# US Tax on Worldwide Income (I live in the UK) *Accidental American*



## basicsboy

Hello everyone and thank you for putting together such a time of resources for what are notoriously tricky topics. Your stories humanise the impossibly complex world of immigration, worldwide income and expat difficulties. Wonders of the internet and all that.

Where to start... I am a dual US / UK citizen due to a piece of legislation called the child citizenship act whereby if a parent is a US citizen (my dad was naturalized in the USA in 2007) and you are under 18 years old, you can claim that same citizenship. This struck me as a great idea as it would open many doors and opportunities for me in later life, so that's how - I have UK and USA passports.

I was at university, not earning, for 2010-2013, and didn't earn enough ($10,100) in those tax years. an IRS lady confirmed this and said "For 2011, 2012, 2013 - you have no need to fire a return, nor do you owe anything or are owed anything. see-publication 501 - exemptions, standard deductions and filing information."

This leaves me with 2014, 2015 & 2016 where I have been earning over the threshold in London.
*
So, How do I file?*
The IRS lady mentioned that I need to file a 1040(z) for Jan 1st to Dec 31st for 2014, 2015 and 2016, and I can us 'streamline tax returns' as I'm a first time filer(?).

Accountants quoted me £1350+VAT for each year of filings, and £500 for the streamline certification.

I don't know where to begin - so I've laid out my current feeling of process and if _anyone_ who knows more about this than me can correct my process - PLEASE DO.

1. Register for streamline tax certification (not sure where to do this)
2. Research if I need W2's from employers or if I can use a UK Equivalent
3. Calculate my income and UK tax paid for each 2014, 2015, 2016
4. File a 1040z for each by the filing deadline of June 16th 2017.
5. Pay the due tax on worldwide income commanded by the US Government.
6. File the form which relates to _Foreign tax credits for individuals - publication 514
_
7. Hope that the refund I get somewhat compares to the UK tax I have paid (I am aware that this will not be dollar-for-dollar), hence 'hoping'.

There are other issues but I'd like to tackle things one at a time:
Namely the bank account related filing that the US government requires if all your banks together contain more than $10,000 - which form is this?
and I had a dormant company from 2011 to 2014 which received an inward investment of £10,000 but never received an income.

I'm asking a lot of you lot - I know - so I will endeavour to pay it forwards as I know how daunting this experience is. I can't afford to get an accountant to do this, and I looked into renouncing citizenship at the sheer prospect of such forms - it's $2350 and comes with the requirement that you must have been tax compliant for 5 years or more. So I couldn't even do that at this stage.

Thanks for taking the time to read this, I hope I haven't bored your socks off.

BB


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## Bevdeforges

Have moved you over to our Expat Tax section, as you'll find lots of folks here in a similar situation.

How did you come to speak to an "IRS lady?" Because, practically speaking, you can probably just start filing without having to go through the "Streamlined" process. Assuming you owe no tax (due to your ability to use the FEIE - Foreign Earned Income Exclusion), you'll simply be filing your 2014 and 2015 returns late. The penalty for late filing is a % of the tax you owe, so in your case likely $0.

First of all, download yourself a copy of Publication 54, which is information for people filing from overseas. It explains the FEIE option, which you are most likely eligible for. https://www.irs.gov/uac/about-publication-54

What those accountants are charging for filing what should be simple returns is outrageous. You can either look into using the IRS Free File service (at least for the current year - 2016) and then purchase the software to do your 2014 and 2015 returns. I think Tax Act has those available for about $15 a year. But do the current year first so you get a feel for the process. https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-free

If you exclude your earned income (i.e. salary), then you will have to file a 1040, but if you don't take the FEIE, you may be able to use either a 1040EZ or 1040A form, both of which are a bit simpler. But you'll find out when you do your 2016 form on one of the tax services. 

If you're not eligible for the Free File service, you can use whichever of the online tax services you prefer. The top ones are generally considered to be: TurboTax, H&R Block and TaxAct. With TaxAct you can download the software to your computer to "play with" a bit while you get the hang of things - though it costs a little bit more (about $40) than just doing your returns online.

First of all, you will get NO refund of any taxes paid to the UK. If necessary, you may use UK income taxes paid to offset any US liability you run up. But if you're working, it's much quicker and easier to simply report and then "exclude" your UK salary from taxation using the appropriate forms.

And no, you don't need any W2 forms. Only US employers can produce those. But this sort of thing is handled in the tax software questionnaire. You report your salary gross for the calendar year, before taking any deductions for social insurances and such. You then apply the various deductions and exemptions and, with any kind of luck, your tax liability comes down to $0.

But you really can do it yourself. Start looking through the links I've given you and then come back with your questions. 
Cheers,
Bev


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## iota2014

> ...the bank account related filing that the US government requires if all your banks together contain more than $10,000 - which form is this?


FINCEN 114, commonly known as FBAR. You file online - v. simple once you've gathered all the info (bank addresses, balances etc). You can backfile previous years. See https://www.irs.gov/individuals/int...onal-information-return-submission-procedures

and Individuals Filing the Report of Foreign Bank and Financial Accounts (FBAR)



> I looked into renouncing citizenship at the sheer prospect of such forms - it's $2350 and comes with the requirement that you must have been tax compliant for 5 years or more. So I couldn't even do that at this stage.


Renouncing is a separate process. Expensive but very easy, provided you're not a covered expatriate. You can do it without waiting until you've filed tax forms.

If you decide to renounce and can pay the fee, email the Embassy requesting an appointment. They should send you a list of documents you'll need (passports, birth certificates, forms etc). Turn up on the day with the forms and the money, go through the formalities and you're done and dusted. Keep your receipt. A few weeks or months later you should receive your CLN. Keep it safe as you may need it in future to open bank accounts. 

You can then backfile five years of returns and six years of FBARs, and then in the following year, file a part-year 1040 (for the year of renunciation up to R-Day), plus you are supposed to file Form 8854.


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## Bevdeforges

Frankly, given that you weren't actually required to file until 2014 anyhow (due to lack of income), I'd just file the current year (2016) to learn how the process goes, and then file 2014 and 2015 late. Don't waste time with anything that would require you to file those years where you weren't required to file (like renouncing). Time enough for that once you have your five years of returns in. (If you still want to - there are advantages and disadvantages, depending on your situation.)

As for the company, I would just forget it. It doesn't raise your "reportable" assets past the threshold for all those FATCA forms ($200,000 for someone filing from overseas), and you say it was dormant anyhow, so skip it. What they're looking for are corporations you hold "for investment purposes" - there's some reason to believe that a corporation you set up to actually work yourself may not even be subject to this type of reporting. (Although you'll find nothing about this anywhere in the IRS material, either on line or in print.)

Take it slow and simple and if the IRS has any questions about what you do file, they'll be in touch (before they launch any sort of hostile audit-type action). It may actually be the case where you can safely skate beneath the radar with a certain level of selected compliance while not jeopardizing your advantages as an "accidental."
Cheers,
Bev


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## Nononymous

Two questions:

1. Were you born in the US, i.e. do you have a US birthplace?
2. Have you filed US tax returns at any point in the past?

If you answer no to both questions, and you aren't planning on moving to the US anytime soon, then I would just ignore US tax compliance and let your US passport lapse without renewal.

If you don't have a US birthplace, there's no reason for any UK banks or financial institutions to know that you're a US person, which means that you needn't fear the loss of banking services or reporting under FATCA.

If you haven't filed US taxes before, all the US knows about you is that you once applied for a passport. If you have a UK (or non-US) birthplace and plan to visit as a tourist you can enter the US with your UK passport. That's technically not allowed but they'll never figure it out.

Why come onto the radar if you're an accidental? At best, a lifetime of filling out forms. At worst, problems and/or renunciation.


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## iota2014

Bevdeforges said:


> Frankly, given that you weren't actually required to file until 2014 anyhow (due to lack of income), I'd just file the current year (2016) to learn how the process goes, and then file 2014 and 2015 late. Don't waste time with anything that would require you to file those years where you weren't required to file (like renouncing).


To clarify: renouncing doesn't require filing for years when filing is not required. Renouncing doesn't require filing *any* tax forms. It's a separate process. 

If the OP decides to renounce, the requirements are:
* Contact the Embassy or Consulate and request an appointment to renounce US citizenship
* Attend the appointment, supplying $2350 and all requested documentation
* Swear oath of renunciation

Once that's done, you're no longer a US citizen. CLN will arrive eventually.

IRS requirements are a different kettle of fish.

IRS requirements in the year following the year of renunciation:
* File a 1040 for the part of the year during which you were a US citizen, and a 1040NR for the part of the year during which you were no longer a US citizen; and
* File Form 8854, which requires, among other things, that you confirm under penalty of perjury that you have met all US tax obligations for each of the previous five years.

In order to be able to confirm 5 years' compliance, the OP only needs to backfile for years for which s/he was *required* to file but didn't. No need to backfile for years for which s/he was not required to file.[/QUOTE]

I agree completely that it's sensible to consider one's options carefully before deciding to renounce.


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## iota2014

I said:


> I agree completely that it's sensible to consider one's options carefully before deciding to renounce.


And also sensible, as Nononymous says, to think carefully before deciding to enter the US tax system.

Three options, as always: comply, renounce, ignore. Which is best depends on individual circumstances.


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## basicsboy

Thank you all so much!

Regarding iota2014's comment "Three options, as always: comply, renounce, ignore", Ignoring is what I've done up until now to be honest but if I do one day want to use my US citizenship it would be nice to be on good standing with the federal tax system.



Nononymous said:


> Why come onto the radar if you're an accidental? At best, a lifetime of filling out forms. At worst, problems and/or renunciation.


Having the IRS causing you problems sounds awful.

I spoke to the UK's inland revenue service and have been told that as I am resident in the UK, and working in the UK, and being paid as a UK employee. I'm taxable only in the UK.

She then pointed me to the following double taxation agreement: [Can't send links so just search "Tax treaties between the UK and USA and related documents." for the gov uk page]
and specifically article 14:

“salaries, wages, and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.”

@Bev - thanks so much for the advice, genuinely very helpful! I have looked into Publication 54, and the relevant section which has settled me considerably - I certainly don't earn more than $103,200 so I am confident I can claim FEIE for the full amount of my UK-based salary.

As for speaking to the IRS lady - I thought it would be a good idea to call and ask some questions and I must say she didn't mention FEIE or publication 54, just 501 and 514.

@iota2014 re: FINCEN 114 - commonly known as FBAR. 
Are there FEIE style exemptions for such a form? Can this be filed online? Can I rely on banks to backdate as far as 2014, especially if I've changed current account since then? I probably only had higher than $10,000 during April 2015, how accurate do I need to be on the FBAR - do I need to cross-reference my multiple bank statements to find out the time I had more than $10,000 in there or do I just supply year-end and year-start figures?

Thank you all again, it's so so appreciated.


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## Bevdeforges

On the FinCEN report, it MUST be filed online. They no longer accept paper forms. But no, you don't have to be terribly accurate. Since you're reporting only the "high" balance for the year, it's common for folks to round up and maybe even add a few thousand to the figure you get. There's no penalty for over-reporting. It's just to get an idea of what accounts you have and the "magnitude" of the accounts.

There are actually more than just three options. Compliance can be a range - from strict compliance to "nominal" compliance (i.e. only report what the IRS might actually have knowledge of - which amounts to US based income and possibly bank accounts likely to be reported under the FATCA rules) to non-compliance. 
Cheers,
Bev


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## iota2014

basicsboy said:


> Regarding iota2014's comment "Three options, as always: comply, renounce, ignore", Ignoring is what I've done up until now to be honest but *if I do one day want to use my US citizenship* it would be nice to be on good standing with the federal tax system


Yes - that's of course the crucial decision.




> I spoke to the UK's inland revenue service and have been told that as I am resident in the UK, and working in the UK, and being paid as a UK employee. I'm taxable only in the UK.
> 
> She then pointed me to the following double taxation agreement: [Can't send links so just search "Tax treaties between the UK and USA and related documents." for the gov uk page]
> and specifically article 14:
> 
> “salaries, wages, and other similar remuneration derived by a resident of a Contracting State in respect of an employment shall be taxable only in that State unless the employment is exercised in the other Contracting State. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in that other State.”


For most people, earned income is cancelled out by the FEIE or tax credits. It's passive income that can get walloped by the US, if you're an IRS-compliant US citizen. The UK doesn't collect for the US, but does share information. 



> @iota2014 re: FINCEN 114 - commonly known as FBAR.
> Are there FEIE style exemptions for such a form? Can this be filed online?


FINCEN 114 is only a reporting form. It's filed online from the link I posted. 



> Can I rely on banks to backdate as far as 2014, especially if I've changed current account since then?


Do you mean for copies of past-year statements? You would have to ask each bank. Most would probably charge. When I did it, I made a guess and added some to be on the safe side.



> I probably only had higher than $10,000 during April 2015, how accurate do I need to be on the FBAR - do I need to cross-reference my multiple bank statements to find out the time I had more than $10,000 in there or do I just supply year-end and year-start figures?


You're meant to file for every year in which the aggregated balance was greater than $10K. You supply the high aggregated balance.


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## celticweb

Hi basicboy
I am another accidental American living in the UK but with the problem of having a US birth place, my UK parents were temporarily working in the US when I was born there. so I didn't have the benefit of being able to hide as easily. I do however benefit from not being subject to the exit tax. 

I did comply and renounce but if I could have stayed under the radar without a US birth place, I would have liked that option. and also Bev's advise of soft compliance. 

Bear in mind that once you contact an Accountant be very careful because they will create a situation of over compliance that forces one to renounce. that's what happened with me. I felt I would have drowned in paperwork later on and things would have gotten more complex as I got older. Paperwork was filed to be safe. So everyone was safe except me.

One thing I do have to say is that it is perfectly possible to do the tax returns on your own. I did the 2011-2014 with an accountant and filed myself for 2015 and intend to file myself again for 2016 which will be my final year for filing. I found it very easy. Of course it helped that I had some tax returns as models with no change of circumstances but really it's not that hard with just a wage and a bit of bank interest. Mine were a bit more complex than just that but nothing too complicated.

For the bank balances for Fbar, I had some online accounts with all the balances I needed and the one account that I didn't, i ordered 6 years back statements so managed to get everything I needed.

Good luck and don't panic and think things through before making a definite decision.


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## iota2014

basicsboy said:


> I spoke to the UK's inland revenue service and have been told that as I am resident in the UK, and working in the UK, and being paid as a UK employee. I'm taxable only in the UK.
> 
> She then pointed me to the following double taxation agreement: [https://www.gov.uk/government/uploa...le/507431/usa-consolidated_-_in_force.pdf...]
> and specifically article 14:


With regard to the treaty, by the way, you should be aware that unfortunately most of the treaty benefits, including Article 14, don't apply for US citizens, because of Article 1.4 (known as the Saving Clause):



> Notwithstanding any provision of this Convention except paragraph 5 of this Article, a Contracting State may tax its residents (as determined under Article 4 (Residence)), *and by reason of citizenship may tax its citizens*, as if this Convention had not come into effect.


See Article 1.5 for a list of the treaty paragraphs that apply for US citizens.


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## B!T

The advice you received from HMRC was incorrect, you do need to file US tax returns, and when you do claiming exemptions will in all likelihood eliminate your US tax liability, while the tax treaty in itself won’t. But you need to file to claim them and become compliant and not face possible US fines in the future. It sounds like the IRS Streamlined Procedure is definitely the best way forward for you. The accountant you spoke to was expensive. Try one of the online specialist US expat tax firms - google US expat tax preparation.


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## iota2014

B!T said:


> The advice you received from HMRC was incorrect,


Incorrect *for a US citizen*. Correct for others.

It's not much use asking HMRC assistants whether one is or is not liable for US tax on this or that type of income. It's not their job. The DTT is not there to protect UK-resident US citizens from US taxation. It's there to allow the UK and the US to reach agreement on which country gets to tax what in order to prevent "double-_non_-taxation" (e.g. treaty-shopping) while avoiding double taxation. 

Unfortunately, what tax authorities - especially the IRS - consider double-taxation is very far from being the same thing as what most of us would see as double taxation. As far as the IRS is concerned, any income of a US citizen that is not taxed by the UK - such as a tax-free savings plan designed to help people provide for their retirement - can and should be fully taxed by the US. It's entirely wrong, morally, IMO.



> It sounds like the IRS Streamlined Procedure is definitely the best way forward for you.


The Streamlined Procedures are an "amnesty" program for people with significant tax arrears. The OP evidently owes little or no tax, is therefore not in need of amnesty, and can simply backfile.


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## Bevdeforges

I tend to agree with iota2014 on this one. You don't need the Streamlined program - particularly if you owe no taxes. There used to be an IRS office in the US Embassy in London (as well as in Frankfurt and Paris) but those got closed down a year or so ago and all the personnel (all 10 or 12 people total) were transferred back to the US.

Take it slow, and if you decide to "get caught up" consider first filing the current year's forms and returns (i.e. for 2016), see how it goes, and assuming you wind up with a $0 tax due, then consider back-filing those prior years (no more than 3) where you actually had a filing obligation. But, with no tax obligation, and assuming your FBARs aren't showing balances in seven or more figures (yes, I mean $ millions), I wouldn't get too worried about back filing those - at least not in a big hurry.
Cheers,
Bev


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## Moulard

My personal view is that renunciation because it is all too hard is perhaps a bit of a knee-jerk reaction. One I have to admit that I have fought on more than one occasion.

I would also not be too stressed about filing deadlines and the like, particularly if you have some confidence at the moment that you will end up with zero tax due. Remember for the 2016 return you have until 15 June, and all you have to do is submit a form to get an automatic extension to 15 October... or write a nice letter to them and get an even longer extension... so in short you have time on your side.

If you make a decision to file the back returns.... my strategy would be to actually try to draft all of the returns in parallel rather than one at a time, because it allows you a chance to think about some of the more confusing bits. It gives you a chance to realise you made a mistake when prepping 2016 and correct it in the 2014 and 2015. For a simple returns the longest and hardest part is the administrative bits of gathering all of the information you need from bank statements, payslips, tax returns and the like and then converting it all into USD.

As Bev says, take it slow.. here is some guidance to help you along a bit.

1040 – line number references below are for the long form, they will be different on the shorter variants.

Most likely the only lines that are relevant will be :

Line 7 – this is where you report Wages, Salary etc.

Calculate what you earned for each US tax year,(ie calendar year) convert it to US Dollars using the IRS Average Rate if your income was more or less evenly distributed through the year.

If you still have payslips then it is easy. If you don’t then you can reverse engineer it using your employment contract, any raises you may have received etc. If the figures are going to be below about 100,000 USD don’t sweat too much about being perfectly accurate. (


Complete Schedule B

Report interest and dividends on an account by account basis. Remember to complete Part III at the bottom - you will need to file Schedule B even if you received no interest or dividends because of part III.

Given you are reasonably young chances are all you need to really consider will be interest from savings accounts etc. Go through your bank statements, add it all up. Convert it to US Dollars. Enter the total on 1040 Line 8 –

Form 2555 – this the form you can use to exclude most if not all of your income.

You can exclude the first 99,200, 100,800 and 101,300 of your wages and other earned income (the limits for 2014-2016 respectively)

If your wages were below that use the EZ version, if not use the full version.

Enter the excluded amount on 1040 Line 21 As a negative. 

Chances are that the standard deduction and exemption will take your taxable income down to zero. That is where you want to be. Don’t do anything more than is required to get your taxable income down to zero.

If you end up at zero tax due you will not be penalised, because penalties for late returns are mostly a % of the tax due.

If you aren’t at zero, then go back and consider Schedule A – Itemised Deductions and the Housing Exemption. 

The only caveat on the above I would call out is that I don’t know enough (read anything) about UK Pension schemes or their treatment under the UK-US Tax Treaties but you may need to consider payments into such a scheme as income now rather than when you are able to draw down on it.

Again, as you are relatively young, chances that you have to File Form 8938 are small, but you should read the reporting requirements and make sure. Chances that you have to file the FBAR are higher.


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## iota2014

> My personal view is that renunciation because it is all too hard is perhaps a bit of a knee-jerk reaction. One I have to admit that I have fought on more than one occasion.


A knee-jerk reaction is a reflex - i.e. a feature that has proved adaptive, and thus has persisted, over the millennia since our ancestors first grew knees. .

My first thought was "They can't do that!" - a knee-jerk reaction which has turned out to be largely true. My second thought, hard on the heels of the first, was "How do I renounce?". - another knee-jerk reaction which for me was indeed the sensible course of action.

The moral is - always listen to what your knees think, even if you subsequently decide otherwise. 



> The only caveat on the above I would call out is that I don’t know enough (read anything) about UK Pension schemes or their treatment under the UK-US Tax Treaties but you may need to consider payments into such a scheme as income now rather than when you are able to draw down on it.


It appears to me the OP doesn't really have any need or obligation to go ploughing through the turgid treaty-speak in search of additional opportunities to send money to the IRS. A UK pension plan belonging to a UK resident is taxable only by the UK, as one would expect. Sufficient unto the day is the evil thereof.


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## Moulard

Yes, but pushing the metaphor to its limits, but you don't go for amputation on the first twinge of pain. You put up with it until the pain isn't bearable anymore. At that point when you go to see the surgeon, they then say you should have come to see us a year ago, and we would have been able to rebuild the knee.

Everyone's pain threshold is different. Its why in hospitals they always ask you on a scale of 1-10. Its your own threshold and its the only one that matters. Similarly there are risks and complications with any surgery.

For an accidental American, with no US connections, US assets or US plans then it can be a simple decision one way or another. It can get much harder when any of those start to come into play. The financial decisions are always easy... its the emotional ones that get tricky.


On the UK pension side... my recollection was correct. I just didn't have the time to find it when I posted earlier.. which is why I took a cautious approach. A UK Pension arrangements are treated as qualifying ...

https://www.irs.gov/irb/2005-18_IRB/ar10.html


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## iota2014

Moulard said:


> For an accidental American, with no US connections, US assets or US plans then it can be a simple decision one way or another.


Or no way. Nine-tenths of those characterized by the US as non-resident USCs don't file US taxes or renounce.



> On the UK pension side... my recollection was correct. I just didn't have the time to find it when I posted earlier.. which is why I took a cautious approach. A UK Pension arrangements are treated as qualifying ...


Correct but the point is, it's irrelevant. The OP doesn't need to waste time worrying about what the dysfunctional under-funded maverick "everything is income" US tax machine would think about his UK pension. The US tax machine doesn't know anything about the OP or his retirement plans, and doesn't need or want to know. All the OP needs to do is keep it simple, claim the FEIE, and file FBARs if neeeded.


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## Sendrigo

basicsboy said:


> 1. Register for streamline tax certification (not sure where to do this)
> 2. Research if I need W2's from employers or if I can use a UK Equivalent
> 3. Calculate my income and UK tax paid for each 2014, 2015, 2016
> 4. File a 1040z for each by the filing deadline of June 16th 2017.
> 5. Pay the due tax on worldwide income commanded by the US Government.
> 6. File the form which relates to _Foreign tax credits for individuals - publication 514
> _
> 7. Hope that the refund I get somewhat compares to the UK tax I have paid (I am aware that this will not be dollar-for-dollar), hence 'hoping'.
> 
> There are other issues but I'd like to tackle things one at a time:
> Namely the bank account related filing that the US government requires if all your banks together contain more than $10,000 - which form is this?
> and I had a dormant company from 2011 to 2014 which received an inward investment of £10,000 but never received an income.
> 
> BB


Hi there,

There is a lot of helpful information on this thread but allow me to summarize it for you and make it (hopefully) easier to understand.

1. The Streamlined Foreign Offshore Procedures is probably the easiest way to get caught up if you haven't filed in several years, but it is typically used when the due date has elapsed for at least the last three tax years (2015, 2014, 2013) and you have not filed for at least those years. Given that you say you need to file for tax years 2016, 2015, and 2014, the due date for 2016 has not arrived and thus you are only 2 tax years behind. 

2. You do not need W2 forms from UK employers, and they won't be issuing them to you anyway. 

3. Correct. You should calculate what your UK income was in the last three years. The IRS has a site where you can use their exchange rate to exchange from British pounds to US dollars. If you decide to use the Foreign Tax Credit (see next point), yes, you should also keep track of how much income tax you paid in the UK.

4. If your income is under $103,000 or so, I recommend you file a 1040 and use the Foreign Earned Income Exclusion to not pay any US tax on that money. Of course, depending on your circumstances, you may decide to use the Foreign Tax Credit instead for taxes paid in the UK, and avoid paying double taxes on that earned income. 

5. Depending on your situation, you may not have to pay any US income tax. If your income is around $103,000 or less, you can simply use the Foreign Earned Income Exclusion to avoid paying US income tax on that money.

6. Please refer to point 4 above - you may certainly claim the Foreign Tax Credit instead of the Foreign Earned Income Exclusion. Please note that you can use only one or the other on that income, you cannot claim both the credit and the exclusion on the same income, if that makes sense.

7. You are not going to get a refund in the US if you just have income that is excluded by using the Foreign Earned Income Exclusion. Pretty much the best case scenario would be that you do not end up paying US tax on that money you earned in the UK.

8. The form you are referring to is the FBAR form and these are filed online, and are very easy to file. I do this all the time for my clients.

For full disclosure: I am qualified to make the statements above based on being an Enrolled Agent, which is essentially a US tax expert. Further, a good 90% of my clients are overseas Americans.

<snip>

Welcome to the wonderful world of US taxation!


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## Sendrigo

basicsboy said:


> Accountants quoted me £1350+VAT for each year of filings, and £500 for the streamline certification.


By the way, unless there is a lot more information that you withheld here, I think the quotes above are insane. There is no way that it should cost 1350 per year to get caught up with your taxes.

Which would be echoing what others have said here...

The quote for the streamlined filing procedures is much more reasonable, unless it was a per year figure.

Just my opinion...


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## Bevdeforges

IMO, even 500 GBP sounds outrageous to me - at least if the OP has a fairly simple situation. It's not that difficult to do the backfilings yourself (if you don't owe any taxes, the penalty for filing late is $0 because it's a percentage of the taxes owed). 

Worry first about filing for 2016, the "current" filing year. You can use one of the Free File services if you're eligible - or use a paid-for service (like TurboTax, TaxAct or H&R Block) to figure how the system works. Once that is done, you can get the past years programs for a reasonable fee if you decide you want to file those. (Or, using your 2016 returns as a model, just download the prior year forms from the IRS website and fill them in yourself.)

When you're just starting out, the tax forms aren't all that complicated. You just leave the lines that don't apply to you blank. But using a software to show you where to put what can be a big help.
Cheers,
Bev


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