Many Americans living abroad, particularly a significant number in Israel, are facing challenges with their U.S. tax filings. For those who have fallen behind, the IRS offers a safe and clear resolution through the Streamlined Filing Compliance Procedures, which allows expats to rectify their tax situations without incurring penalties.
Importantly, there is a limited-time opportunity available: U.S. expats who file their taxes now can also claim the $1,400 stimulus payment provided during the COVID-19 pandemic. To take advantage of this offer, the deadline is set for June 16, 2025. After this date, any unclaimed funds associated with the stimulus will be permanently forfeited.
Understanding the IRS’s Streamlined Procedures is crucial for those seeking compliance. This program enables U.S. citizens abroad to file up to three years of late tax returns and six years of Foreign Bank Account Reports (FBARs) without penalties, as long as they can certify that non-compliance was not intentional.
Olivier Wagner, founder of 1040 Abroad, emphasizes that there’s no need for concern, as many Americans have successfully navigated these procedures without penalties. The firm, which has extensive experience in helping expats with their tax matters, also provides complimentary tax advice to help them make informed decisions before submitting any filings.
Taking proactive steps now can offer significant financial benefits. Expats who submit their tax returns for 2021 by the deadline will not only achieve compliance but can also receive the $1,400 Economic Impact Payment. This stimulus check can often help offset the cost of retroactive tax preparation and submission.
Moreover, maintaining tax compliance is increasingly vital, as foreign banks often require proof of compliance to open or retain accounts. Regulations such as FATCA mandate financial institutions to report American account holders to the IRS. Expats lacking up-to-date tax filings may experience difficulties with banking services, investments, and mortgages, underscoring the importance of timely compliance to safeguard financial freedoms.
For those considering renouncing U.S. citizenship, compliance is a required step. Applicants must have five years of tax filings to fulfill the renunciation process, which also involves a fee of $2,350. Utilizing the amnesty program to meet IRS compliance allows expats to not only clear their tax records effectively but also to claim the aforementioned stimulus payment, thus potentially reducing their overall expenses related to renouncing.
Acting promptly under the current regulations enables expats to secure their financial future by achieving compliance, avoiding penalties, and capitalizing on the available stimulus payment. For Americans living abroad, especially the vibrant expat community in Israel, this is an opportune moment to navigate tax compliance and move forward with financial confidence.