Past Due U.S. Tax Returns and FBAR FinCEN Form 114 | U.S. Expats in Colombia
If you are a U.S. expat in Colombia with past due tax returns or unfiled FBAR requirements, getting caught up now could avoid harsh penalties.
If you are a U.S. expat living in Colombia who is filing late, overwhelmed with multiple years of past due returns, or just discovering you have been required to report your foreign bank accounts, you are not alone. In fact, these are some of the most common mistakes that new expats in Colombia can make in their first years living abroad.
Past Due U.S. Tax Returns
A past-due tax return, simply put, is a tax return you were obligated to file and missed the filing deadline. This could have happened for a variety of reasons such as:
- Not knowing you were still required to file while living outside of the United States.
- A misunderstanding of the IRS definition of self employment income, and the responsibilities that come with earning self employment income vs. wages.
- Not having applied for an extension to be able to collect all necessary information in time.
- Misunderstanding that even if you don’t owe any tax doesn’t necessarily mean you don’t need to file.
- Simply just letting the time slip away from you while in the city of eternal spring.
The good news is that even if you have unfiled tax returns, there is an opportunity to get caught up. And considering that there is no statute of limitations on unfiled returns, this opportunity to file late is indefinite, as opposed to the time limit you have to amend a return. The IRS has shown increased flexibility with American taxpayers living abroad who demonstrated a willingness to become tax compliant in recent years.
What Does FBAR Mean for Expats in Colombia?
FBAR [CC1] is short for the ‘report of foreign bank accounts,’ and it’s a provision of the Bank Secrecy Act (BSA). This provision requires U.S. individuals with at least $10,000 in foreign bank account(s) to complete an FBAR filing. This applies to the bank account(s) that you own, such as a checking or savings, or any accounts where you have signature authority.
Submitting your FBAR filing is simply a reporting requirement, so the payment of additional taxes is not required. However many new U.S. expats could have missed this obligation for a variety of reasons, such as:
- A miscalculation of the COP to USD value of their account balance and believing it was below a certain threshold for FBAR filing.
- Not knowing an account qualified as being foreign.
- They didn’t receive a bank statement in time, or it was lost and requested a replacement.
- They did not understand the obligation to report on accounts you don’t own but have signing authority over.
- They were not able to access the BSA e-filing system.
- Or they simply did not know or forgot.
Unfortunately, forgetting or simply not knowing about FBAR requirements is another common issue that new U.S. expats may face, but not filing can come with some severe consequences. Similarly to filing your past due tax returns, you can get caught up and file your FBAR requirements past the deadline as well.
How Do I Get Caught Up?
There are a few options for you to get up on past-due taxes and unfiled FBAR requirements. The first simple option is just to file late and pay any late-filing penalties.
Another possible option for those with 3 years or more of past-due tax returns and 6 years FBAR requirements is the Streamlined Foreign Offshore Procedure for U.S. taxpayers living abroad, where you can seek relief from penalties and get caught up.
The eligibility requirements for this program include the following:
USATax.co Helps with Past Due Taxes and Unfiled FBAR Requirements
The penalty for not filing can be overwhelming and expensive, so the best way to tackle the problem is to face it head-on, the sooner the better.
Our experienced and licensed tax professionals at USATax.co can help you catch up with your past due taxes and unfiled FBAR requirements. We can see if you’re eligible for the streamlined program and keep penalties down to a minimum. If you have some catching up to do, request an appointment today, and take the first step to get yourself back on track!