Assets
  • Foreign banks, investment firms and other foreign financial institutions are required to report their US expat account holders, thus allowing the IRS to monitor their foreign financial accounts.

The bottom line is that FATCA is making it much easier for the IRS to identify US expats who are not keeping up with filing their US taxes.

I Haven’t Kept Up With Filing My Back Taxes While Abroad – How Many Years Can (or Should) I Be Filing Back Taxes?

Expats who want to catch up on back taxes, but have missed filing returns for more than a year or two, are probably wondering just how many years back they can – or  should – be preparing and filing back tax returns?

Generally speaking, the answer is six years – the IRS statutory period of enforcement on delinquent tax return does not extend back further than six years.

However, taxpayers should be aware that per IRS Policy Statement 5-133, enforcement for periods longer or shorter than six years may be used by the IRS, depending on:

  1. The taxpayer’s prior history of noncompliance.
  2. The existence of income from illegal sources.
  3. The effect upon voluntary compliance.
  4. The anticipated revenue in relation to the time and effort, required to determine tax due.
  5. Any special circumstances existing in the case of a particular taxpayer, class of taxpayer, or industry, or which may be peculiar to the class of tax involved.

If the IRS determines that a taxpayer filed a false or fraudulent return, the statute of limitations on delinquent returns is not limited to six years, it is unlimited. This is true even if the taxpayer later files an amended return to correct the fraud that was initially reported.

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How Many Years Back May I Claim A Refund For A Prior-Year Return?

When it comes to claiming a refund for a prior-year tax return in the US, the general rule is that you have a three-year window from the original due date of the return to file an amended return and request a refund. This means that if you discover an error or overlooked a credit or deduction on a tax return you filed within the past three years, you can file an amended return to correct it and potentially receive a refund.

For example, the due date of your 2022 tax return was April 15, 2023, you would generally have until April 15, 2026, to file an amended return and claim a refund for that tax year.

However, it’s important to note that if you file your tax return before the original due date, the three-year window starts from the actual filing date. Additionally, if you filed for an extension, the three-year period still begins on the original due date, not the extended due date.

In cases where you have unpaid taxes or owe additional taxes for a prior year, filing an amended return can also help you avoid or reduce penalties and interest that may have accrued.

If you find yourself needing to file back taxes for multiple years, it’s crucial to address them as soon as possible to minimize any potential penalties and interest. To file back taxes, gather the necessary financial documents for each year, and consider seeking professional assistance to ensure accuracy and compliance with tax laws.

As An Expat Who Hasn’t Kept Up With Back Taxes, Are There Any Other Options Besides Filing Returns Going Back Six Years?

Expats who have missed filing more than a few US tax returns from abroad can simply and voluntarily back file those years to catch up.   The good news is that expats who have not filed back taxes for a number of years don’t have to file returns going back six years – the IRS offers an amnesty program called the Streamlined Foreign Offshore Procedures, whereby taxpayers who certify that they have not willfully been out of compliance with their US tax filing requirements can be restored to full compliance via filing their US returns for the past three years, as well as their FBAR reports for the past six years, without being subject to any IRS penalties.

Want to learn more about how to qualify for the IRS’s Streamlined Foreign Offshore Procedures amnesty program?  Contact Universal Tax Professionals today, and we will walk you through the steps needed to get back in full compliance with the IRS for your unfiled back taxes. We also provide a wide range of US expat tax services for all Americans living abroad.