US citizen who lived abroad for 8 years with no formal job/income - do I have to file back taxes for all those years

[liseylis]

Hi everyone, I am a US citizen who moved abroad ( to a very cheap country) after college in 2012.
For 6-7 years I survived just from some money from my parents and giving English lessons (where students paid me in cash, so I didn't have a formal salary). For this reason I never filed taxes with IRS as my income was way below the annual income threshold which I think was 60,000 USD/year+

Now I am working officially in another country and I need to file 2020 taxes. But do I need to file my back taxes (including bank account info) for all those other years?

If I do I'll have to use the streamlined procedure which will cost a lot of money on all the websites so I'm really hoping to avoid this. but then also better to be safe than sorry.
Thanks sincerely for any help

 

[stephendisraeli]

@liseylis

For this reason I never filed taxes with IRS as my income was way below the annual income threshold which I think was 60,000 USD/year+

The income threshold for filing is well below that. For single filers, is is generally below $20k. The threshold can be surprisingly low in some cases, like income from self-employment ($400/year).

But do I need to file my back taxes (including bank account info) for all those other years?

Probably.

If I do I'll have to use the streamlined procedure

Consider carefully if the streamlined procedure is the best option. The streamlined procedure requires filing the last three tax returns. This might be preferable if those tax return are ... complex. If the tax returns are simple, and result in no tax liability, then catching up on all missing returns may be an option as well.

 

[liseylis]

@stephendisraeli Thank you very much for the help! I was confused between the threshold to pay taxes and the threshold to file. Even though I probably earned 5K a year max, I guess I should still file.

.I was using "myexpattaxes" and they said if you have never filed taxes before, to use their 'streamlined' option where you enter tax and bank account info back to 2014. But it's quite expensive. And other websites (like 'expatfile') are cheaper, but they only allow you to file for 2020 and 2019. So I'm not sure what to do :/

 

[stephendisraeli]

@liseylis

I guess I should still file.

Filing is a good idea even if you technically do not have to do so. Once a return is filed, the statute of limitations starts running for the IRS to audit the return.

 

[jin86]

@liseylis Step 1: consult with someone who does expat taxes and pay them for their services rather than rely on a bunch of random people on a reddit thread. I use greenback tax as an expat, and it is money well spent. I'm sure that they have dealt with situations like yours before.

Don't forget your FBAR filing (if you have a balance over 10K USD in your foreign bank account) because the penalties on not filing this are not nice. Plus, when I filed this year I got my 'rona stimulus cash that more than paid for my tax filing.

Step 2: Once caught up with the IRS, keep up with this every year unless you take on a new citizenship AND renounce your US citizenship.

 

[five2one]

@jin86 Unless you are a multimillionaire with many exotic accounts, paying a company to file your FBAR is foolish.

Also, for simple returns with just earned income a simple online tax tool like H&R or Turbotax will be just as effective as an expat tax service, but will take a fraction of the time to file and cost a fraction of the price. Expat tax services can only be recommended for people with complex tax situations like PFICs or large transactions like house sales or inheritances. Most expats could probably fill out their 1040 and 2555 by hand in a single afternoon. I do not think OP will benefit at all from a service like Greenback Taxes.

 

[rhunette]

@liseylis You probably want to just file 2020 only and continue to file going forward. Your streamlined filing package is a waste of your time and money.

 

[lankyguy007]

@liseylis

But do I need to file my back taxes (including bank account info) for all those other years?

Technically... probably, but you were paid under the table. And a miniscule amount.... Is there any chance that bank statements are going to make their way back to the USA? What country is this anyway?

I would say that.. from the IRS's perspective you should retain that you've haven't had an income and so haven't been required to file.