Never filed US taxes from Germany? What you need to know

You may not know that the US is one of the few countries that taxes its citizens regardless of their residency. If you're one of the few people that did not know US taxes are an obligation no matter where you are in the world, don't worry. The IRS realised this was a common problem and therefore created something known as the Streamlined Procedure.

Streamlined Procedure

The Streamlined Procedure was implemented by the IRS in 2012. It's used to aid US expats who did not know they had to file US taxes, allowing them catch up without penalties by filing three years of tax returns and six years of FBARs.

Let's say you haven't filed in 10 years. You can use the Streamlined Procedure and only need to file for the last three years - not the last 10. After that, you go right back to being tax compliant in the eyes of the IRS, with the knowledge that you must file every year moving forward.

Do you qualify for the Streamlined Procedure?

There are two procedures within The Streamlined Procedure: domestic and foreign offshore. The Streamlined Foreign Offshore Procedure (SFOP) is strictly for US expats; you must be an American who is living and earning abroad.

As this procedure is for those who did not know that filing was mandatory abroad, it makes no sense to offer this to individuals who live in the US. Therefore there is a separate procedure for those living in the US, who have not declared their foreign assets.

In order to qualify, you must have failed to file tax returns, pay taxes and file FBARs. It has to be shown that you had no idea about US taxes and their importance abroad. This is also known as "non-willful conduct", meaning that it was essentially an honest mistake.

Social security number 

Next to the qualification list, you need the exact requirements as you would if you were normally filing a US tax return. You must have a US Social Security Number (SSN) or an Individual Taxpayer Identification Number (ITIN).

The most important point is that if you were ever contacted directly by the IRS asking about your tax returns, you are automatically disqualified from the Streamlined Procedure. In this case, you must take action before the IRS does, or you could be subject to some hefty penalties.

Filing deadlines

US expats should keep the following dates in mind:

• April 15: If you owe the IRS any money, you must file the current year tax return before this deadline.
• June 15: Automatic extension for expats (the recommended date for the Streamlined Procedure)
• October 15: File Form 4868 before June 15 to qualify for this extended tax return deadline. It’s also the deadline for FBARs.
• December 15: The latest date to file an extension, plus a written letter asking for the extension.

These dates can be easily forgotten, which is why tax advisors recommend signing up for tax newsletters / emails or simply setting reminders in your calendar.

The sooner you use the Streamlined Procedure, the less stress you'll have, because no one can guarantee how long this procedure will be available to US expats. The IRS makes changes every year, so if you haven't filed yet, don't wait.

Stimulus payments

This year is one of the best years to use the Streamlined Procedure due to the COVID-19 checks that were given out to eligible individuals in 2020 and 2021. During that period, three stimulus checks were issued, totalling $3.200. If you didn't claim these checks during the pandemic, there is still time for you to do so.

You do not have to use the Streamlined Procedure to receive your stimulus checks. However, if you're already behind on your tax returns, this procedure is a win-win scenario. In the end, if you qualify, you could end up being tax-compliant for absolutely free after your refunds are issued.

For more information about who qualifies for stimulus checks, check out the US Department of the Treasury website, which highlights all you need to know.

The Child Tax Credit

The Streamlined Procedure also gives you the opportunity to catch up on tax benefits that you missed out on in previous tax years. One of the most common is the Child Tax Credit, which could give you a credit of up to $2.000 (if you meet the eligibility requirements). 

File your US and German taxes

Finding a company that does both your US taxes and German taxes is the ultimate dream for US expats in Germany. Consulting with a tax advisor can help you to meet your tax obligations in both countries.