Filing Past Years Tax Returns for US Income Taxes Can be Painless

Two many US citizens and green card holders are afraid to file all of the past year tax returns they have not filed. Most expats did not know they were required to file a tax return each year while living abroad even though they filed a return in their resident country. They want to catch up but are afraid of the huge amount of taxes, interest and penalties which may have accrued over the years.

In most situations, after filing 5-10 or even 15 years of past returns not tax is due and the entire process is painless. Why? Because the foreign earned income exclusion ($70.000 in the earlier years and now $80,000) offset their earnings abroad and the foreign tax allowed against US taxes offsets the rest.

Remember, the statute of limitations on tax assessments does not start to run until you actually file a tax return. After you file a return, absent fraud, the statute for any assessments from the IRS expires in 3 years. It is good to file returns to make this time run out and avoid future surprises from the IRS.