Streamlined Offshore Disclosure: A Practical Guide for Canadians with U.S. Tax Obligations 

Unlike Canada, the United States generally taxes based on citizenship rather than residence. As a result, U.S. citizens and most Green Card holders have annual U.S. tax filing obligations even if they have lived in Canada for decades and have not earned any U.S.-source income.

A surprising number of Canadians discover they were supposed to file U.S. tax returns after either leaving the U.S. years or learning that they have U.S. citizenship at birth. Many assumed they only needed to file Canadian tax returns and some are even told that they don’t need to file taxes in the United States if they don’t live there or don’t have any US source income. However that is not true.

Non-US persons who find out they missed filing US tax returns ask: “Am I in trouble with the IRS?” In many cases, the answer is no, if corrective steps are taken as soon as possible.

The IRS recognizes that many people living outside of the US are simply unaware of their filing obligations and to address this, the Streamlined Foreign Offshore Procedures were created (also known as the Streamlined Program). This is a practical way for a non-US person who has fallen behind on their U.S. filings to catch up on missed US tax filings.

By that point, the concern is not usually the tax owing itself. It is the possibility of penalties on missed reporting forms (which can be as high as $10,000 USD per form per year).

What Is the Streamlined Program?

The Streamlined Foreign Offshore Procedures allow eligible taxpayers living outside the United States to become compliant with their U.S. filing obligations.

The program requires:

• Three years of U.S. income tax returns
• Six years of FBAR filings
• A certification (IRS Form 14653) explaining why the filings were missed

Provided that the failure to file was non-willful, the IRS generally does not impose penalties. Under IRS standards, non-willful conduct is conduct that is due to negligence, inadvertence, or mistake, or conduct that is the result of a good faith misunderstanding of the requirements of the law. Your narrative on Form 14653 must provide specific facts that support this conclusion.

Also, it is important to note that while penalties are waived, income taxes and statutory interest are still due. Interest is calculated from the original due date of each return until the date the tax is paid in full. All tax and interest must be remitted at the time the Streamlined submission is filed.

A Common Canadian Example

We often see taxpayers who left the United States many years ago and built their lives in Canada.

They have Canadian employment income, Canadian bank accounts, and investment portfolios. They file Canadian tax returns every year and may not have any ongoing connection to the United States other than citizenship.

Then a question comes up during financial planning, estate planning, or a banking review, and they discover that U.S. filings were still needed.

What Must Be Filed?

A Streamlined submission generally includes three components.

Three Years of U.S. Income Tax Returns

You must file complete U.S. tax returns for the most recent three tax years for which the U.S. tax return due date has passed. As of August 2026, this typically includes the 2023, 2024, and 2025 tax years, if the 2025 tax return filing was not extended.

Depending on your situation, additional international information forms may be needed, including:

• Form 8938 (Specified Foreign Financial Assets)
• Form 8621 (PFIC reporting for Canadian mutual funds and ETFs)
• Form 5471 (Foreign corporations)

Six Years of FBARs

You must electronically file FinCEN Form 114 (FBAR) for the most recent six years if the aggregate value of your non-U.S. financial accounts exceeded USD $10,000 at any point during the year. These accounts may include Canadian bank accounts, investment accounts, joint accounts, and certain registered plans.

Form 14653

Form 14653 is a signed certification explaining why the filing obligations were missed.

This is one of the most important parts of the submission. The explanation should clearly describe the facts that led to non-compliance and demonstrate that the failure to file was not intentional.

The form also tests the residency status and requirements to be eligible to file under the Streamlined Foreign Offshore Procedures. The Form 14653 and the program are designed for the U.S. person living outside of the U.S.

Therefore, it will ask U.S. citizens or “green card holders” whether, in any one or more of the most recent three years for which the U.S. tax return due date has passed, you (1) did not have a U.S. abode and (2) were physically outside the United States for at least 330 full days. Maintaining a temporary dwelling in the U.S. does not necessarily mean you have a U.S. abode, but this is a fact-specific determination.

Final Thoughts

Finding out that you’ve missed filing US returns and forms can be very stressful. Most people immediately assume they face large penalties or significant tax liabilities, then are scared away from seeking help. In practice, that is not always the case.

The Streamlined Foreign Offshore Procedures are available to help US taxpayers living abroad correct past filing issues and become compliant. For many Canadians, the process is manageable once the filing requirements are identified and addressed properly.

The most crucial step is usually not waiting. The sooner the issue is reviewed, the easier it is to determine what needs to be filed and whether the Streamlined Program remains available.

Lastly, Taxpayers should avoid ‘quiet disclosures,’ which involve filing delinquent or amended returns outside of the formal Streamlined Program. The IRS identifies these filings and may subject taxpayers to the full suite of civil penalties and potential audits if the disclosure is not made through official channels.

Still Have Questions About Streamlined Offshore Disclosure?

If you have questions about overdue U.S. tax filings, your eligibility for the Streamlined Foreign Offshore Procedures, or what may be required to bring your U.S. tax filings up to date, please contact one of our Manning Elliott U.S. tax experts.

For more insights and updates on Canadian and U.S. tax matters, visit our latest blogs and articles.

NOTE: Tax laws are complex and subject to frequent change. The contents of this Manning Elliott article are provided for general informational purposes only and are not intended to constitute legal or tax advice. Please consult your tax adviser regarding your specific circumstances before taking any action based on the information discussed in this article.