# I cannot believe I have done this...



## midsummer night's dream (Jan 26, 2012)

I don't entirely know where to start... I have lived in the UK for 18 years now since 1993, and for all this time I have not 'hung out' with other Americans on message boards or in real life, though there is an American museum and 'ladies who lunch' American society here in Bath, that was not at all my scene. so when I moved here, went to the pub, got a job... blah blah...blah the ordinary things everyone does. 

I really had left my old life behind and before i knew it 18 fantastic years have passed. Recently my passport expired so I went on to the Embassy website to remember how to renew it, And for the first time in 18 years I thought I would have a look around the website and I have never done that beyond the renewals page, and I happened across the IRS paying taxes page and my heart really skipped a beat.

For the past 18 years I have not filed any taxes/ tax returns and I had no idea that I had to. really! I moved here and to Aberdeen, Scotland when I was quite young and completely naive and just got straight down to finding a job and living. I feel so stupid that this has happened and when I rang the IRS they seemed quite surprised that I had not seen American stories in newspapers very recently concerning tax etc. I said to that I have no time to read newspapers as I do not work in an office, I don't sit at a desk and read newspapers whilst eating lunch, I confirmed with them that I do not make the above the amount of $91.000, never have, I have no financial ties to America like property ownership etc. 

She said there is a likely possibility that I will be fined for 18 years though she could not confirm this and that my American passport may not be renewed which is right now going through the system as I type. 

This is causing panic attacks as all of my family still live in Florida and I am seeing them in June, or supposed to be. and I cannot afford to pay thousands of dollars in fines and OMG, how confusing is that 1040 form as I need to fill out 10 years worth of them by June, I have been employed as an antique gilder/restorer for 7 years but my previous employment went bankrupt, i have no pay slips that old, what to do and what happens when my passport does not get renewed? can I still live here? everything is so screwed up at the moment. Can anyone shed some light for me?
Sorry for rambling and many thanks for any and all opinions.
Ella x


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## Bevdeforges (Nov 16, 2007)

First of all, don't panic. You are far from the first American living overseas to "suddenly" discover that you should have been filing US returns all this time.

Your tax situation should not impact your passport renewal. (For all they know, you may NOT have had to file all these years - if you have no income, or your income was below the filing threshold, then you wouldn't have needed to file at all.)

First thing to do is to file 3 years back. For you that means: 2010, 2009 and 2008. The 2011 return isn't due until June 15th, so you can hold off on that one for a bit.

All the forms and the instructions are available on the IRS website. This is the site for the prior year forms: Prior Year Products

You'll need (for each of the three years) a 1040, a 2555 and a Schedule B (if you have at least $10,000 in total in non-US bank accounts - in which case you'll also need a form TD F90-22.1). If you can't find your payslips for any of the three years of back filings, make an educated guess - you remember how much your monthly salary was, and multiply it by 12. 

Start with the form 2555 (or use the 2555EZ if you meet the requirements, which you probably do). Go through those calculations (they pretty much guide you through it) and if your salary was, indeed, less that $91,000 those three years, you'll wind up "excluding" it all by putting the figures they tell you to on the appropriate lines of the 1040s. 

Then list any bank interest (all accounts, worldwide) on the Schedule B. You don't actually have to use Schedule B if you only have a few hundred dollars in bank interest - but at the bottom of the form there's a question about foreign bank accounts. You may have to file a Treasury form listing your foreign bank accounts, and if you do, having detailed your bank interest just "proves" that you're not hiding anything. Again, if you can't find your exact bank records, make an educated guess (and just to be safe, err on the high side by a hundred $ or so).

Get those back forms filed at least. And as long as they show that you don't owe any back taxes, you're ok. Any penalties are generally calculated based on a percentage of the tax due for the year - so if you owe nothing, the penalty will be nothing. What you're actually doing here is "proving" to the IRS that you have no back taxes due and that your failure to file wasn't an attempt to hide anything.

By the time you've knocked out those 3 back returns, your current return (for 2011) should be a breeze to do - and if you're getting to Florida in the first half of June, you can even save a little postage by mailing it from the US! (or not, however you prefer).
Cheers,
Bev


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## midsummer night's dream (Jan 26, 2012)

Thank you for your fantastic reply, I have been so worried over this I have actually rang in sick at work today to try and make sense of it all. I will take your advice and start getting everything in order asap. I am sooooo relieved about your opinion concerning my passport, perhaps I just rang the most grumpy IRS official in philadelphia, the thought of it not being renewed is just too much to contimplate. Thanks again!


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## Bevdeforges (Nov 16, 2007)

midsummer night's dream said:


> Thank you for your fantastic reply, I have been so worried over this I have actually rang in sick at work today to try and make sense of it all. I will take your advice and start getting everything in order asap. I am sooooo relieved about your opinion concerning my passport, perhaps I just rang the most grumpy IRS official in philadelphia, the thought of it not being renewed is just too much to contimplate. Thanks again!


Oh, THAT explains it. There is an IRS office in the US Embassy in London. They are MUCH easier to deal with than anyone back in the US. (And, the IRS people in the US have very little understanding of filing from overseas.)
Cheers,
Bev


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## Peg (Sep 22, 2011)

midsummer night's dream said:


> ... For the past 18 years I have not filed any taxes/ tax returns and I had no idea that I had to. really!
> ...
> She said there is a likely possibility that I will be fined for 18 years though she could not confirm this and that my American passport may not be renewed which is right now going through the system as I type.


Millions of us are in the same situation! I had never filed US returns in my 30 eligible years. Three months ago, when I learned of all of this I filed 5 years of returns with a letter explaining that I had just learned of the requirement. I have not yet heard from the IRS and may never hear from them if I do not owe them money.

In my opinion, that IRS person was *wrong*. Absolutely ridiculous that someone like that is allowed to answer the phone. If it turns out that you owe some US income tax then you can pay it. From what I have read they would not go back 18 years regardless. There are many newspaper articles that talk about the huge penalties but they are not typically applicable to us average workers. 

It can get messy if you also have a lot of investments. But if just earned income it is relatively easy.


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## RødGrød (Oct 8, 2011)

Don't worry, Midsummer. You will be fine. The IRS telephone hotline service is a disgrace. They seem to know less about expats' tax situation than most of us on this forum.

I, too, was sick with stress when I discovered I had made innocent filing mistakes that could have given hefty penalties. I went through it all almost two years ago and haven't heard back from the IRS so I am moving on and not worrying anymore. As long as you make a good faith effort to comply and you are obviously not an extremely wealthy person with lawyers and accountants who should have known better, you should be fine.

And as far as I know, there is currently no law that would allow allow them to delay your passport renewal because of tax filing. I doubt they even have the time/resources to cross check those things.


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## Omater (Nov 26, 2011)

I understand your concerns as I was losing sleep over the last few months myself. Upon the advise of a not-so-knowledgeable accountant I stopped filing tax returns in 2004. He advised me that since I owed nothing, I didn't have to file. I was in shock over finding out that I did indeed have to file not only my tax returns but the FBAR reports as well. It was the FBAR reports that really had me worried. Not only that, but my passport expires next month and I was worried that I might get into a problem getting it renewed. I am currently in the states on holidays and worried what my experience on each side of the border might be. 

In the end, it has all been about my fear. I finally realized that I am allowing the nightmares based on fear from horror stories and published threats from the IRS and media. It took a while on holidays, but I have finally been able to make some decisions that will allow me to just live my life.

First, I have had no questions asked about my tax obligations at the border.

Secondly, I renewed my passport by express post and it went off without a hitch, no questions asked. Just be sure that you fill out the forms correctly and give them the correct photo, etc, whatever they require. 

Third, I filed 6 years of back tax returns not knowing I could probably get away with only filing 3 years. It didn't matter though, I owed no taxes. I am getting ready to file FBAR reports, even if under protest. (Bev - not sure how many years back I should go for FBAR?) I will write a letter to explain why I have not filed these reports in the past (ignorance, as in most cases) and then I am going to just go on with my life. I had been on the verge of selling off all of my US assets in fear that they might try to seize them based on FBAR, but I have decided that I am not going to do that. The worst case scenario is that I will hear from them in a few years and I will deal with them then if that happens. I am hoping they will see that I am not hiding anything and that I am now and have always been willing to comply with any US tax law.

Based on what you have posted I really don't think you have anything to worry about. The IRS employs a little bit of fear in order to get people to come forward who do owe taxes and we have all been swept up in that net.


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## Bevdeforges (Nov 16, 2007)

Officially, the statute of limitations on FBARs is supposed to be 6 years. But as long as your tax returns showed that you owed nothing over the last three years, I'd just file the FBARs to match your back income tax returns. If they really want more, they'll ask for them - but I seriously doubt they'll ask unless there is something amiss or "odd" about your filings.
Cheers,
Bev


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## byline (Dec 5, 2011)

midsummer night's dream said:


> I feel so stupid that this has happened and when I rang the IRS they seemed quite surprised that I had not seen American stories in newspapers very recently concerning tax etc.


Hi, Ella! As many others will note, you are not alone. I'm in a similar situation, though I was born and lived in the States for most of my life, then moved to Canada 15 years ago. But even with that, I had no idea that I was supposed to be filing U.S. tax returns or FBARs. I thought that filing Canadian tax returns was all that was required. Initially, I felt pretty stupid, but have since come to realize that I am hardly alone in this situation, and that it's not about stupidity; we just didn't know!

Also, even those of us who read newspapers on a regular basis didn't know this. You had to have been reading the right page of the right newspaper, listening to the right radio broadcast at the right time, whatever, to have caught wind of this. Which is why I feel it's so wrong for the IRS to be relying solely on the media as a way of informing people. In my case, it took the accountant at the plant where my husband works to point out a _Globe and Mail_ article to us from last June, before we realized what was going on. Had he not taken that step, because he just happened to know that my husband has an American wife, I'd probably still be in the dark.


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## midsummer night's dream (Jan 26, 2012)

Thank you everyone for your fantastic replies! They have really settled my mind at ease. During my lunch hour at work, I am going through the mounds of paperwork ready for April, they will soon find out I am just a working class stiff and not a lottery winner! 

I ran into another American today and just chatted about this and that and holidays etc. she said her passport was expired and then I mentioned about my passport renewal, I mentioned lightly about the IRS threat not to renew mine because of not filing and she was shocked that you had to. She has lived in the UK 6 years and had no idea. 
I did not want to scare her or make her feel the panic I felt, so I told her about all of you and the American Embassy website, so you may get another 'OMG, I did not know' type of post soon!
Thanks for everything again, you guys are fab!:clap2:


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