How Far Back Do I Need To Go Back When Filing My Expat Taxes?

By: Pete
Date posted: 11.10.2011 (12:49 am) | Write a Comment  (0 Comments)

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As I prepare to file my US taxes for the first time as an expat, one thing that was clearly a concern is how far back I have to go. There is “black or white” answer on this but what the IRS did tell me is that under P-5-133, the IRS will accept the filings of the last 6 years. That could clearly take some time.

It Gets Worse

In theory, the IRS does reserve the right to ask for back-dated information dating further than 6 years. How far back? As far back as I was in legal obligation, as a US citizen, to file taxes on my worldwide income.

Let’s Not Panic

Chances are very slim that I would ever get asked to go back that far. Why? Because every year will turn out to be more or less the same thing for me. I will be reporting, income, assets but will have no taxes to pay to the IRS because of the taxes I have already paid in Canada.

One Step At A Time

Like so many other things in life, it’s easy to get overwhlmed by the whole process but I will do it one step at a time. My first objective is to file my taxes for 2010 (which I would be over 6 months late on) and then will likely be able to follow up with my 2011 taxes. Then, depending on how the process goes, I will file the other returns that are recommended. I do have all my Canadian tax returns dating back to 2003, when I finished school so I could in theory become “100% compliant”

The First Year Is By Far The Most Important

While I think that being fully compliant is important, I think that getting your first filing in, will be the most important one by far. Why? It shows the IRS that you do not have anything to hide, that you are doing your best to become compliant, etc. If you are going to do nothing else, focus on these 2 things:

-File taxes for the last year
-File taxes for all future years

If You Do Owe Money To The IRS

This would be the only situation where I would actually hurry to do past year filings as a priority it would be this one. If you did not pay taxes to a foreign government at a rate that would basically exempt you from owing money to the IRS, you really need to hurry. Why? Because you will be hit by fees and interest charges on any amounts that you would owe from those past years. The longer you wait, the more those will accumulate.


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