Never Filed US Taxes While Living in Denmark? Here is How to Fix It

Quick Facts: Catching up on US Taxes from Denmark

Why Americans in Denmark Are Required to File US Taxes at All

The United States is one of only two countries in the world that taxes its citizens based on citizenship rather than residency.

This means that no matter how long you have lived in Denmark, no matter how thoroughly you are integrated into the Danish tax system, and no matter how little connection you have to the US, you are still required to file a US tax return every year if your worldwide income exceeds the filing threshold.

This comes as a genuine surprise to many Americans abroad. The obligation is not widely publicized, Danish accountants rarely know about it, and nothing in the process of moving to Denmark alerts you to it.

The IRS filing threshold for 2025 is $14,600 for single filers under 65. Most Americans working in Denmark exceed this easily. The obligation to file exists even in years when no US tax is owed.

What is the Streamlined Foreign Offshore Procedures Program?

The Streamlined Foreign Offshore Procedures (SFOP) is an IRS amnesty program designed specifically for US taxpayers living abroad who fell behind on their filing obligations non-willfully.

It allows eligible individuals to catch up on years of unfiled returns and FBARs without facing the standard penalties that would otherwise apply.

The program has been available since 2014 and remains open as of June 2026. Despite recurring speculation that it will close, the IRS continues to offer it.

However, it can be closed or restricted at any time, and it is not available to anyone the IRS has already contacted about non-compliance.

What the Program Offers

For Americans living abroad who qualify under SFOP:

• Zero offshore penalty on unreported foreign accounts and assets
• No failure-to-file or failure-to-pay penalties on the back returns
• No FBAR penalties on the six years of late filings
• A clean path back to full compliance with the IRS

The only amount you pay is any actual tax owed on the back returns, plus interest.

For most Americans in Denmark, that amount is zero or very small, because Denmark’s high tax rates generate Foreign Tax Credits that typically eliminate the US tax liability entirely.

Who Qualifies for the Program?

To use the Streamlined Foreign Offshore Procedures, you must meet three requirements.

1. Foreign Residency

You must have spent at least 330 full days outside the United States in at least one of the three most recent tax years for which a US return was due.

This is the same physical presence test used for the Foreign Earned Income Exclusion. Most Americans who have been living and working in Denmark full time meet this easily.

2. Non-Willful Conduct

Your failure to file must have been non-willful. Non-willful means the non-compliance resulted from negligence, oversight, mistake, or a genuine misunderstanding of the law, not from a deliberate decision to hide income or evade taxes.

Common non-willful situations that qualify include:

• Not knowing that US citizens living abroad are required to file
• Being told by a Danish accountant that local filing was sufficient
• Assuming that paying Danish taxes covered all obligations
• Not knowing about FBAR requirements for Danish bank accounts
• Filing US returns in some years but missing FBARs or foreign account disclosures

If you deliberately hid income or assets from the IRS with the intent to evade taxes, SFOP is not appropriate. That situation requires the IRS Voluntary Disclosure Practice, a separate and more complex process.

3. No Prior IRS Contact

You cannot use the Streamlined Procedures if the IRS has already opened an examination of your returns or contacted you about the non-compliance. Acting before the IRS makes contact is critical.

This is particularly relevant for Americans in Denmark, because Danish banks and financial institutions are legally required to report US account holders directly to the IRS under the US-Denmark FATCA Intergovernmental Agreement.

The IRS already receives information about your Danish accounts from the banks themselves. A discrepancy between what Danish institutions have reported and what you have filed creates exactly the kind of paper trail that prompts IRS inquiries.

What You Have to File under the Streamlined Program

The SFOP submission has three core components.

3 Years of US Tax Returns

You file original or amended Form 1040 returns for the three most recent years for which US tax returns were due. Each return must include all foreign income, foreign account disclosures, and any applicable information returns such as Form 8938 (FATCA) or Form 5471 (if you own a Danish ApS).

The words “Streamlined Foreign Offshore” must be written in red at the top of each return.

6 Years of FBARs

You file FinCEN Form 114 for the six most recent years in which you had reportable foreign financial accounts. This covers all Danish bank accounts, pension accounts, and investment accounts where the combined balance exceeded $10,000 at any point during the year.

FBARs are filed through the FinCEN BSA E-Filing system, not with the IRS. You select “Other” as the reason for late filing and note the Streamlined Filing Compliance Procedures.

Form 14653: The Non-Willfulness Certification

This is the most critical document in the submission. Form 14653 is a signed certification, submitted under penalty of perjury, that your non-compliance was non-willful. It must include a narrative explanation of the specific facts and circumstances that led to the non-filing.

A vague statement is not enough. The IRS expects a clear, factual explanation of how you came to not file, why you did not know about the obligation, and what changed that led you to come forward now.

A well-written Form 14653 is the foundation of a successful SFOP submission. A weak or inconsistent one can undermine an otherwise eligible case.

What to Include in Your Streamlined Returns

The Foreign Tax Credit

Because Danish income taxes (38% to 55.9%) consistently exceed US rates, the Foreign Tax Credit on your streamlined returns typically eliminates any US tax liability entirely. Most Americans in Denmark file three years of back returns and owe nothing beyond minor interest.

The credit is claimed on Form 1116 and must be calculated correctly for each year using the actual Danish taxes paid.

Danish Pension Accounts

Employer pensions with providers like PFA, Danica, Velliv, or AP Pension must be reported on the FBAR and potentially Form 8938.

If Form 8833 was never filed to claim the Article 18 treaty deferral on pension growth, this can be corrected as part of the streamlined submission by including Form 8833 with each applicable year’s return.

The Årsopgørelse

Your Årsopgørelse, the annual tax assessment issued by SKAT each spring, is the key document for reconstructing your streamlined returns. It shows your total Danish income and taxes paid for the year, which feeds directly into the Form 1116 calculation.

Three years of Årsopgørelse documents, available through the SKAT TastSelv portal, are typically all you need for the Danish income side.

Danish Bank and Investment Accounts

All Danish financial accounts held during the six FBAR years must be reported, including lønkonto, opsparingskonto, investment accounts, and pension accounts.

You will need each account number, the institution name, and the highest balance held during each year. Most Danish banks provide historical statements through their online portals.

Limits of the Streamlined Program

The Streamlined Foreign Offshore Procedures resolve most penalty exposure for Americans in Denmark who have not been filing, but there are limits.

• It does not cover willful non-compliance. If the IRS determines that your non-compliance was willful after reviewing your submission, the penalty protections do not apply and you may face significantly larger penalties.
• It does not eliminate tax owed. Any actual US tax due on the back returns, plus statutory interest, must be paid. For most Americans in Denmark this amount is small or zero, but it is not waived.
• It does not resolve outstanding IRS notices. If the IRS has already sent you a notice or opened an examination, SFOP is no longer available. You would need to work through a different resolution process.
• It does not address state tax obligations. Some US states assert the right to tax their former residents even after they move abroad. If you lived in a state with this approach before moving to Denmark, separate state filing obligations may exist alongside the federal streamlined submission.

Streamlined Program vs. Quietly Filing Late Returns

Some Americans in Denmark consider simply filing late returns without using the formal Streamlined program, sometimes called a “quiet disclosure.” This approach is strongly inadvisable.

A quiet disclosure is a series of late returns filed without the formal certification and penalty waiver structure of SFOP. The IRS explicitly discourages this and has stated that it may treat quiet disclosures as potential willful conduct, removing the possibility of non-willful treatment entirely. If the IRS identifies the pattern as a quiet disclosure, penalties that would have been waived under SFOP may be assessed in full.

Using the formal SFOP process with a properly prepared Form 14653 is the correct approach. It places the non-willfulness finding on the record and creates a documented basis for the penalty relief.