# Ukraine/US citizen tax question



## lynx3 (Feb 13, 2018)

Hi all, I was wondering if I could get some advice on my filing situation 

I'm a US/Ukraine double citizen currently living in Ukraine. I was not born in the US and have been filing US taxes ever since I moved back. I have recently found out that I should have also been filing the FBAR and am now considering how to proceed. 

As far as I can tell the reasonable options for me are as follows:

1. File the FBAR for 2017 disclosing all of my local accounts. I've got around $200k in savings. Would this raise a flag at the IRS and lead to a possible investigation? I think I would still pay zero tax, since my income is not that high. I have not told any of my local banks that I am a dual citizen, so if the IRS contacts them, the fact of the matter would probably come up. Not sure if that entails any risks. 

2. Continue to disregard the FBAR. All of my accounts are open under my Ukraine passport and therefore should not reported to the IRS. The downside is that it probably looks a bit weird for anyone that chooses to review my taxes that I've got income but no bank accounts and could trigger an investigation by itself. Theoretically, its possible to trace both of my identities via customs data, but not sure if anyone would actually go through that much trouble. 

I have also not filed any taxes for 2016 as my income was below $10k and am tempted to not file anything at all for 2017 either. After all, i am working for a local employer who is not aware of my dual citizenship status and therefore would not report anything to the US. On the other hand, it may also trigger an investigation, and I'm not totally sure how far that can go. 

Any advice is much appreciated!!


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## Bevdeforges (Nov 16, 2007)

Actually, either option is open to you at this point. Or, you can go back and file a couple of years "late" on the FBARs. 

Given that you don't have a US birthplace to give you away, it's more or less up to you. They don't seem to check the FBARs against your tax returns unless there is something "strange" on the tax returns. 

I don't know how it is in Ukraine, but in some countries (like here in France) some of the banks seem to be sending out forms to all foreigners asking them to affirm what country or countries they are subject to taxation in. Theoretically, at some point, they might require this sort of assurance from all customers, even the local ones, but I haven't heard anything like this so far.

It's perfectly valid to simply not file in a year where your income is below the filing threshold. (I've had a couple of those sorts of years during the time I've been here in France.) Merely the fact that you've filed before and aren't filing this year doesn't seem to trigger any sort of query and certainly not an "investigation." (The IRS is pretty badly understaffed and underfunded so they tend not to waste their time on accounts that won't produce a pretty decent return on audit.) A non-US employer (or even a US employer with a local subsidiary) will not report anything to the IRS about US citizens working there - the one exception being if you work for the US government or military outside the US.

The one caveat in all this is that, for a few administrative functions, you may need to show that you are "up to date" on your US tax filings. The main one is if you should wish to sponsor a foreign spouse for a visa/green card and move back to the US with him/her. You are also asked about being up to date on filings if/when you decide to renounce your US citizenship - though it's not at all certain if anyone actually checks into it should you say that you fell under the filing threshold in the years just before you renounce. 

So, net-net it's up to you what you want to do - taking into consideration any future plans involving the US.
Cheers,
Bev


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## lynx3 (Feb 13, 2018)

Thanks for the reply! 

If I were to go back and file late FBARs - how many years back would I need fill out?

I feel like the downside of filing the FBAR is that once I start, I will have to keep doing so every year. From what I've been reading so far there are clear benefits of staying "under the radar"

Also, if I fail to disclose my US citizenship to local banks - how much trouble am I getting into from the US side? They've got a semi-formal questionaire right now that they're using for all clients. 

What if I totally stop filing everything and claim to have income below the threshold? Is there any way for the IRS to verify my income, given that I'm emlopyed as a local everywhere?


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## Bevdeforges (Nov 16, 2007)

> If I were to go back and file late FBARs - how many years back would I need fill out?


Officially it's supposed to be six years back. (Though that is for the Streamlined program which, since you have filed in the past you may or may not be eligible for.)



> I feel like the downside of filing the FBAR is that once I start, I will have to keep doing so every year. From what I've been reading so far there are clear benefits of staying "under the radar"


Other than the fact that "they" don't seem to do much year-to-year checking or correlation, you're probably right about the FBARs. 



> Also, if I fail to disclose my US citizenship to local banks - how much trouble am I getting into from the US side? They've got a semi-formal questionaire right now that they're using for all clients.


As far as those questionnaires go from the banks, it's the banks that are covering their backsides with those. They are obligated to do a certain amount of "due diligence" to find US persons among their customer base. The penalty for them is that they would be prohibited from doing business in or with the US, though I'm not sure how works in the practical sense.

If the banks find out that you're lying to them, they could, I guess, close your account.



> What if I totally stop filing everything and claim to have income below the threshold? Is there any way for the IRS to verify my income, given that I'm emlopyed as a local everywhere?


The only income of yours that the IRS will know about is anything that involves the source of that income filing the information with the IRS directly (or through the national bank). What usually motivates folks to 'fess up is if they have financial assets (like bank accounts or retirement accounts) in the US that could be seized if there is reason to believe that you're not reporting your income and paying your taxes. 

The main thing to consider is your exposure in the US. Includes not only financial assets there, but any possibility you'd want to return there (perhaps with a spouse or other family members in tow), whether or not you can transmit your US citizenship to any children you might have and, to a lesser degree, whether you might need or want a US passport in the future. They do ask you for your US SSN when you go to renew your passport (or re-apply) but that doesn't necessarily mean that they check to see if you've filed recently.

Take a look over in the Expat Tax section here on the forum. There are quite a few discussions over there about flying under the radar.
Cheers,
Bev


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