# Confusing expat situation due to Triple Citizenship. How to proceed with tax returns?



## Flight

Hello everyone, I would like to explain my current situation and see if anyone who has more knowledge than me on the subject can guide me please.

I'm a bit worried because I don't think many other people are in the same position as me, as most expats either hold just one passport (a U.S. passport), or, hold dual citizenship and live in the country where they hold dual citizenship (for example U.S. and German national, lives in Germany). Thats quite simplified as compared to me. I hold 3 nationalities, and live/have permanent residence status in a fourth country.

My citizenships:

1. Chile (I was born there)
2. United States of America (citizen at birth because both parents born there)
3. Germany (citizen at birth, long story, but I have a very mixed family background) 

And, 

4. Spain (country of residence, not as a citizen but as a permanent resident)

I have no clue if the above information is relevant or not to the IRS. But obviously it is not very common.

I am 28. I lived in the U.S. only as a child and ever since have lived abroad, I have never worked in the U.S. either, however I do have a social security number. I have only been working for about 4 years but I have never filed U.S. tax returns.

I have no intention of living in the U.S. again, however due to my current job, I am a flight attendant and only operate regional European flights, but I would like to transfer next year to Long Haul flights which operate to the U.S. which would mean entering the U.S. and leaving about 10 times a month. I do not want any problems with customs every time I enter the U.S., or, even if I never have problems, I would like to avoid them when renewing my passport. 

I have been reading about an amnesty program called "Streamlined foreign offshore procedures" to catch up on non filed tax returns without fear of penalties. One of the requirements say that you have to have been outside of the U.S. for at least 330 days during at least one of the last 3 years. Does that mean that if before I do my tax returns, I start flying in and out of the U.S., I forfeit my benefit to use this and that I should wait until after doing this to apply to U.S. bound flights?

Reading on the subject, people talk about money being retained and severe penalties for not filing, honestly, I am someone who makes 1.8K a month, I am far from owing taxes, my problem is not having filed. Can I still be exposed to these severe penalties?

Honestly, I guess that if I never decide to voluntarily do this, it would be very difficult to find myself in a situation where the IRS could contact me abroad because in Spain, all my residence and legal papers have me as a German National, and any papers I fill out (banks, employment contracts, etc.) appear this way. I don't even have a U.S. birthplace. Everything appears as "Spanish resident, Nationality Germany, Place of birth Chile." No where does the U.S. citizenship appear. However, I prefer just being honest and going through all of this to avoid any problems especially thinking about flying to the U.S. or when renewing passport. And, based on what I have read, if you earn less than 100K a year (I earn just above 20K), you won't have to pay taxes just declare what you earn, and I have no problem with that, I prefer to be completely stress free about this subject.

So after reading my long story, I guess I have the following main concerns which I would appreciate any and all answers to:

1. Will things be complicated because of my 3 nationalities plus living in a fourth country registered here in the immigrant offices as a german national and not as a U.S. national. (Inside of the E.U., if you hold another European nationality it is much easier to register and get your residency than by doing so as a non-European.)

2. How can I file my returns for the first time? Especially not having done so before. I am clueless on how I can do it myself, I'm certain I will not do it 100% properly as I don't have the knowledge I would much rather pay an expert to do it for me, I think it would be a CPA. I have researched on google and I have not found any professional in the Barcelona area where I can set up an appointment and physically go to his/her offices. I guess the other option is to contact one online but in this case I would only like to do so if I can obtain some strong recommendations because I do not trust giving info such as Social Security number, passport number, bank account numbers, etc. To anyone I am not personally meeting and I can trust 100%. 

3. If I do decide to do it via contacting a professional via the internet, can anyone guide me though how it actually works. I guess this person has an initial contact with me where I explain my situation, I then forward this person the tax returns for the last few years from the countries I've lived and worked at, and then do a money transfer to pay for the services. I would like an idea of how much these services usually cost. I won't end up paying taxes that for sure because I have been working for 4 years, the first 2 years I only made 2K (I lived with my parents so I had no need to work), and the last two years around 20K a year. So I guess the only thing I will be paying is the professional services of doing it for the first time, and then, the following years. 

4. I did not register to selective services before 26. This might be a whole different topic, but does it have anything to do with this one, or when I need to renew my passport 2 years from now? 

I've made an extremely long post. I'm sorry for consuming so much time reading.

Thank you.


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## Bevdeforges

OK - in reality your situation isn't really all that complicated. It's only the US that attempts to tax its citizens wherever they live. (Well, unless you had Eritrean nationality, too, but I don't see that one listed amongst your citizenships <g>)

To your specific questions:


> 1. Will things be complicated because of my 3 nationalities plus living in a fourth country registered here in the immigrant offices as a german national and not as a U.S. national. (Inside of the E.U., if you hold another European nationality it is much easier to register and get your residency than by doing so as a non-European.).


Not really. Your German nationality gives you the right to live and work anywhere you want to in the EU. Period.

2. (won't reproduce the text here). If you go to the IRS website, you can download all the forms and instructions you want - if only to get an idea what's involved in the filing process. Unless you have somewhat complex financial arrangements, it should be possible to do your filings yourself - either on paper or using one of the online tax preparation programs (TaxAct, Turbotax, etc.). Of course you can find a local tax preparer who can do US returns, but be careful - they can be expensive and there aren't really any "standards" to protect you from the sharks. It does seem kind of a shame to spend several hundreds or thousands of $$$ to file returns only to "prove" you owe nothing, which is likely to be the case if your main source of income is your salary from a job.

3. Oddly enough, getting your US returns prepared has nothing at all to do with any returns you may have filed elsewhere - unless you elect to take the Foreign Tax Credit rather than simply excluding your "earned income" (i.e. salary) via the Foreign Earned Income Exclusion. The taxable and reportable amounts can vary greatly from one country to the next, so the returns or declarations filed are of limited value.

What most tax preparers do is to provide you with a standardized questionnaire (sometimes a whole booklet) that you need to fill out, providing supporting documents where asked to do so. It's from that questionnaire that the preparer will prepare your returns. Among the questions will be those asking you which options you prefer - like the FEIE vs. FTC - so it's handy to have skimmed through some of the IRS instruction material. https://www.irs.gov/uac/about-publication-54 is a good place to start. And you should check the "filing thresholds" because for those first two years, you probably have no filing obligation. For a single person, you don't need to file until your worldwide income exceeds about $10,000.

4. Don't worry about not having registered for Selective Service or not having filed your taxes the last few years. Not, at least, for renewing your passport or entering and leaving the US on your US passport. There are LOTS of legitimate reasons not to have filed taxes - and the State Department and IRS are not allowed to share records, unless someone has put out a warrant for your arrest (and if the IRS had done so, you'd definitely know about it). You may want to contact the local US Consulate to ask about the Selective Service registration. They may be able to handle that for you - but it's mostly a formality these days, given that there is no draft in the US.

Cheers,
Bev


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## iota2014

First question: do you travel on a US passport?

If the answer is no, then I would suggest you think carefully before entering the US tax system. 

If the answer is yes, and you want to continue doing so, then I would suggest you just start filing your returns and filing your FBARs. Or, if you prefer, you could backfile returns and FBARs for the four years you've worked.

It doesn't sound worth your while to go through Streamlined, since you reckon you owe no tax.


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## Flight

Hi, answering your question I travel on all 3 of my passports depending on the country that I am going to.

Since I am a flight attendant based in Europe, my job requires me to use my German passport because that is the nationality reflected on my European Cabin Crew License, and since I am employeed with the airline as such, all legal papers such as one called the General Decleration which is basically a paper given at customs to agents reflecting the data of the nationalities, passport numbers, and birthdates of the crew. (This example if I am entering/leaving the Schengen area as an active crew member.)

Another example is if my airline positions me to work in the U.K. For a few days, this is called a Layover, I will be entering not as an active crew member, but as a passenger, I enter customs as a German national as well. (Again, i'm inside Europe, it's easier this way since all my legal documents for residency and employment only reflect this nationality, I am not going to confuse them unnecesserily using a different passport.)

Now, if I am visiting family in Chile. I will enter Chile with a Chilean passport.

If I visit the U.S. I most definately enter and leave the U.S. with the U.S. passport. The last time I entered was to visit family in Puerto Rico about 5 years ago. 

If I visit any other country as a tourist (not as an active cabin crew), I will use out of the three passports the one that most benefits me visa wise.


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## iota2014

That's a lot of passports. 

If you want to simplify it, you could consider renouncing your US citizenship, which would also free you of US tax filing. It's easy (file for five years, then renounce) but expensive ($2350).

The other thing you need to be aware of is the cross-border bank account reporting regimes - FATCA (affects US citizens who have accounts outside the US) and CRS (affects just about everybody else, if they have an account in one country (e.g. Germany) and are tax-resident in another (e.g. Spain).


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## Flight

Thank you for this information. I guess I can go to the IRS website as you say, in all honesty I am just very nervous because taxes and finances is not in my area of expertise, and I can get very confused due to all the complex wording. And no, I believe I do not have any complex financial arrangements in the sense that I have had low incomes. I guess the only thing complicated is the fact that two of the years that I have worked have been in Chile, and the other 2 here in Spain. So I'm "mixing" countries.

In Chile I was self employeed. But since I lived with my parents I did not do too much, it was an attempt at just trying things out. I totaled an income of about 2K for the first year, and 2K for the second year. Having been registered in Chile as self employeed and filing my tax returns there as such I don't know if I can benefit from the not having filing obligations. I've thought about not mentioning this, and just starting to file based on my last two years earing a salary, but since it was earned as self employeed and not salary wise through an employer I don't know if that changes anything.

Here in Spain I have been working for 2 years. Now on a salary employeed by the airline with an income of around 20-24K a year. 

Using one of the online tax preparation programs you mention without going through a local tax preparer is one of the options I have thought about. So is it possible to do this for the 4 years I have worked? Is this something I can do in the next following days, or do I have to wait until next year until the next tax return period is open.

Now that you also mention the U.S. consulate. In the two years I have been living here I have not gone to the consulate/embassy in Spain to let them know I live here, and update my permanent address. The last permanent address they are aware of is my parents home in Chile, which was where I was living last time I renewed my passport. Is this something I should do before filing the tax returns?

Thank you.


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## Flight

Thanks Iota, 

I am aware of the FATCA, I have two bank accounts. One in Chile, one in Spain. The Chilean one was opened more than 10 years ago and whenever I deal with them they have never asked if I hold a U.S. citizenship. 

The Spanish one has been opened since I started working here, again, the only nationality reflected there is my German one. Curiously though, two weeks ago I went to the bank and they stated they where doing an update on all of the clients most recent information. They asked me if I was a U.S. Resident Green Card Holder. I said NO. Because literally speaking, I am not a green card holder rather a Citizen. No other questions where asked regarding this, if they would have directly asked if I was a U.S. Citizen I would have said yes. Now I don't know if I made a mistake by saying no, because once I do my U.S. tax returns I will have to state this bank account, but this bank account is not forwarding information on me through FATCA having said no. I'm sure implicitly what the bank was really asking me was "Are you a U.S. green card holder, OR, citizen." For FATCA purposes. Otherwise, there is no reason why they would want this information. 

So I'm sure that at least right now no info is being forwarded to the IRS regarding those bank accounts as in their eyes I have no relation with the U.S. of course once I start filing this will change. 


I


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## iota2014

Up to you, but telling the banks of your US citizenship is no harm to you, since you're going to file. If you don't tell them now, and it comes out later, it could cause trouble for the bank. In your place, I would tell them. They'll ask you to sign a W-9, that's all.

The bank in Spain might have been doing CRS due diligence, which might well explain why they asked you only about a Green Card. You'll presumably have no US indicia, not having been born there, so the citizen question would not be triggered.


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## celticweb

I would consider renouncing your US citizenship if you never plan to live in the US. As a flight pilot, it can cause you problems entering the tax system and doing flights to the USA. I would stay off the radar or file to renounce. 

I remember seeing an article somewhere once about the nightmare for US person flight pilots having to record time spend over US airspace. so I searched and managed to find the article
IRS nightmares: My tax return is 'insane' - Jul. 1, 2014

If you do take up the long haul flights to the US this could be a headache if you want to follow the rules to the letter. which rarely is possible to do and live a normal life at the same time. Not sure how accurate this article is even or if US citizen pilots even calculate this nonsense, nothing is ever straight forward.

Renounce now while you can before starting any long haul flights. You have EU passport anyway that gains you entry to US without having to apply for a Visa.

You should be able to file yourself. i managed to file the last two years myself, had the streamlined done by an accountant, used those 3 years as a guide to file myself the last two remaining years before renouncing. i didn't use any tax preparation software. I am good at maths, downloaded the forms and manually entered it all. checked and double checked the figures 10 times. hypothetically ran the figures through turbo tax that confirmed i had done everything correctly. it's is definitely possible to file yourself and my circumstances were no where near as straight forward as yours appear.


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## celticweb

also you did mention about being a flight attendant, sorry i put pilot, but the article seems to imply that anyone that works abroad a plane/boat is subject to this.


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## iota2014

The CNN article seems to be more or less correct. The IRS says (at https://www.irs.gov/businesses/u-s-...ervices-in-foreign-and-international-airspace)



> If you are a flight crew member performing services on international flights, your earned income will need to be apportioned between the:
> 
> Income earned in a foreign country (or countries), including the country’s airspace and territorial waters, and
> 
> Income earned in other than a foreign country.
> 
> Only the portion of income earned for services provided in or over a foreign country is eligible for the foreign earned income exclusion.
> 
> Example:
> A U.S. citizen flight crew member based at an airport in France mostly works roundtrip flights from France to the United States. When working these roundtrip flights, the aircraft flight path generally crosses France, Spain, and Portugal before crossing international waters and entering U.S. airspace. Income earned for providing services in France prior to departure and while flying in French, Spanish and Portuguese airspace is foreign earned income. Income earned for services provided while the aircraft is flying over international waters, in U.S. airspace, and on the ground in the United States is not foreign earned income.
> 
> *Computing the Amount of Foreign Earned Income*
> 
> A flight crew member’s earned income is based, in large part, on the services performed from the time the aircraft starts moving away from the gate for departure (“block out” time) until the time the aircraft stops at the gate upon arrival (“block in” time). While the crew member’s earned income is generally computed by the airline based on the actual flight or block time, all of the time spent providing required services (pre-flight, flight, post flight time, training, and other required services) must be taken into account when allocating earned income to the location where they were earned. Time basis is the method for allocating earned income between “foreign” and “other”.
> 
> Thus, if you are a flight crew member on international flights, you should be keeping as accurate a record of your hours of service as is possible. In order to compute the amount of your foreign earned income, you will need to compare your time for services performed in and over foreign countries (including their airspace and territorial waters) to your total time spent performing services during the taxable year. This comparison can be expressed by a fraction:
> 
> Total time worked in and over foreign countries
> --------------------------------------------------------------- x Total wages earned
> Total time worked
> 
> The result is the amount of your foreign earned income (income earned in and over foreign countries, including their airspace and territorial waters).
> 
> Vacation pay and sick pay are included as total wages earned. Thus, vacation pay and sick pay are allocated between “foreign” and “other” based upon the actual time spent performing services in foreign countries and in other places. However, used vacation time and sick time do not go into the numerator or denominator of the fraction outlined above.
> 
> Because flight time between two cities may vary based on the actual flight route, location of the jet stream, weather, and other factors, the most accurate way to determine the time spent in and over foreign countries is by using detailed records (flight plans) for each flight reflecting the flight’s planned route and the planned flight time. The flight plan includes a lot of information about the flight, including the route designated by its latitude and longitude readings as well as the estimated flight time between those points. The flight plan will also show the total estimated flight time from the flight’s block out to its block in. As a result, it is possible to plot the geographical points and determine the actual planned time spent flying over foreign countries.
> Some crew members, however, may have difficulty securing and reading actual flight plans. Also, this process can be burdensome for crew members who fly a large number of international flights during the taxable year. As a result, airlines are providing crew members a breakdown reflecting the “average” flight time components of flight segments in and over foreign countries (sometimes called “Duty Time Apportionment” or “Flight Time Apportionment”). Per a Tax Court case, Rogers v. Commissioner (T.C. Memo 2009-111), these apportionments, if reasonable, are acceptable as a means to determine the amount of foreign earned income.


Bizarre!


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## celticweb

Thanks Iota for the research confirming my article
It's ludicrous really. Who has time for this!

My advise to Flight is again to renounce now or forget about filing anything and stay as you are. you don't have a US birth place I believe.


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## celticweb

Flight said:


> Thanks Iota,
> 
> Now I don't know if I made a mistake by saying no, because once I do my U.S. tax returns I will have to state this bank account, but this bank account is not forwarding information on me through FATCA having said no. I'm sure implicitly what the bank was really asking me was "Are you a U.S. green card holder, OR, citizen." For FATCA purposes. Otherwise, there is no reason why they would want this information.
> 
> So I'm sure that at least right now no info is being forwarded to the IRS regarding those bank accounts as in their eyes I have no relation with the U.S. of course once I start filing this will change.
> 
> 
> I


Also don't go back to the bank and change anything. You answered correctly based on your understanding of the question, you are not a greencard holder. yes they probably meant US citizen too but they didn't ask that. 

I answered this question too with my bank based on my understanding of the question. I was asked about tax residency and if I was tax resident in the USA or anywhere else. i answered no on the phone because I never heard of CBT and it's a logical answer no, i am resident in the UK not the USA and I never bothered to return the form back because I simply forget. 

Technically I am recalcitrant account holder. I have filed and renounced. Never heard from anyone, filed the fbars too. and am still happily banking there.


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## iota2014

celticweb said:


> Thanks Iota for the research confirming my article
> It's ludicrous really. Who has time for this!


I've since concluded that it's just a logical product of the fiscal arms race that creates the US postmodern tax code. It makes perfect sense, when you think about it. From their point of view.


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## Flight

First of all, thank you all for kindly replying to all of my questions.

I am literally mind blown reading those articles, as if I wasn't already stressed out enough. To me compiling this information as to how many block hours have been spent inside foreign airspace + block hours over international waters + block hours inside U.S. airspace is going to be impossible. For a flight attendant like myself who makes just a bit over 20K a year and who isn't even obligated to pay taxes, just report income, unless I pass 100K (this is my understanding of how it works while filing taxes living abroad.) What difference does it make then to go into so much trouble calculating all of this? Or is there no way around this?

Following up on the other questions,

Now regarding renouncing citizenship, I'd like to keep this as a final option. But first I'd like to evaluate all other options that allow me to keep my nationality. This is why I am actively trying to research as much as possible because I'd like to apply for Long Haul flights soon in the next few months and I can use my U.S. passport to enter and leave the U.S., what I don't want happening is problems at customs because I haven't filed before (or refuse to file from now on). I somehow suspect that eventually it would be a problem, if its not at customs, then 2 years from now when I renew my passport at the U.S. embassy in Spain, assuming that when you renew your passport they look into you and I would be giving them my info such as permanent address, job, social security number, etc. I was also thinking about going to the embassy soon to get a passport card, since I do not have any other credit card sized I.D. For the U.S. and if Im going to start flying to the U.S. on my days off over there I'd prefer to carry my passport card at all times with me to identify myself as a citizen whereever I go, and keep my passport safe at the hotel.

Now to follow up on Celticweb,
I guess I could do that, the not filing ever and staying as I am, as I do NOT have a U.S. Birthplace. It's both of my parents who where born in the U.S. and since I've never had a job inside of the U.S. so i'm not in the system and could potentially stay off the radar. But I've read so much about the severe penalties that apply, frozen bank accounts, heavy fines from the IRS, etc. If they do manage to contact you that it just frightens me. Again, maybe this is ignorance on my part, but I believe I can only keep on avoiding this so much until I either start entering the U.S. many times a month due to my job, or, have the need in 2 years to renew my passport as they will have update information on me and could very well mail me. Either one of these two things can put me "on the radar." 

Thank you, and I am sorry for being so repetitive on some examples, I've just read so much that it has me quite stressed out and confused.


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## iota2014

celticweb said:


> Also don't go back to the bank and change anything. You answered correctly based on your understanding of the question, you are not a greencard holder. yes they probably meant US citizen too but they didn't ask that.


Not very nice though, is it. IMO, those who are citizens and want to continue to be citizens and intend to make regular use of the citizenship, should bear the resulting burdens themselves rather than claiming their citizenship when it suits them and hiding it when it doesn't. 



> I answered this question too with my bank based on my understanding of the question. I was asked about tax residency and if I was tax resident in the USA or anywhere else. i answered no on the phone because I never heard of CBT and it's a logical answer no, i am resident in the UK not the USA and I never bothered to return the form back because I simply forget.


You were answering in good faith, though, and have since renounced so the answer you gave is now correct.


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## iota2014

Flight said:


> First of all, thank you all for kindly replying to all of my questions.
> 
> I am literally mind blown reading those articles, as if I wasn't already stressed out enough. To me compiling this information as to how many block hours have been spent inside foreign airspace + block hours over international waters + block hours inside U.S. airspace is going to be impossible. For a flight attendant like myself who makes just a bit over 20K a year and who isn't even obligated to pay taxes, just report income, unless I pass 100K (this is my understanding of how it works while filing taxes living abroad.) What difference does it make then to go into so much trouble calculating all of this? Or is there no way around this?


Evidently it's been tested in court, so it's clearly a requirement that can be, and is, enforced.



> ...regarding renouncing citizenship, I'd like to keep this as a final option.


Definitely wise to take your time, read up on the options, do nothing in haste.


> Now to follow up on Celticweb,
> I guess I could do that, the not filing ever and staying as I am, as I do NOT have a U.S. Birthplace. It's both of my parents who where born in the U.S. and since I've never had a job inside of the U.S. so i'm not in the system and could potentially stay off the radar. But I've read so much about the severe penalties that apply, frozen bank accounts, heavy fines from the IRS, etc. If they do manage to contact you that it just frightens me. Again, maybe this is ignorance on my part, but I believe I can only keep on avoiding this so much until I either start entering the U.S. many times a month due to my job, or, have the need in 2 years to renew my passport as they will have update information on me and could very well mail me. Either one of these two things can put me "on the radar."


They don't have a lot of power to enforce CBT beyond the US, but if you're expecting to fly in and out of the US, on a regular basis, then you're more vulnerable.



> Thank you, and I am sorry for being so repetitive on some examples, I've just read so much that it has me quite stressed out and confused.


Yes, very stressful. You're not alone!


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## Bevdeforges

OK, first of all - don't panic. While things in these troubled times may change, at the moment, it's extremely unlikely that you would be hassled on entry to the US (on your US passport or not) over your non-filing of US income taxes. There are quite a few legitimate reasons why a US citizen may not be obligated to file income taxes in any given year, and frankly they don't seem to control incoming citizens that closely.

It's also highly unlikely that "failure to file" would have any particular effect on your passport renewal. (Again, unless things change.) The Consulates are run by the State Department and there is some considerable inter-departmental rivalry. The State Department does not particularly want to function as a control point for the IRS. I know here in Paris, it's entirely possible to apply for a US passport (or to renew a passport) even if you don't have a Social Security number. Although they ask for a SSN, there appears to be no "check" of the number you report against tax records. (I renewed my passport a year or two after I legitimately had not filed taxes and never had any questions or other repercussions.) 

Despite all the hype, there are still many overseas "taxpayers" who are not filing and/or or not aware of their filing requirement. Even if you file your prior returns on a "late" basis, the penalty is a percentage of the amount of tax due - and as long as you have 0 tax due, your "penalty" is still 0. I wouldn't worry about your "self employment" in Chile - it's next to impossible for the IRS to have any knowledge of that, whatever the regulations try to imply. If, after you've filed your regular tax returns for your salary income, they have questions about earlier years, they'll contact you. But don't hold your breath.

As far as partitioning your salary for the hours you spent over US airspace - I'd take that with a large grain of salt. A "good faith estimate" is normally more than good enough if you want to handle it that way, and if you base a "good faith estimate" on how many days you actually spent on the ground in the US, that's probably going to be more than adequate. 
Cheers,
Bev


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## Flight

iota2014 said:


> Not very nice though, is it. IMO, those who are citizens and want to continue to be citizens and intend to make regular use of the citizenship, should bear the resulting burdens themselves rather than claiming their citizenship when it suits them and hiding it when it doesn't.


That's exactly why this is all so stressful, because as you say, I do wan't to make regular use of the citizenship (for example, working in Long Haul), and if I want to do that and then hide it when it suits me (Such as never filing), I'm just being someone who uses the nationality to his advantage. 

My purpose coming to this forum is to try my best to do things honestly, filing,
I'm just very let down and turned off by seeing how complicated this process is + now reading the IRS section regarding flight crew. As I said before, I have no idea how to gather all of that info or if it would be relevant to clasify the hours by geographical areas, when the salary I earn is 20K, and not the 100K+ which would obligate me to pay taxes.

I would somewhat understand if I earned that kind of money that it would be necessary to divide and be so specific as to how much of that could be excluded or not. But in my case i'd owe $0. So in my POV compiling this information is nonsense.


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## iota2014

> As far as partitioning your salary for the hours you spent over US airspace - I'd take that with a large grain of salt. A "good faith estimate" is normally more than good enough if you want to handle it that way, and if you base a "good faith estimate" on how ma


Bev, I wonder about that. It's been to court and survived, and it's something they can check, and enforce, so why wouldn't they?

The airlines are all scared stiff of America, just like the banks. In the OP's shoes, I'd be wary of relying on a guess, where this issue is concerned.

The rule is not that they don't allow the FEIE for hours spent over US airspace; it's that they only allow the FEIE for hours spent in/over foreign countries. That makes it a lot more significant.


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## Flight

Bevdeforges said:


> OK, first of all - don't panic. While things in these troubled times may change, at the moment, it's extremely unlikely that you would be hassled on entry to the US (on your US passport or not) over your non-filing of US income taxes. There are quite a few legitimate reasons why a US citizen may not be obligated to file income taxes in any given year, and frankly they don't seem to control incoming citizens that closely.
> 
> It's also highly unlikely that "failure to file" would have any particular effect on your passport renewal. (Again, unless things change.) The Consulates are run by the State Department and there is some considerable inter-departmental rivalry. The State Department does not particularly want to function as a control point for the IRS. I know here in Paris, it's entirely possible to apply for a US passport (or to renew a passport) even if you don't have a Social Security number. Although they ask for a SSN, there appears to be no "check" of the number you report against tax records. (I renewed my passport a year or two after I legitimately had not filed taxes and never had any questions or other repercussions.)
> 
> Despite all the hype, there are still many overseas "taxpayers" who are not filing and/or or not aware of their filing requirement. Even if you file your prior returns on a "late" basis, the penalty is a percentage of the amount of tax due - and as long as you have 0 tax due, your "penalty" is still 0. I wouldn't worry about your "self employment" in Chile - it's next to impossible for the IRS to have any knowledge of that, whatever the regulations try to imply. If, after you've filed your regular tax returns for your salary income, they have questions about earlier years, they'll contact you. But don't hold your breath.
> 
> As far as partitioning your salary for the hours you spent over US airspace - I'd take that with a large grain of salt. A "good faith estimate" is normally more than good enough if you want to handle it that way, and if you base a "good faith estimate" on how many days you actually spent on the ground in the US, that's probably going to be more than adequate.
> Cheers,
> Bev


Thank you for this post. So in your opinion, do you think I should go ahead and apply to Long Haul U.S. bound flights, without letting this affect my decision? I've been postponing doing this only because of all my concers which I have been stating in my previous posts. But reading your, and everyone elses posts, give me a sense of calm because of course it's not the same to process this information by myself, than to have all sorts of inputs which help clarify on this subject.


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## iota2014

Flight said:


> As I said before, I have no idea how to gather all of that info or if it would be relevant to clasify the hours by geographical areas, when the salary I earn is 20K, and not the 100K+ which would obligate me to pay taxes.
> 
> I would somewhat understand if I earned that kind of money that it would be necessary to divide and be so specific as to how much of that could be excluded or not. But in my case i'd owe $0. So in my POV compiling this information is nonsense.


Collectable nonsense though. The FEIE is conditional, and strictly speaking they're right - money earned mid-Atlantic is not earned in a foreign country. So it's available to the US to tax, without contravening any treaty agreements. They don't care how much extra work it makes for you - they really don't. It's absolutely not about fairness, it's about the law.

Just give yourself time to think about it, and take it all in. There will be light at the end of the tunnel, once you have time to weigh up your options. Go slowly, and as Bev says, don't panic.


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## celticweb

iota2014 said:


> You were answering in good faith, though, and have since renounced so the answer you gave is now correct.


Yes I was answering in good faith but so was Flight when asked and when the question was asked I was a citizen. the point I am making is nothing seems to come of a lot of this. if flight were to get a form in the post later on that specifically asks the question on US citizenship, then yes answer correctly based on your understanding of the question. 
a lot of advise is now on forums to stay out of the tax system. if you think you might owe tax that's different but they are chasing people with zero owing tax who are then forced to spend thousands on accountancy fees. 

I would advise Flight to renounce now as soon as possible, you can renounce now and file later. just file before next year's tax return is due June 2018
it's the option that will give you the ability to plan your future and career without this cloud hanging over your head. there are other things later on that may cause problems, retirement saving, investments in a foreign country and for someone who never intends to live in the USA it can be a big problem. or maybe hold off starting the long haul flights until the end of the year to see if there is any law change or improvements with this administration. there has been talk of this but it could also be just talk. so worth maybe taking a wait and see approach


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## iota2014

"a lot of advise is now on forums to stay out of the tax system. "

Absolutely. 

A person with no US birthplace and no other indicia and no US assets and no need for the right to enter/reside, doesn't need to enter the US tax system at all; they can either renounce or not bother. No need for CBT/FATCA/IGA to affect them at all. 

A person with a US birthplace and no US assets and no need/desire for any of the benefits of US citizenship, can renounce. Hiding may not be so easy, because of the birthplace, but clearly many people manage it.

A person with or without a US birthplace who is able to claim US citizenship and wants to do so, would be wise, and ethical, IMO to 
(a) get right with the IRS (or as right as is necessary); 
(b) make sure they inform their fiancee/bank/employer/accountant/lawyer/etc of their status; and 
(c) make full use of the not-insignificant advantages of US citizenship.

None of it is necessarily easy, whichever category one is in; but could be a lot worse.


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## Nononymous

Late to the conversation, but my advice, for what it's worth. 

You have three options:

1. Renounce US citizenship. Unfortunately this will cost you $2350. You can file a bunch of tax returns and FBAR forms to cleanly the exit the tax system, which might be worth doing because your affairs are relatively simple and you won't owe any money; others with no financial ties to the US have chosen to ignore the paperwork because they feel it's not worth the hassle, or refuse to pay monies claimed as owing by the US government. Ultimately this is the safest option but it's not cheap and it does mean you'd never have the chance of moving to the US.

2. Become compliant with US taxes for the rest of your life. This is, in my view, the worst of all options. Your taxes may not be complex now, but with the crazy business of time over US airspace, plus future retirement savings etc. and the possible need to pay accounting fees, it would be very costly (in terms of time, money and anxiety) and largely pointless unless you were very certain you wished to move to the US at some point in the future.

3. Ignore the fact that you have US citizenship. Stay out of the tax system. You have an EU passport with a non-US birthplace. There is no reason for any financial institution to believe that you are a US citizen. If you are comfortable with giving untruthful answers, simply say that you are not a US citizen and you will never have problems with banking or FATCA reporting. 

I personally would not renew the US passport either. Without a US birthplace you can enter the US as a German. I suppose it's possible that one day in the future they might find it odd that a person with the same identifiers (name, date of birth, place of birth) once held a US passport, but I doubt that their database will ever be that good. Since learning about the tax issue, I have always used my Canadian passport with US birthplace to enter the US, and only on one occasion did I encounter difficulty. So I think you can safely use a German passport with Chilean birthplace with no fear of discovery. (You may of course have issues with your employer requiring that you truthfully list all citizenships etc. so this may not be as simple for you as it is for me.)

You need to make your own decision, but for me number 3 is clearly the best course of action. Pretend your US citizenship does not exist and act accordingly. Your problems will disappear. Without a US birthplace you are quite safe. I don't personally have an ethical issue with this course of action because I view the entire US practice of citizenship taxation to be monstrously stupid and best ignored.


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## iota2014

Ethical issues only arise for the US-born and for those who wish to make use of US citizenship, as far as I can see.

A person who doesn't have a US birthplace, and doesn't acknowledge or make use of US citizenship, is not a risk for their bank, employer, accountant, or lawyer.


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## celticweb

All ethical issues aside, making use of US citizenship does not include traveling into the USA on a US passport. That is law not making use of US citizenship.

Most people would like to keep their US citizenship but are being forced to renounce. Wanting to keep your US citizenship is not making use of your US citizenship. 

Making use of US citizenship includes things like going to live and work in the US, probably the only real benefit left to US citizens person abroad now holding US citizenship. 

The OP has indicated they have no intention of going to live in the US. The OP to date has not made use of US citizenship except following the laws by entering the US on a US passport. The OP has not worked and lived in the US. The OP will not even be able to pass US citizenship on to his children unless they happen to be born there. I wonder if the OP can even vote. 

The US is not ethical in their treatment of their overseas citizens, taxation without representation and where no good deed goes unpunished. The ones who were hurt the most were the ones who tried the hardest to comply

On another note, i found this article that explains a way on how you can track days for pilots, air crew. just reading this would be enough for me to run to the hills and get on that renunciation list asap. the problems are just beginning and unless there is law change, the problems will escalate. 

https://www.taxesforexpats.com/arti...g-track-days-abroad-international-pilots.html


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## iota2014

celticweb said:


> All ethical issues aside, making use of US citizenship does not include traveling into the USA on a US passport. That is law not making use of US citizenship.
> 
> Most people would like to keep their US citizenship but are being forced to renounce. Wanting to keep your US citizenship is not making use of your US citizenship.
> 
> Making use of US citizenship includes things like going to live and work in the US, probably the only real benefit left to US citizens person abroad now holding US citizenship.


Making use of US citizenship in any way inevitably means acknowledging and accepting the status. Whether it's voting, obtaining a passport, filing, or paying tax, somewhere there will be a form with Joe Citizen's name on it.

But the ethical issues I'm referring to only arise for those the FIs are required by local law to identify. A customer who is "out" as a USC (US-born or making use of US citizenship ) is a risk for the FI etc unless the FI knows the customer's status and has documentation (W-9 or CLN) on file. 

A customer who doesn't have a US birthplace and is not making use of US citizenship in any way, is not a risk for the FI and can live a normal life.

The OP is lucky in having the choice - to keep US citizenship, with the pros and the cons, or to not keep US citizenship. For a US-born person this choice costs $2350, because a US-born person needs the CLN; but a non-US-person who hasn't entered the tax system, can do it for free.


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## Flight

I'd like to thank everyone who has been replying to this thread so far. I will give a more detailed reponse to reply to each of your inputs later on this week as I have a busy working schedule for these next few days.

However, I've come across this article. I'm not sure if it's being exaggerated. But I'll leave it here for analysis: https://www.nestmann.com/why-the-irs-can-now-ground-you


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## iota2014

I said:


> The OP is lucky in having the choice - to keep US citizenship, with the pros and the cons, or to not keep US citizenship. For a US-born person this choice costs $2350, because a US-born person needs the CLN; but a non-US-person who hasn't entered the tax system, can do it for free.


Except that if the OP does decide to work the long-haul flights (flying frquently to the US on a non-US passport), the employer might, as Nononymous suggested, want proof of status; in which case a formal renunciation might be necessary.


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## iota2014

Flight said:


> I've come across this article. I'm not sure if it's being exaggerated. But I'll leave it here for analysis: https://www.nestmann.com/why-the-irs-can-now-ground-you


The official info on the IRS passport revocation issue is here:
https://www.irs.gov/businesses/smal...l-of-passport-in-case-of-certain-unpaid-taxes

As far as I've heard, they haven't yet done this. I wouldn't worry about it: when they do start using it, it's likely to be used only for those they reckon they can _prove_ owe, and are able to pay, lots of money.


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