Scrolling through social media, it’s easy to come across posts offering incorrect expat tax advice. Given how often we receive misguided driving directions from strangers, relying on social media tax guidance can be just as risky—especially when one-size-fits-all advice can never fully address individual circumstances. Expatriate tax law and filing requirements is full of nuances that a brief social media post can’t possibly capture.

It also doesn’t take long to stumble upon posts advising Americans abroad to avoid filing taxes altogether and to “stay off the radar,” suggesting that filing taxes is where the trouble starts. But if you keep scrolling, you’ll also come across expats sharing personal experiences and cautionary tales of bad advice and missed opportunities. The IRS repeatedly warns taxpayers to be cautious and avoid relying on guidance from unqualified sources and IRS Commissioner Danny Werfel recently confirmed “bad tax advice on social media continues to grow, luring unsuspecting taxpayers.”

Some posts are created to stir controversy and attract followers, not to provide solid tax guidance. Following reckless advice that encourages neglecting U.S. tax obligations can lead to serious, long-term consequences. Unless you’re fully prepared to deal with the repercussions, it’s best to ignore such advice and stay informed.

There are many compelling reasons to remain tax compliant. If you’ve fallen behind on filing, may we suggest that you make this year the year you get back on track.

Don’t Assume You’re Exempt from Filing

You can no longer stay off the Internal Revenue Service’s radar and it’s not advisable to try. Major life events—such as marriage, a job transfer, a death in the family, the death of a loved one, children planning to study in the U.S., a divorce, or the sale of a home—can significantly alter your financial and tax situation. Failing to recognize and plan for these possibilities can lead to unexpected and potentially costly consequences.

You might think that, in your specific situation, you don’t have a filing obligation. However, the reality is that most Americans must file annually, regardless of where they live, whether they pay taxes to a foreign government, or what tax treaties exist between their country of residence and the U.S.

While you may be an exception, it’s important to note that you could have other significant reporting requirements. These could arise from foreign accounts, ownership of a foreign company, participation in a foreign trust, or even receiving a substantial gift from a nonresident. Missing these reporting obligations can lead to hefty penalties.

If you haven’t been staying on top of your tax obligations, now is the time to get informed and tax action.  There are strong reasons to voluntarily come into compliance—ensuring that you avoid potential penalties and gain full control of your tax situation. We’re here to help!

Key Reasons Tax Compliance is the Smart Choice

1. Unpaid Taxes Can Cost You Your U.S. Passport

Your U.S. passport is your gateway to exploring the world, and as a U.S. expat, the U.S. passport’s importance is amplified.    

Imagine this—you’ve spent a few years living abroad, embracing the digital nomad lifestyle, and immersing yourself in new adventures in your home away from home. You’ve mastered the art of living overseas, and now, you’re planning a trip back to the U.S. to reconnect with family and friends. Then, to your shock, you discover at customs that your passport has been revoked. It sounds like a fictional nightmare or an exaggerated warning, but it’s a reality that many U.S. expats have faced — and one you’ll certainly want to avoid.

While the IRS can’t directly seize your passport, they can collaborate with the State Department to restrict or revoke your passport if you have an outstanding tax debt of $62,000 or more. That amount excessive, but keep in mind that it includes interest and penalties. The IRS calculates tax liability based on the most conservative filing status, disregarding potential expatriate concessions like the foreign tax credit or Foreign Earned Income Exclusion (FEIE). Years of missed tax filings can push your outstanding debt beyond that threshold very quickly.    

The IRS does issue multiple warnings, and the revocation only occurs after a taxpayer has ignored these repeated notices. The IRS will send a letter to the address they have on file, which if you haven’t filed in years is likely outdated. Even if your address is current, international mail can be unreliable. While these letters are on their way, the IRS is legally obligated to certify taxpayers with seriously delinquent tax debts to the State Department and once certified, the State Department is generally prohibited from issuing or renewing your passport. They can also restrict your international travel or revoke a current passport. 

For taxpayers with certified tax debts overseas, the State Department may issue a limited-validity passport, essentially a temporary passport which is only good for a return trip to the U.S. Not an ideal situation if your life and work is entirely now located abroad.  

2. Minimize the Risk of Fines from Late or Missing Forms

As mentioned earlier, even if you don’t owe any taxes, you may still have reporting obligations and need to file the appropriate paperwork. Failing to file certain informational forms can result in significant penalties. These forms include:

• The Foreign Bank Account Report (FBAR)
• FATCA Form 8938 – Statement of Specified Foreign Financial Assets
• Form 3520 – Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts
• Form 5471 – Information Return of U.S. Persons with Respect to Certain Foreign Corporations.

These forms are required to disclose foreign assets, financial accounts, and interests in foreign corporations. The penalty for late filing or failure to file these forms can be $10,000 per form, even if you do not owe any U.S. taxes.  

Let’s do some quick math: Remember the $64,000 threshold for outstanding tax debt? If you’ve been living abroad for years and haven’t filed a tax return since moving, unpaid taxes can quickly pile up.  Add in yearly penalties of $10,000 or more for failing to file returns or other required forms, and the $64,000 doesn’t seem too far out of reach.  

The FBAR – The Most Commonly Overlooked and Misunderstood Reporting Obligation

Most Americans living abroad have financial accounts (such as banking, pension, investment, etc.) located outside of the U.S.  Simply having these accounts triggers a reporting requirement if the combined value of all foreign accounts exceeds $10,000 at any point during the calendar year. This threshold has remained unchanged for over fifty years and affects many Americans due to its relatively low reporting limit. Penalties for missing or late filings of the FBAR are severe. Under the statute of limitations for FBAR, the IRS has the authority to impose penalties for up to six years of noncompliance.

3. Noncompliance can Impact a Spouse’s Green Card Application

When a nonresident spouse is applying for permanent residence based on marriage to a U.S. citizen or permanent resident, they must prove that their marriage is bona fide. Noncompliance with U.S. tax obligations can delay or even prevent this process. The U.S. Citizenship and Immigration Services (USCIS) will request U.S. tax returns from the sponsoring spouse; to prove they meet the financial requirements to sponsor the spouse seeking a green card. If the sponsoring spouse has not filed their tax returns, they’ll need to catch up on any overdue filings or provide an exemption letter stating their income was below the filing threshold.

If you decide to go the route of an exemption letter, it’s important to make sure it aligns with the tax laws and accurately reflects your situation for the years you truly didn’t need to file taxes.

To avoid potential issues, it’s best to check with a professional. Married taxpayers who file separately from their nonresident spouses have an unusually low-income threshold of just $5 which triggers a filing requirement. This low filing threshold often catches many of our clients by surprise, so we highly recommend you confirm you qualify for the exemption  before you submit an exemption letter,

Shorten Your Learning Curve – Avoid Costly Lessons

Instead of relying on ill-informed influencers on social media, a better option for taxpayers is to educate themselves and work with a professional. You can steer clear of tax pitfalls by knowing what they are, where to look, and whom to trust for guidance. Take a shortcut to success—get caught up on your taxes and learn from the mistakes of others.

1. Retirement Savings Drained

After living and paying taxes in Portugal, a retired couple received a notice from the IRS regarding missing tax filings. Unfortunately, they hadn’t filed for over a decade, mistakenly thinking they did not have to file because they were under a “threshold”. As a result, they faced significant penalties and interest charges, which accumulated into several hundred thousand dollars. This unexpected financial burden led them to sell their home and deplete much of their retirement savings.

2. Denied U.S. Entry

After working in the U.S. for many years, an Indian national became a naturalized U.S. citizen. She moved back to India to care for her aging parents but did not file taxes while she was away. While in India, the IRS issued a demand notice for unpaid taxes, interest, and penalties, which she could not pay. The State Department restricted her international travel, and she could not enter the U.S. to work or to visit her children and grandchildren.  

3. Delayed Green Card – Married Couple Separated

An American born overseas was presented with a promotion of a lifetime and accepted a C-Suite position in the U.S. However, he was unaware of that his past noncompliance could impact his spouse’s green card application. Now, he is faced with the challenging task of gathering the necessary information to catch up on his outstanding tax filings, including complex foreign asset reporting, information filings due to gifts received from his nonresident spouse and his ownership interest in a foreign corporation. Meanwhile, the couple has been living apart for over six months, adding to the stress of the situation

Done Talking Tax with Strangers? Let Us Help

These situations highlight how a lack of awareness about U.S. tax requirements combined with widespread misinformation can lead to heartbreaking situations. The good news? Now you are informed!

If you were genuinely unaware of your filing obligations, there is a way to catch up voluntarily and penalty-free if you qualify for the IRS Streamlined Filing Offshore Compliance Procedures. And even if you don’t qualify for this program, you still have options. But don’t wait too long, as tax amnesty programs can change and if the IRS contacts you about your tax delinquency first, you may lose the opportunity to participate in any tax amnesty program.

This is a lot to unpack and navigating it alone can feel overwhelming. Create an account and set up a free consultation today.  Talk to one of our Expat tax advisors in the dedicated Expatriate Tax Services group at H&R Block. We’re are not strangers; we’re a trusted brand, and we’re looking forward to helping you get back on track.