# US Citizen, long term UK resident help with catching up on US taxes



## KRM2015 (Jan 21, 2015)

Hi guys

I was born in Texas but have lived in the UK from a young age. I'm now 29 and have only recently become aware of my obligations to file US taxes. I have been linked to the streamlined filing compliance procedures designed to help people like me catch up with "delinquent tax returns".

My income is fairly modest and all comes from the UK. I have done as much research as I can and have worked out the following:

(1) To catch up, I need to file tax returns for the previous 3 years (2014, 2013, 2012) and 6 years of FBARs
(2) For each year I need to fill out form 1040
(3) I am eligible for the Foreign Earned Income exclusion so should fill out form 2555EZ

I have some questions which I wondered if anyone who has been through this same process can help me with. I have been quoted around $1000 by taxesforexpats.com to do this all for me but I'm not able to afford that so I'm trying to do it all myself

Questions:

(A) Do i need to fill out form 2555EZ for each of the last 3 years? I think I do but I can't find where to get historic copies of this form from? I have the 2014 form but not the 2013 or 2012?

I'll just start with that 1 and see where we get to

Thanks in advance for any help, I'm truly appreciative of anyone spending the time to read this

Amy


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## BBCWatcher (Dec 28, 2012)

Not quite. The IRS's Streamlined Program requires filing the 3 years that are late, so that'd be 2011, 2012, and 2013. Your tax year 2014 return is not yet late, so you'd file that one per normal schedule. You can extend the filing deadline (receipt date at the IRS) for tax year 2014 as late as October 15, 2015, by filing a request for an extension (IRS Form 4868). Otherwise your 2014 return is due at the IRS on June 15, 2015, assuming you attach the simple statement that you're an overseas resident and qualify for the June 15th deadline. You also get until June 15th (but not October 15th) if you owe any remaining tax for tax year 2014. (Probably you don't owe any.)

Same with your FBARs (FinCEN Form 114): 2014 when due (June 30) plus 2013, 2012, 2011, 2010, 2009, and 2008.

You don't _need_ to take the Foreign Earned Income Exclusion (Form 2555/Form 2555EZ) at all. You could take the Foreign Tax Credit (Form 1116) alone if you wish. That one's a choice. But yes, in each year you'd file that year's complete tax return, including either (or sometimes both) the FEIE and FTC forms. The IRS's Web site has older tax year editions of all forms available. Just use your favorite Internet search engine and you can find them easily.

You could also buy past years of tax preparation software. TaxAct.com, for example, charges about US$14 per tax year if you'd like to use back editions of their software. They also have a free edition for the current tax year (2014). I'm not necessarily endorsing TaxAct, though -- there are several tax preparation software options if you're interested in that. One strategy might be to buy tax year 2011's tax preparation software to "learn the ropes" then fall back to the more manual approach if you don't want to pay the $14 for each of the other two years.


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## KRM2015 (Jan 21, 2015)

Ok, that makes sense thank you

Do you attach or include all of your payslips with each return, or do you just enter the amounts and then only have to show proof if it is later requested by the IRS?

I also have some income from poker tournaments earned during these years. I note on the 1040 there is a separate section for gambling winnings. However winnings in the UK aren't accompanied with a W-2 form obviously, so should I just include this income within my regular income?

Many thanks


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## BBCWatcher (Dec 28, 2012)

I cannot think of any occasion when the IRS asks you to include payslips with your U.S. tax filing. The IRS does ask you to keep tax and financial records in your personal files, yes.

In the following discussion I'm referring to IRS forms for tax year 2014. Line numbers and form numbers don't change very much, but it's possible they may be different in other years.

According to the IRS, you report gambling winnings on IRS Form 1040 line 21 ("Other Income"), _inclusive_ of taxes withheld or paid on those winnings (if any). Your gambling winnings should be net of any tournament buy-in, for example. In other words, what did you "clear" at the table? Don't count things like drinks, food, hotel rooms, petrol to drive to the casino, etc.(*) If you paid non-U.S. income tax on those winnings you would separately report those taxes paid via the Foreign Tax Credit (IRS Form 1116). If you paid U.S. income tax on those winnings -- from a tournament in Las Vegas, for example -- then that'd get reported elsewhere on Form 1040, most probably on line 64.

You can deduct gambling _losses_ if you itemize your deductions. You would claim your gambling losses in Schedule A of IRS Form 1040 (line 28, "Other Miscellaneous Deduction"). You can claim actual gambling losses less than or equal to your gambling winnings. You cannot claim more losses than winnings on your tax return. Be sure to check whether you _should_ itemize your deductions or should rather claim the standard deduction. (Tax preparation software checks that for you automatically, but it should be pretty easy to check.)

For more information on gambling winnings and losses, refer to IRS Tax Topic 419.

(*) If you are operating under a business structure of some kind as a professional gambler, often with partners and/or investors, then that can be quite different and perhaps complex with different rules and reporting requirements.


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## KRM2015 (Jan 21, 2015)

BBCWatcher said:


> I cannot think of any occasion when the IRS asks you to include payslips with your U.S. tax filing. The IRS does ask you to keep tax and financial records in your personal files, yes.
> 
> In the following discussion I'm referring to IRS forms for tax year 2014. Line numbers and form numbers don't change very much, but it's possible they may be different in other years.
> 
> ...


I'm not sure that non-residents can claim deductions for gambling losses.

Do you know if I reported a US gambling income of $6,000 in a year, and all my other income for that year fell under the foreign earned income exclusion, would I be liable for a tax bill for the $6,000?


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## Bevdeforges (Nov 16, 2007)

KRM2015 said:


> Do you attach or include all of your payslips with each return, or do you just enter the amounts and then only have to show proof if it is later requested by the IRS?


Unless you have US W-2s listing your salary income and withholdings, you do not send anything in with your tax returns to "prove" your reported salary income. (You've never needed to send in 1099s or other documents reporting other kinds of income paid to you anyhow.) Yes, it's an honor system for how you report your income. But yes, you should keep your records (and how you added up and converted the totals for any line item) "just in case" you get asked. 

Statute of limitations is something like 4 years - and one tax preparer friend of mine recommends shredding supporting documents past the statute. Never done so myself, but technically speaking, any income not reported remains open to audit "forever" - one advantage of reporting it, I guess.



> I also have some income from poker tournaments earned during these years. I note on the 1040 there is a separate section for gambling winnings. However winnings in the UK aren't accompanied with a W-2 form obviously, so should I just include this income within my regular income?


This is the "honor system" again. Don't report gambling winnings with your salary or other "earned" income (unless you're a professional gambler, I suppose). You can deduct gambling losses, though only up to the limit of the amount of gambling winnings you report. Again, it's the honor system until and unless they come back to question you, when you'll have to show them "something" to back up what you reported. Up to you to determine the odds regarding them questioning your reported amounts (or the lack thereof).
Cheers,
Bev


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## KRM2015 (Jan 21, 2015)

Bevdeforges said:


> Unless you have US W-2s listing your salary income and withholdings, you do not send anything in with your tax returns to "prove" your reported salary income. (You've never needed to send in 1099s or other documents reporting other kinds of income paid to you anyhow.) Yes, it's an honor system for how you report your income. But yes, you should keep your records (and how you added up and converted the totals for any line item) "just in case" you get asked.
> 
> Statute of limitations is something like 4 years - and one tax preparer friend of mine recommends shredding supporting documents past the statute. Never done so myself, but technically speaking, any income not reported remains open to audit "forever" - one advantage of reporting it, I guess.
> 
> ...


Thank you. I had some advice from a professional that Poker winnings can be classified as "earned" income and referred to the Baxter v United states case (I can't link to it)

My UK salary +poker winnings is less than the circa $100k limit for the Foreign earned income exclusion so as there will be no tax due here I may aswell add it and report it

As for the $6k won in a las vegas poker tournament, I'm unsure whether this will be subject to tax or not if it's my only taxable income


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## KRM2015 (Jan 21, 2015)

Sorry for all the questions....

1 other issue is that I got married in 2014. I have gotten a new US passport in my new name (does this automatically update SSN?)

When i file my back taxes 2011-2013 what name should I be putting on the form, my current name or my name during those years (maiden name)?


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## nyclon (Apr 3, 2011)

Changing your name on your passport does not automatically update your name on your Social Security card. You must change that separately. 

See 6 in the link:

Social Security Numbers | Embassy of the United States


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## BBCWatcher (Dec 28, 2012)

Not quite. According to Baxter v. U.S. there's a distinction between a professional gambler and a non-professional gambler, as I noted. You have to check the IRS's definition of "professional gambler" to determine whether you are one.

Yes, that determination will influence whether your winnings are classified as earned income or not, though keep in mind Vegas winnings are not _foreign_ even if you could treat them as earned. (And be careful what you wish for. If earned you'll likely need to pay self-employment tax on them, i.e. Social Security contributions.) All of this _probably_ won't matter, though. You still have a personal exemption and standard deduction (or itemized deductions), and you still have the FTC. (The scope of your FTC will depend on whether or not you take the FEIE.)

Your winnings in Vegas in that amount may have had U.S. tax withheld. Check the statement you received. Yes, the casino is supposed to withhold taxes, at least if your winnings are substantial enough in one "transaction," and issue a statement when they do so. If you did pay U.S. tax on your Vegas winnings then you'd report the gross (before tax) as income and the tax paid as I described upthread.

I'm not aware of any residency requirement limiting your ability to itemize gambling losses. Where do you see that?


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