# I need to file US Taxes and didn't know. What are my options?



## MBFin (May 4, 2020)

Hi Expat forums!

I've recently found out that I need to file taxes with US despite having been away for almost 9 years. I've been doing my research, but this issue seems complicated, so I could use a little reinforcement of my understanding.

My situation: I live in Finland. I'm married to a Finnish citizen with no ties to the US. I have not visited, earned money, or owned any assets in the US during this time (hence my confusion that I need to file taxes, but so it seems I do). I was attending university until mid-2018, with little to no personal income aside from government assistance given to all university students in Finland to pay for school. I do not own a business or any significant assets in Finland. I am not currently a dual-citizen, but was planning to start that process now that I'm out of school and in a decent job.

As I understand it, while my income was very low before this year (first year out of school and working), I should have been filing as "Married, filing separately". Therefore I should now be using the SOFP to get on track and avoid any issues.

I'm looking for advice on three issues:

1. The instructions for the 1040 indicate that "married, filing separately" means I'm not eligible to file earned income credit... does this mean the taxes I paid to finland will not be considered, and I must pay full US taxes on top of it?

2. It partially hinges on the answer to question 1, but what do I need to include in the SFOP package, in total? 1040's for this and the last 3 years... FBARs for up to 6 years? And EITC forms, if applicable to me, for each of those years? A simple list would be immensely.

3. Are there other options I'm unaware of?

Thanks for your help!


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## MBFin (May 4, 2020)

And perhaps one more: Is there an online service where I can have the SFOP handled by professionals? I saw something with H&R Block, I think, but it surely wasn't cheap and I'd like to know about others.


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## Bevdeforges (Nov 16, 2007)

Hi, and welcome to the "club" of those who just found out about the tax filing obligation for US citizens living overseas.

OK, there are a variety of options - everything from "just forget about it" to filing the Streamlined option and then continuing to file going forward. But to answer your questions:



> 1. The instructions for the 1040 indicate that "married, filing separately" means I'm not eligible to file earned income credit... does this mean the taxes I paid to finland will not be considered, and I must pay full US taxes on top of it?


Oh no - the earned income credit is a specific "refundable credit" (i.e. cash back from the government) but I think you have to have children to qualify. But in your situation, you're probably well advised to use the Foreign Earned Income Exclusion (FEIE) to simply "exclude" your earned income (i.e. salary or wages) and so bring your taxable income down to 0 (or just perhaps any bank interest you've received).

Your Finnish taxes only figure in if you elect to take the Foreign Tax Credit (FTC), which is a major PITA since you have to divide your income and the taxes you have paid into "active" and "passive." 


> 2. It partially hinges on the answer to question 1, but what do I need to include in the SFOP package, in total? 1040's for this and the last 3 years... FBARs for up to 6 years? And EITC forms, if applicable to me, for each of those years? A simple list would be immensely.


Generally speaking, you file the current year's tax return (at the moment, the 2019 return) and then you do the "package" of 3 prior years (2018, 2017 and 2016). Separately, you then do FBARs for 6 years back - FBARs have to be filed online and go to a separate agency.

These are the IRS instructions for the Streamlined program for overseas residents like yourself:
https://www.irs.gov/individuals/int...-taxpayers-residing-outside-the-united-states


> 3. Are there other options I'm unaware of?


If you plan on trying to claim the EITC, just be aware that that may very well "highlight" your filings to the IRS - i.e. tell them that you are only filing to get money back. Normally, you file your Streamlined returns and basically never hear anything back from them. A classic case of "no news is good news."


> Is there an online service where I can have the SFOP handled by professionals? I saw something with H&R Block, I think, but it surely wasn't cheap and I'd like to know about others.


I've seen ads online for a "flat rate" of $250 or so for a Streamlined filing, but that's well below the usual fees for tax preparation so I would be wary of the quality of the filing. In your situation, the forms ultimately are fairly simple to prepare yourself, including the "mea culpa statement" (form 14653). If you do it yourself, keep it simple and honest - i.e. "I didn't know I was supposed to file" - and don't offer too much gratuitous information about your situation. 

What you decide to do ultimately depends on whether or not you have financial (or other) ties back to the US. But there is always the option once you get a second nationality to pay up the $2350 fee, renounce your US nationality and just get on with life. Or just continue to float under the IRS radar if you prefer


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## 255 (Sep 8, 2018)

MBFin -- As usual, Bev has given you good answers. Just reading your e-mail though, make sure you need to file. There is a minimum income required to file. If you were in school, not working -- there is a good chance you'd be under the threshold for the years before you started working, full time. Therefore, there might not be any need to mess with the SFOP -- just file for 2019! There are also minimum overseas account values that require filing the FBAR. If you are a new graduate, with limited assets under your control; you may not be required to file the FBAR.

The IRS has everything you need to file your returns on their web-site: irs.gov including fillable forms (pdf.) You can easily do it yourself -- just fill in the forms, get your returns together and mail them in. The new CARE law also extended the due date -- so you're not even late!

Of course if you made more than the thresholds for either federal income tax filing or FBAR reporting, you will need to file and forget everything I posted. Good luck. Cheers, 255


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## Nononymous (Jul 12, 2011)

Yeah, I was going to say that as well. If you were going to school with minimal income, you may not have been required to file in the past. Similarly if your accounts never held more than $10,000 total balance, you were not required to file FBARs. In other words, it's possible that you've been secretly compliant all along, so no need for the Streamlined program.

A few years ago the income threshold for filing dropped to $5 (yes you read that correctly) for Married Filing Single status, but if you assume that the student benefit you received is not income, then you earned less than $5 and it's okay.

So if you assume (or just pretend) that you were not required to file in the past, you could just begin filing US tax returns now that you're working. The IRS is not likely to ask for previous years' returns, and would have no information available about your finances in any case. If you file FBARs make sure you discuss this with your spouse, as she may not wish to have any joint accounts included in the report. 

If you intend to obtain Finnish citizenship and have no plans of returning to the US, you can also continue to ignore these tax obligations. It's a popular option, and perfectly safe.

The biggest concern isn't the IRS but rather if banks limit services offered to you because of your US citizenship and birthplace. It may not be possible to hide your American identity (particularly if you are not a fluent Finnish speaker I imagine). Being identified may lead to FATCA reporting, once the numbers are high enough. The only cure for this is renunciation.

If you make long-term plans to stay in Finland you may also discover that ordinary retirement savings and investment schemes available to residents have negative US tax consequences. Your options then are to hobble yourself by tailoring your financial affairs to reduce the US tax burden, or to simply ignore the IRS and continue down the path of non-compliance (which you can safely do without renouncing).


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## MBFin (May 4, 2020)

I want to thank everyone who has provided this information, it's been both enlightening and reassuring. I've been using this social distancing time to take on extra work (remotely), and really had to keep my focus on my jobs this week... so I haven't said it before now. I will consider all of this advice before filing.

I very much appreciate it!


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## Nononymous (Jul 12, 2011)

My personal recommendation: 

1. Submit the non-filer form as "single" to collect your $1200. Use Transferwise if you don't have a US bank account, their multi-currency account is simple to set up and works for direct deposit from Uncle Sam. Further money may be on its way, who knows?

2. File nothing further with the IRS, ever.

3. Obtain your Finnish citizenship.

4. Renounce US citizenship if Finnish banks don't let you invest like a regular Finn.


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## Nononymous (Jul 12, 2011)

PS Step 1 is optional, but it's a nice way to finance step 4, if you choose to go that route. Steps 2 and 3 are very strongly recommended.


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