Never filed US taxes in the Netherlands: What you need to know

Are you behind on your US taxes? The team from MyExpatTaxes explains the Streamlined Procedure and how you can catch up on your returns as a US expat in the Netherlands. 

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.

What is the Streamlined Procedure?

In 2012, the IRS implemented a procedure known as the Streamlined Procedure. It's used to aid US expats who did not know they had to file US taxes. The Streamlined Procedure lets expats catch up without penalties by having you file three years of tax returns and six years of FBARs.

Let's say you haven't filed in ten years. You can use the Streamlined Procedure and only need to file for the last three years - not the last ten. 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.

How do you qualify for the Streamlined Procedure?

The Streamlined Procedure is split up into two procedures, 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. On the other hand, 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.

Other requirements

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 this procedure. In this case, you must take action before the IRS does, or you could be subject to some hefty penalties.

When should you file using the Streamlined Procedure?

Here are the deadlines to keep in mind when following the Streamlined Procedure:

• 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 for additional time. It’s also the deadline for FBARs.
• December 15: The latest date to file an extension, plus a written letter asking for the extension.

Remembering 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 checks

2024 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.

Child Tax Credit

The Streamlined Procedure is not just for catching up on your previous tax returns but also for catching up on benefits you missed out on before. One of the most common ones is the Child Tax Credit, which can give taxpayers a credit up to $2.000.

You must, however, meet specific eligibility requirements to take advantage of this tax break.

MyExpatTaxes offers assistance to US expats in the Netherlands with their US tax obligations. Your Dutch investments, social security, pension and more are all included with your standard US tax return.