# US citizen in UK - questions on tax



## maxmurphy (Oct 14, 2013)

Hi,

Like many others who have posted in this forum I have just discovered that I should have been filing tax returns to the US. I work and pay taxes in the UK, I wasn't born in the US, I have never lived or worked in US but I am US citizen because my father was a citizen and I obtained a passport when I was younger. I don't have a SSN.

I was oblivious to the requirement to fill in tax forms until I started reading up on it today and I'm wondering what I should do. I'm employed and payed in the UK by a US based company and for reasons related to my employment I can't really ignore the situation. 

My first option is to apply for a SSN and then use the streamlined filing procedure to get back on track. This would be pretty straight forward in terms of income tax for previous years as for the previous 3 years my earnings were under the allowance thresholds. However I'm not so sure about next year and following years so there are a few things I'd like clarified.

I received some money from shares in a UK based company on which there were some favourable tax conditions. Can I put these in the 2555 form ? 

Also for capital gains and salary income to be declared in both the 2555 and 1040 do I declare the gross amount before tax in the UK or the net after tax and national insurance deductions in the UK. 

What about pension contributions from both me and my employer which aren't taxable in the UK, do these go into the forms ?

Depending on the answers to the above questions I may have tax liabilities in future years (but probably not). The other thing that is worrying me ins the fact that I will have to declare bank accounts which are mostly joint with my wife who is not a US citizen. I've nothing to hide but I don't like the idea of getting my wife caught up in this process.

For me US citzenship is nice to have but not something I really need and if the tax situation is going to cost me money whether this be in the next few years or on my pension or my estate when I die maybe the simplest option would be to renounce US citizenship. If I do this without a SSN should I expect to be asked to file tax returns for previous years ?

Max


----------



## maxmurphy (Oct 14, 2013)

sorry, this should have been in the expat tax forum, i'll repost there


----------



## Bevdeforges (Nov 16, 2007)

maxmurphy said:


> I received some money from shares in a UK based company on which there were some favourable tax conditions. Can I put these in the 2555 form ?


No, the 2555 is only for "earned income" - i.e. salary and salary-like income. Shares are dividends or capital gains and must be reported without benefit of the exclusion.



> Also for capital gains and salary income to be declared in both the 2555 and 1040 do I declare the gross amount before tax in the UK or the net after tax and national insurance deductions in the UK.


Capital gains do not go on the 2555. They should normally be reported gross, with any taxes paid to the UK either as a deduction for "expenses" or (better plan) as a foreign tax credit on a form 1116.



> What about pension contributions from both me and my employer which aren't taxable in the UK, do these go into the forms ?


What is or isn't taxable in the UK has no bearing on your US filings. You are supposed to report your full gross income (i.e. before any deductions for pensions or other "benefits"). Technically, I suppose you should report your employer's contributions as income - though I know of many people who don't do so and have not been called to task for it.



> Depending on the answers to the above questions I may have tax liabilities in future years (but probably not). The other thing that is worrying me ins the fact that I will have to declare bank accounts which are mostly joint with my wife who is not a US citizen. I've nothing to hide but I don't like the idea of getting my wife caught up in this process.


Since your wife is not a US citizen and not subject to US taxes, you can simply indicate "NRA" (non-resident alien) for her name and/or ITIN (tax i.d. number) wherever it is asked for on the forms.



> For me US citzenship is nice to have but not something I really need and if the tax situation is going to cost me money whether this be in the next few years or on my pension or my estate when I die maybe the simplest option would be to renounce US citizenship. If I do this without a SSN should I expect to be asked to file tax returns for previous years ?


The rule is that you must have your last 5 (I think it is) tax returns up to date in order to renounce - which means you would have to get a SSN just to renounce. Makes little or no sense, but you could check with the US consulate to see if they can advise you.
Cheers,
Bev


----------

