# US Citizen living in the UK, 9 years behind on Tax Returns



## Stace0618

Hello, I moved to the UK in 2008 to live with my husband (he's a UK citizen).
I moved at the age of 20 and having never had a job in the US, I have never had to submit a tax return and didn't realise that it was required even whilst living abroad.

During the process of looking at how to get my passport renewed, I learned of the requirement to submit a tax return if you earn somewhere around $10k+ a year.

This matter is slightly complicated by the fact that my husband, his family and I have a Florida vacation booked for March 2017. (I felt the need to renew my passport to give me plenty of valid time on my passport to be able to re-enter the UK after the vacation which will last 2 weeks.)

After plenty of panicking and lost sleep I'm now ready to deal with this head on. 

My initial thoughts were to get in touch with a company like "taxes for expats" and although there is a considerable cost, at least I would know that everything has been done correctly.

I'm also considering trying to sort it out myself, but I am rather hesitant as I'm worried about making a mistake and creating a bigger problem for myself, since I need to get my passport sorted and the UK's Biometric Resident Permit to replace the Indefinite leave to remain visa that is in my current passport.

So my questions are:

Am I correct on what I think I've read, that I only need to do the tax returns for the previous 3 years as a delinquent?

In this time sensitive situation, should I just bite the bullet and get involved with a professional/s?
If so, are there any companies that come well recommended for this sort of thing or for fair prices?

Am I making a mountain out of a molehill, is this something I can sort out myself?
If so which forms do I need to fill out and how do I go about submitting as quickly as possible?


I do earn enough now to have to submit but make far below the 95k/100k threshold and I do pay UK taxes on my earnings.
I have no savings in my name nor investments.
My husband does have some savings but they are only in his name as is the house that he has shared ownership of.

No matter which route I go down, I do plan to submit myself going forward so please include any relevant forms I need to be aware of and perhaps any good links you know of that would help in submitting whilst abroad. 


Thank you in advance for any help you can provide me and please ask any questions as I am bound to have left out some information.


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## Nononymous

I would not rush to do anything. Just renew your passport, then take your time deciding if or when you want to bother dealing with US taxes. If they haven't found you yet, they're not likely to find you anytime soon, so there's no rush. You won't owe anything so there's no penalty for being late.

One factor to consider is whether you ever plan on returning to the US. If so, you'll need to be compliant on taxes (for five years I think) in order to sponsor your husband for a green card.

Otherwise if it's peace of mind you're after, filing should be relatively simple - your income is under the FEIE - and you could probably do it yourself without any great difficulty. File taxes next year for 2016, and continue to do so going forward, or do the streamlined program (three years tax returns plus five years FinCEN forms if your total bank balances exceed $10k in a given year) if that makes you feel better. You can find most of what you need via IRS Publication 54 (I'm too lazy to find a link but it's an easy google).


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## iota2014

Stace0618 said:


> Hello, I moved to the UK in 2008 to live with my husband (he's a UK citizen).
> I moved at the age of 20 and having never had a job in the US, I have never had to submit a tax return and didn't realise that it was required even whilst living abroad.


Don't worry. Nine years is nothing to worry about. I've lived and worked and raised my family here for more than half a century, and never knew until last year that in theory I was supposed to be filing US tax returns all that time. 

Like you and many others, I panicked at first. Eventually, with the help of this and other forums, it all got sorted. My circumstances were simple, and from what you say, it sounds as if yours are even more straightforward. Have you had a go at filling in a "practice" 1040? I felt a lot better after I did this. It's tedious, but not very difficult when the circumstances are simple. Or you can download free/cheap software such as TurboTax to generate a 1040 so you can see which numbers go where. The software has its own learning curve though - personally I found it easier to work through the form for myself.

https://apps.irs.gov/app/picklist/l...ue=1040&criteria=formNumber&submitSearch=Find


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## Bevdeforges

I basically agree with everything Nononymous has said. To be quite blunt about it, I have never heard of any instance of someone being hauled away at passport control on entry to the US for "failure to file." The only way that could happen would be if the IRS had already tried contacting you and was looking for some significant amount of back taxes - which is not at all your case.

If you want to get caught up, you can do so under the Streamlined Compliance Procedures, as outlined here: https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures (you're obviously under the version for those residing outside the US).

Given that you most likely owe no back taxes (thanks to the FEIE - the $100K exclusion of earned income), it's really just a matter of filling out the paperwork and sending it in. I really wouldn't bother paying someone huge gobs of money to fill in a few forms for you. The tax guys are really for those who owe money and want to make sure they don't overpay.

Given the information you've given here, you're looking at filing a 1040 (long form), 2555 (to exclude your salary income) and Schedule B (if only to check the little box at the bottom of the page about foreign bank accounts). If your "foreign" bank accounts don't add up to $10,000 you don't need to worry about FBAR (also known as FinCEN these days). 

You can use a tax preparation software if you want to (though generally speaking the back year versions will cost you, even if the current year version is free to use) - but I find that learning how to work the software can take longer than just filling in the forms by hand (or filling in the fillable pdf version of the forms on your computer). 

If you need help, take a look at Publication 54 on the IRS site. (Most of the stuff in there does not apply to you, so don't get tied up in knots over the fancy stuff.) There is also Publication 17 for the basics (all the same info you'd get in one of the $25 "do your own taxes" books back in the States).

Just a hint: you should probably file as "married, filing separately" - although the filing threshold for that category is only $3500 or so. It's a bit less advantageous in several respects, but if all your income is from salary and thus excludable, it's the quickest way to go.

Give a shout if you need help but once you get used to the forms, you'll be able to whip out your tax return in about 20 minutes. And, as long as you owe nothing (as is apparently your case), there is no particular penalty for not filing. Actually, there are any number of legitimate reasons for not having filed in the past. You could easily just start filing now and going forward and not suffer any repercussions at all.
Cheers,
Bev


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## LC3622

Stace0618 said:


> Hello, I moved to the UK in 2008 to live with my husband (he's a UK citizen).
> I moved at the age of 20 and having never had a job in the US, I have never had to submit a tax return and didn't realise that it was required even whilst living abroad.
> 
> During the process of looking at how to get my passport renewed, I learned of the requirement to submit a tax return if you earn somewhere around $10k+ a year.
> 
> This matter is slightly complicated by the fact that my husband, his family and I have a Florida vacation booked for March 2017. (I felt the need to renew my passport to give me plenty of valid time on my passport to be able to re-enter the UK after the vacation which will last 2 weeks.)
> 
> After plenty of panicking and lost sleep I'm now ready to deal with this head on.
> 
> My initial thoughts were to get in touch with a company like "taxes for expats" and although there is a considerable cost, at least I would know that everything has been done correctly.
> 
> I'm also considering trying to sort it out myself, but I am rather hesitant as I'm worried about making a mistake and creating a bigger problem for myself, since I need to get my passport sorted and the UK's Biometric Resident Permit to replace the Indefinite leave to remain visa that is in my current passport.
> 
> So my questions are:
> 
> Am I correct on what I think I've read, that I only need to do the tax returns for the previous 3 years as a delinquent?
> 
> In this time sensitive situation, should I just bite the bullet and get involved with a professional/s?
> If so, are there any companies that come well recommended for this sort of thing or for fair prices?
> 
> Am I making a mountain out of a molehill, is this something I can sort out myself?
> If so which forms do I need to fill out and how do I go about submitting as quickly as possible?
> 
> 
> I do earn enough now to have to submit but make far below the 95k/100k threshold and I do pay UK taxes on my earnings.
> I have no savings in my name nor investments.
> My husband does have some savings but they are only in his name as is the house that he has shared ownership of.
> 
> No matter which route I go down, I do plan to submit myself going forward so please include any relevant forms I need to be aware of and perhaps any good links you know of that would help in submitting whilst abroad.
> 
> 
> Thank you in advance for any help you can provide me and please ask any questions as I am bound to have left out some information.


My experience is that all tax preparers/lawyers are extremely expensive and many are not that qualified to deal with complex issues (NRA spouse implications for the streamlined, foreign pension plans, etc). They are good with very simple 1040/2555 returns (basically, just salaries), but if the returns are a bit more complicated, the fees become too high. A phone consultation with a CPA is about USD 200-250+ per hour and if it is a tax attorney, some quoted as much as USD 800-1000 per hour. What US government does to its own citizens is simply criminal. I know US citizens who hate their country now because of the FATCA/citizenship taxation/reporting requirements.

They key issue with the streamlined program is the certification form which is very confusing. I read many articles prepared by tax attorneys who warn that simply stating "I did not know I have to file" is not good enough for IRS to accept the non willingness and the submission may go directly into audit. Whether IRS created the streamlined program just to collect penalties after rejecting the applications - remains to be seen. I would not be surprised with anything as the government is bankrupt. 

However, if your income is below FEIE and you do not have foreign accounts with balances of more than USD 10,000 in any year, I would not worry and just file the 1040/2555 tax returns pursuant to section 1.911-7(a)(2)(i)(D) for all years. This will allow you not to sign a very intimidating certification for the offshore streamlined. 

Unfortunately, my situation is a bit more complex (form 8938, which if filed late can incur penalties of up to USD 50,000 and housing exclusion as income in some years is slightly above FEIE), so I cannot do it; but if I didn't have it, I would file it with section 1.911-7(a)(2)(i)(D).


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## iota2014

lucenet said:


> They key issue with the streamlined program is the certification form which is very confusing.


For me, the problem with the streamlined certification form was the fact that it is based on the premise that the person filling it in is guilty of wrongdoing and has to prove on penalty of perjury that their wrongdoing was "nonwilful". Since I was not guilty of wrongdoing, either wilful or non-wilful, I wasn't willing to throw away my rights by signing the form.



> I read many articles prepared by tax attorneys who warn that simply stating "I did not know I have to file" is not good enough for IRS to accept the non willingness and the submission may go directly into audit.


I backfiled five years of FBARs, stating "Didn't know I had to file." No problems.



> Whether IRS created the streamlined program just to collect penalties after rejecting the applications - remains to be seen.


The IRS actually tells you that there's no need to enter Streamlined to backfile FBARs, if tax due = zero, as was the case for me and sounds likely to be the case for the OP.



> Taxpayers who do not need to use the OVDP or the Streamlined Filing Compliance Procedures to file delinquent or amended tax returns to report and pay additional tax, but who:
> 
> - have not filed one or more required international information returns,
> - have reasonable cause for not timely filing the information returns,
> - are not under a civil examination or a criminal investigation by the IRS, and
> - have not already been contacted by the IRS about the delinquent information returns
> 
> should file the delinquent information returns with a statement of all facts establishing reasonable cause for the failure to file.


https://www.irs.gov/individuals/int...onal-information-return-submission-procedures

And there's no need to enter Streamlined to backfile 1040s either, if tax due = zero, since there's no penalty.



> However, if your income is below FEIE and you do not have foreign accounts with balances of more than USD 10,000 in any year, I would not worry and just file the 1040/2555 tax returns pursuant to section 1.911-7(a)(2)(i)(D) for all years. This will allow you not to sign a very intimidating certification for the offshore streamlined.


Agreed. Intimidating and, worse, incriminating.


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## LC3622

iota2014 said:


> I backfiled five years of FBARs, stating "Didn't know I had to file." No problems.
> 
> 
> .


You only had FBARs not filed, but no issues with the tax returns themselves?


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## iota2014

lucenet said:


> You only had FBARs not filed, but no issues with the tax returns themselves?


After excluding non-US-taxable income (UK pensions), I was below the filing threshold.


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## Bevdeforges

OK, before you get all freaked out about the "incriminating language" and all of the Streamlined program, let me just make a couple comments.

Assuming you owe nothing, then there is no penalty for filing late, or even not filing at all. The one "advantage" of going through the motions of the Streamlined Program is that, once accepted, it shuts off any liabilities for the years prior to the 3 back years you filed. (Based on the principle that there is a 4 year statute of limitations on your tax returns as filed. However, there is no statute of limitations on any income you didn't declare at all on your tax returns.)

There is also no single "correct" way to file anyone's tax returns. In the US system, you have options and choices at just about every level of income that will affect how you report (or don't) specific items. As long as you file "in good faith" and don't leave off anything obvious that the IRS is aware of, your chances of being audited are extremely slim. (And an audit is just a review of your returns - it doesn't necessarily mean there is anything wrong.)

Things do get complicated if you have foreign (i.e. non-US) investments - if only due to the extra (excess?) reporting these may require. But it sounds as if this isn't your case.

Best approach - download the 2015 forms from the IRS site and try filling them in. Remember to "exclude" (on form 2555) your salary income, and just take your personal exemption plus the standard deduction and see if you wind up owing any tax. If, as I suspect, you don't then it's up to you whether to backfile the 3 years (under the Streamlined program or not) and then just go forth. Or just forget about the whole thing until you "need" to file - say, if you want to move back to the US with your husband, and need to show that you've filed the past 5 years in order to sponsor him for a visa.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Assuming you owe nothing, then there is no penalty for filing late, or even not filing at all. The one "advantage" of going through the motions of the Streamlined Program is that, once accepted, it shuts off any liabilities for the years prior to the 3 back years you filed. (Based on the principle that there is a 4 year statute of limitations on your tax returns as filed. However, there is no statute of limitations on any income you didn't declare at all on your tax returns.)


Indeed. I was able to exclude my pension income (not report it) because it was exempt under the UK-US Treaty and therefore not required to be reported. Earned income does have to be reported in order to claim the FEIE.



> Best approach - download the 2015 forms from the IRS site and try filling them in. Remember to "exclude" (on form 2555) your salary income, and just take your personal exemption plus the standard deduction and see if you wind up owing any tax. If, as I suspect, you don't then it's up to you whether to backfile the 3 years (under the Streamlined program or not) and then just go forth. Or just forget about the whole thing until you "need" to file - say, if you want to move back to the US with your husband, and need to show that you've filed the past 5 years in order to sponsor him for a visa.


Or if you aren't interested in returning to live in the US, you could renounce and never have to file again.


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## Bevdeforges

iota2014 said:


> Or if you aren't interested in returning to live in the US, you could renounce and never have to file again.


Though the price of so doing ($2350) seems a bit steep if your tax liability is already $0 and your returns only take 20 minutes a year to fill out and mail in.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Though the price of so doing ($2350) seems a bit steep if your tax liability is already $0 and your returns only take 20 minutes a year to fill out and mail in.
> Cheers,
> Bev


The pros and cons vary, depending on present circumstances and future plans. For me the advantages were:

- never having to file IRS forms again
- being able to open a new bank account
- being free to invest my modicum of cash as I see fit without having to worry about whether the IRS might decide to treat the investment as a PFIC
- being free to set up an educational trust for my grandchildren
- being free to open a joint account with another person, should I wish to do so, without having to report the account to the US Financial Crimes whatever
- liberation! 

The disadvantages were: 

- having to pay $2350 and 
- having to file one last form (+ FBARs). 

Fortunately, the $2350 has more than been repaid by the US Social Security pension which I now receive monthly as a serendipitous by-consequence of researching renunciation.


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## Bevdeforges

Though don't you have the full 30% withheld from that Social Security pension? For those of us more dependent on SS in retirement, that's another one of the trade-offs.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Though don't you have the full 30% withheld from that Social Security pension? For those of us more dependent on SS in retirement, that's another one of the trade-offs.
> Cheers,
> Bev


No. In the UK (not in every country) it's free of US tax. 90% is taxable by HMRC.


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## Bevdeforges

iota2014 said:


> No. In the UK (not in every country) it's free of US tax. 90% is taxable by HMRC.


OK - just goes to show how you have to think through the implications of each situation. Though in the OPs case, since she moved to the UK at age 20, having never held a job in the US, chances are she can skip any consideration of US SS benefits.
Cheers,
Bev


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## Stace0618

Thanks for all your help so far. Got to sit down with the hubby and look at the forms you suggested. Massive help, I'm sure there will be more questions along the way. 
Thanks again, a lot of worry off my mind.


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## celticweb

I think if one has lived a significant time abroad especially as in my case, their whole adult life, it was normal to not know of the requirement to file. It's totally ridiculous that one would leave the US years ago (or any country for that matter) and think that they need to have any involvement with that country at all unless they had some business interests there.

Regarding streamlined, a lot of tax accountant will insist on streamlined when getting caught up saying that is the way the IRS wants you to come into compliance. Having said this, my situation was not straight forward with just a wage but I did not fare badly at all in the streamlined. didn't even owe any tax in the end. 

also regarding the streamlined certificate, we did not write a long story for my statement, it was a one liner basically and was accepted. Makes me think that they don't even read the statements. Not saying that one should do the same as me, just letting people know what I did in case it helps.


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## celticweb

Also forgot to mention what I came on to say to the OP, that the other form that might be needed is the form 8965 health coverage exemptions
someone else may come along and say i am mistaken but one was filed with my returns from year 2014


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## Bevdeforges

celticweb said:


> Also forgot to mention what I came on to say to the OP, that the other form that might be needed is the form 8965 health coverage exemptions
> someone else may come along and say i am mistaken but one was filed with my returns from year 2014


Thanks for adding that - I always forget that form because I haven't had to file for the last couple of years and so haven't actually ever filled out that one.

Frankly, too, for all the discussion here and elsewhere, I have yet to hear of anyone being "denied" under the Streamlined program - at least if they owed no or very little tax. As far as the IRS is concerned, you could theoretically just be "late" in filing or perhaps you simply didn't have to file (for insufficient income, for example).
Cheers,
Bev


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## LC3622

celticweb said:


> I think if one has lived a significant time abroad especially as in my case, their whole adult life, it was normal to not know of the requirement to file. It's totally ridiculous that one would leave the US years ago (or any country for that matter) and think that they need to have any involvement with that country at all unless they had some business interests there.
> 
> Regarding streamlined, a lot of tax accountant will insist on streamlined when getting caught up saying that is the way the IRS wants you to come into compliance. Having said this, my situation was not straight forward with just a wage but I did not fare badly at all in the streamlined. didn't even owe any tax in the end.
> 
> also regarding the streamlined certificate, we did not write a long story for my statement, it was a one liner basically and was accepted. Makes me think that they don't even read the statements. Not saying that one should do the same as me, just letting people know what I did in case it helps.


when did you submit? they changed the certification form just recently and make it clear they want your "whole story".


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## celticweb

I filed May 2016 and yes it was the new streamlined forms. 

If one has never filed, it is a lot easier to explain briefly why. for example in my case born in the USA to UK parents on assignment in the USA, left the US at 13 years old (actually I was 12-1/2). basically we wrote these facts that I was born a dual citizen abroad and left at a young age and that I just became aware of the filing and fbar requirement. It is easy to see in this case that I had no reason of knowing the requirement to file living in the UK as a UK citizen with no contact to other Americans or American tax law 

But honestly unless you owe a lot of tax, i would not worry too much. There are so many people in this situation, trying to get compliant in streamlined but not guilty of evading taxes. Just write a true statement to the best of your ability.


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## celticweb

lucenet said:


> when did you submit? they changed the certification form just recently and make it clear they want your "whole story".


also to follow up on this from my response last night. if it helps, the accountant told me he had done 350 streamlined the same year as mine and none were rejected. 5 had queries but in the end the IRS agreed with the original return. so I don't think people are being rejected unless it is obvious they are a whale and don't belong in the program.

I think the purpose of insisting we come through using these programs is to compile data where the IRS can than brag how the programs are working. there was an article recently about how much the IRS collected through these programs. Quiet disclosure doesn't give them this data.


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## LC3622

celticweb said:


> also to follow up on this from my response last night. if it helps, the accountant told me he had done 350 streamlined the same year as mine and none were rejected. 5 had queries but in the end the IRS agreed with the original return. so I don't think people are being rejected unless it is obvious they are a whale and don't belong in the program.
> 
> I think the purpose of insisting we come through using these programs is to compile data where the IRS can than brag how the programs are working. there was an article recently about how much the IRS collected through these programs. Quiet disclosure doesn't give them this data.


Yes, I bet the accountant is very happy with all this mess with IRS  Once they see a US person, they know they are up for some big money as this is probably the worst and most complicated tax code in the world with a lot of loopholes and ambiguities (created , of course, on purpose). 

I think the purpose:

1) to collect data and information from people living abroad (who in my view should not be liable for US taxes if they do not live in the country and do not use any services)

2) to assess what can be collected in tax / penalties. Actually, let's say you do not owe any tax, but you did not file a FATCA form - IRS can still impose a penalty on you for not filing that particular form, i.e. you send a quiet disclosure, you do not owe tax - so, no penalties for not filing, but what about FATCA form, for example? 

3) to get as much facts as they can, so they can claim wilful in the court if they choose to penalise you for not filing/reject streamline eligibility. The prior form did not really allow them to do it as many people just said "I did not know".


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## celticweb

yes totally agree that we shouldn't be paying tax. and the accountants have a lot to answer for too because they are scaring innocent people. don't let that happen. 

If it wasn't for my sister telling me to wait to see if there is any law change with Trump, i would have been making plans to renounce. My sister married a very well off American and moved to California and is living the American dream there in sunny California in a very upmarket town so she sees a possibility of me retiring there when i am older to be near her so to keep my options open for now until i am absolutely certain Trump won't do anything. Maybe this is foolish but another year isn't going to hurt me since I am not subject to the exit tax. 

I think if they want to access you for penalties it was always the case even with the old form. with the new form, the reason is still the same. one didn't know. you just need to go into more detail but honestly i don't know your circumstances and I am not giving advise but if you answer truthfully and fit the program criteria, you should be fine. they are not letting you off the hook for anything, they want the tax due. it's just the penalty waiver for non-willful. don't think they will waste time and resources trying to prove non-willfulness with small fish. if you don't already have another citizenship, apply for one as soon as you are eligible as this starts you on the road to renunciation.


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## iota2014

IMO, quiet disclosure is good if a person has never before filed *from abroad* and owes no tax. Otherwise (if you can stomach the grovelling), Streamlined might be best. Horses for courses - whatever gives you peace of mind.

Interesting to note, from comments elsewhere, that the "FATCA initiative" has been shifted in the IRS budget to the category of "Strategic Revenue-Producing Initiatives (which do not have immediately measurable ROI, but clear long-term revenue effects)". 

That seems to me to suggest that long-term compliance/deterrence is probably now considered the main goal, rather than penalty-fishing.


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## LC3622

celticweb said:


> yes totally agree that we shouldn't be paying tax. and the accountants have a lot to answer for too because they are scaring innocent people. don't let that happen.
> 
> If it wasn't for my sister telling me to wait to see if there is any law change with Trump, i would have been making plans to renounce. My sister married a very well off American and moved to California and is living the American dream there in sunny California in a very upmarket town so she sees a possibility of me retiring there when i am older to be near her so to keep my options open for now until i am absolutely certain Trump won't do anything. Maybe this is foolish but another year isn't going to hurt me since I am not subject to the exit tax.
> 
> I think if they want to access you for penalties it was always the case even with the old form. with the new form, the reason is still the same. one didn't know. you just need to go into more detail but honestly i don't know your circumstances and I am not giving advise but if you answer truthfully and fit the program criteria, you should be fine. they are not letting you off the hook for anything, they want the tax due. it's just the penalty waiver for non-willful. don't think they will waste time and resources trying to prove non-willfulness with small fish. if you don't already have another citizenship, apply for one as soon as you are eligible as this starts you on the road to renunciation.


The accountants are just using the system to their advantage to maximise their profits. You can't blame them - it is a fair game in a capitalism market model  Yes, there are some scary articles by some accountants and tax lawyers - of course, they want to get business, but I cannot say they are really trying unnecessarily to scare you. The tax code is very ambiguous and complicated, more so for the people living abroad as they cannot really use many legal tax minimisation techniques available to the US residents (in theory they are available to all, but you cannot use mortgage deduction, 401k, IRA in many cases and so on). There is a significant uncertainty with the retirement plans, PFICs, etc. 

It is indeed better if anything sent to the IRS (especially the certification form) is reviewed by a professional. Yet, the cost of these professionals is extremely high and unless you have millions of hidden $$$, the compliance becomes too expensive even if you do not owe any tax.

If they choose to prove your wilfulness - they will use the certification statement against you. IRS can do anything and a small taxpayer is not protected. Even if you owe no tax, but they believe you are wilful - they can make a lot of money out of the penalties on a number of delinquent information returns (FATCA form, etc).


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## celticweb

the main reason I was given for using streamlined was to stop the clock for prior years. so file the 3 years and the current year, come into compliance and be off the hook for penalties and asking for prior tax returns before that period. i didn't owe tax and had very straight forward circumstances to prove non willfulness as technically I am an accidental American. born abroad to UK parents while they were working there. 

for others if they can quietly disclose i still think the outcome is going to be the same. no one is going to question for prior years too if the tax returns are presentable and without owing tax. and yes horses for courses, one needs to do what one feels more comfortable with.


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## LC3622

iota2014 said:


> IMO, quiet disclosure is good if a person has never before filed *from abroad* and owes no tax. Otherwise (if you can stomach the grovelling), Streamlined might be best. Horses for courses - whatever gives you peace of mind.
> 
> Interesting to note, from comments elsewhere, that the "FATCA initiative" has been shifted in the IRS budget to the category of "Strategic Revenue-Producing Initiatives (which do not have immediately measurable ROI, but clear long-term revenue effects)".
> 
> That seems to me to suggest that long-term compliance/deterrence is probably now considered the main goal, rather than penalty-fishing.


The sad thing is that both options do not give any peace of mind  

Example: One resides abroad for 10 years. Never filed tax returns because did not know / thought does not need to file as owes no income tax. Owes no income tax on any tax returns after taking FEIE, housing exclusion, standard deduction, personal exemption, etc. Zero tax liability. Technically, one can do a quiet disclosure under section 1.911-7(a)(2)(I)(d). However, here comes the FATCA form, which carries this:

Failure-To-File Penalty 

If you are required to file Form 8938 but do not file a complete and correct Form 8938 by the due date (including extensions), you may be subject to a penalty of $10,000. 

Continuing failure to file. If you do not file a correct and complete Form 8938 within 90 days after the IRS mails you a notice of the failure to file, you may be subject to an additional penalty of $10,000 for each 30-day period (or part of a period) during which you continue to fail to file Form 8938 after the 90-day period has expired. The maximum additional penalty for a continuing failure to file Form 8938 is $50,000. 

So, technically - if you do a quiet disclosure and owe no tax, they can get at least $10,000 for each year you are required to file.

Of course, they may or may not impose the penalty - but they are entitled to do so by their own instructions, so why in the world one would think they will not do it? IRS only goal is to collect as much tax as they can - why would they abandon $30,000 for 3 yrs filing if they can get them from a taxpayer? What makes you believe they will not exercise this? Nothing. Therefore, the specialists recommend going through the streamline procedures. 

This is just one example. Everyone's situation is different and there is a myriad of different forms, with most forms having a substantial penalties. 

You lose no matter what you do and I think the whole system is designed on purpose to create ambiguity, fear and collect as much as they can in taxes which should not have been paid in the first place.


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## LC3622

celticweb said:


> the main reason I was given for using streamlined was to stop the clock for prior years. so file the 3 years and the current year, come into compliance and be off the hook for penalties and asking for prior tax returns before that period. i didn't owe tax and had very straight forward circumstances to prove non willfulness as technically I am an accidental American. born abroad to UK parents while they were working there.
> 
> for others if they can quietly disclose i still think the outcome is going to be the same. no one is going to question for prior years too if the tax returns are presentable and without owing tax. and yes horses for courses, one needs to do what one feels more comfortable with.


Well, Accidental Americans are different. It is really scandalous that these people are affected at all. The US should have absolutely no business with these people, yet they try to collect money even from these people (who in many cases do not even have SS numbers). The whole thing is just unprecedented and out of control - I am not even sure it is legal from the international law perspective, but who will stand up against "the greatest democracy on earth"?


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## iota2014

lucenet said:


> IRS can do anything and a small taxpayer is not protected. Even if you owe no tax, but they believe you are wilful - they can make a lot of money out of the penalties on a number of delinquent information returns (FATCA form, etc).


No point making it worse than it is. The IRS does *not* have unlimited powers to enforce the collection of taxes on USCs living in the UK.

Some countries have "mutual assistance with tax collection" agreements with the US. The UK does not have such an agreement.


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## iota2014

lucenet said:


> ... technically - if you do a quiet disclosure and owe no tax, they can get at least $10,000 for each year you are required to file.
> 
> Of course, they may or may not impose the penalty - but they are entitled to do so by their own instructions, so why in the world one would think they will not do it? IRS only goal is to collect as much tax as they can - why would they abandon $30,000 for 3 yrs filing if they can get them from a taxpayer? What makes you believe they will not exercise this?


Too difficult to collect - provided the taxpayer has no US assets. And not a good way to encourage all those under-the-radar overseas taxpayers to come forward.



> Therefore, the specialists recommend going through the streamline procedures.


Indeedy. And the double-glazing specialists keep recommending I should replace my windows.


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## celticweb

lucenet said:


> Well, Accidental Americans are different. It is really scandalous that these people are affected at all. The US should have absolutely no business with these people, yet they try to collect money even from these people (who in many cases do not even have SS numbers). The whole thing is just unprecedented and out of control - I am not even sure it is legal from the international law perspective, but who will stand up against "the greatest democracy on earth"?


Yes I totally agree. I was really shocked when I first found out that I was in this situation at all. I don't even identify as an american. when asked my nationality, i always said British as I am from a completely British family. Just my sister and I were born abroad to UK parents working there. and I had to have my social security number looked up because I didn't have it to hand.

I used to see having dual citizenship as an asset. In fact even today many people (not US citizens) tell me how lucky I am have to dual citizenship. the biggest issue is the lack of education on the tax rules and the non enforcement in the past which produced a whole generation of people totally unaware of the rules. at least future generations will know now and plan accordingly. i don't see how they could not know in a Fatca world.


suddenly they decide to come after everyone but not just give people a nudge and educate, instead make it a full scale war against expats no matter the circumstances. But my health is more important. i will decide in 2017 after trump takes office what I will do. in the meantime i am not going to worry about all the stuff anymore.


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## LC3622

celticweb said:


> Yes I totally agree. I was really shocked when I first found out that I was in this situation at all. I don't even identify as an american. when asked my nationality, i always said British as I am from a completely British family. Just my sister and I were born abroad to UK parents working there. and I had to have my social security number looked up because I didn't have it to hand.
> 
> I used to see having dual citizenship as an asset. In fact even today many people (not US citizens) tell me how lucky I am have to dual citizenship. the biggest issue is the lack of education on the tax rules and the non enforcement in the past which produced a whole generation of people totally unaware of the rules. at least future generations will know now and plan accordingly. i don't see how they could not know in a Fatca world.
> 
> 
> suddenly they decide to come after everyone but not just give people a nudge and educate, instead make it a full scale war against expats no matter the circumstances. But my health is more important. i will decide in 2017 after trump takes office what I will do. in the meantime i am not going to worry about all the stuff anymore.


Well, that is the way IRS has been operating. Usually, you are innocent until proven guilty. Not in that court.


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## Bevdeforges

Although I agree in principle that US citizens living overseas shouldn't have to file as we now do, I do think you're making things worse than they really are.

Have you heard of ANYONE who has been assessed the $10,000 fine for failure to file a form 8938 if they came into compliance via the Streamlined Compliance procedure? (Actually, I believe if you read the instructions for the 8938 you'll find that if you do not have to file a tax return, you don't need to bother with the 8938.) Have you heard of anyone being fined for failure to file an FBAR if they either did not have to file income taxes, or had $0 tax due on the forms that were (or weren't) filed in prior years?

The IRS is seriously understaffed and underfunded, and has been for ages. They try to devote their time and efforts toward auditing and investigating taxpayers and tax returns where there is some indication of "easy pickings" - like obvious tax evasion or large offshore "investments" in dodgy schemes.

And even within Europe, if you are drawing "government" pensions (i.e. from the national pension program) from more than one country, chances are that the payments are being withheld at the source rather than being taxed in your country of residence. So there may be some logic for taxing income based on its source rather than strictly on residence of the recipient.
Cheers,
Bev


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## celticweb

The thing is even if they can't collect the debt, they have the ability to revoke your passport. Fbar fines could easily run up to thousands. That's why it is important to get another citizenship.
that's why i am only giving trump 3 to 6 months at most after he takes office to show some signs he intends to keep his promises in the GOP platform. otherwise i am out of it.

also i realised that i actually filed both ways, 2012-2014 through streamlined, 2015 on time and 2011 quiet disclosure. i had decided to renounce so needed another year so added the 2011 afterwards outside streamlined. no correspondence or problems under any method. however i was a zero owing taxpayer.


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## celticweb

also not trying to tell anyone they will get fbar penalties (I would think it is unlikely for the average tax payer just trying to come into compliance) just that it's best to protect yourself as much as possible with a second citizenship. if you intend to live permanently abroad or for a great length of time, this is a good strategy. it's also nice to be a full member of the country you live in.

when looking at submissions on the certificate (if the IRS even read them) it should be obvious to the IRS who they should possibly investigate further. these taxpayers could be doing things like having accounts in code names, not reporting them to their place of residence. things that are red flags. not your local checking account in your place of residence where tax is fully paid up every year.


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## iota2014

celticweb said:


> The thing is even if they can't collect the debt, they have the ability to revoke your passport.


IMO, they give themselves powers which they don't actually use unless they're confident they have enough evidence to go to court and win. Have they actually revoked any passports? I haven't heard of any.



> Fbar fines could easily run up to thousands.


Bear in mind the mitigation rules. 
https://www.lexisnexis.com/legalnew...hould-know-about-fbar-penalty-mitigation.aspx

And even those much less scary penalties seem to be brandished more than used. Don't let them ruin your sleep.


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## celticweb

Thanks iota and don't worry i am not losing any more sleep over this stuff. My fbars are all filed so hardly going to lose sleep. 

Just making a point that they do have the power to revoke passports if you owe a lot of tax or penalties but I believe they have to give you a summons of tax owing first and time to pay before they even take further action. if one is solely a US citizen, it is expected that they should be obeying US laws. If one is a dual citizen living in the country of their other citizenship, those laws should take precedence over US laws. we know they don't but that's how it should be. 

As we have been saying all along, one has to do what one is comfortable with. These laws are what we have to work with for now. I am not expecting that much positive change under Trump but it does make sense for me to see how the situation plays out for a little while.


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