# US Tax - Dual Citizen moving to USA



## emmarshy (Jun 9, 2013)

Hi, 

I'm a dual citizen of UK and USA (by birth) living in New Zealand. 

I'm a week and a half away from temporarily moving to the USA (for a year or so), and found out a couple of weeks ago that I was meant to be completing US tax returns and FBAR's. I've spent the last 2 weeks frantically digging out information and have managed to get most of the info for my 2012 return. 

Can someone please help me with the following questions:
> Once I move to the US will I lose my ability to use the 'Streamlined' process?
> Once I move there will I lose the ability to use the 'Foreign exclusion' for my taxes I've paid in the UK and NZ?
> What will happen if I just move to the US and start filing returns once I get there (without filing back returns)?

This is causing massive stress and I don't think I'll be able to meet the 15 June deadline for 2012 and will definitely not be able to file the past returns before I move to the US.

> Is this serious enough to delay my trip to the USA?
> Should I hold off getting a job / bank account in the US until I have sorted out my taxes? - I'll be working for my NZ company for a little bit longer when I'm out there. Then will be searching for work.

Any help will be appreciated. This is a mindfield and is causing massive stress - I really dont understand why I need to provide so much information to the USA when I don't even have to provide that level of detail to the countries I'm being taxed in!!!!????


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## Nononymous (Jul 12, 2011)

I would take the blasé approach and do nothing. 

Move the US as planned. Start working as planned. File your taxes next year. If and when you get a letter from the IRS saying there's no record of previous years, you reply by saying I was in New Zealand and had no idea, but I'll get organized to file something at some point in the future. 

Then go back to New Zealand and deal with it in your own sweet time.

Relax.


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## Nononymous (Jul 12, 2011)

PS I was in this exact situation twenty years ago. When after filing US taxes for the first time I received a polite letter from the IRS inquiring as to the whereabouts of previous years' returns, I wrote "was living in Canada" on the letter (possibly block capitals, in crayon) and mailed it back to them. Thus ended their investigation.


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## BBCWatcher (Dec 28, 2012)

emmarshy said:


> > Once I move to the US will I lose my ability to use the 'Streamlined' process?


No.



> > Once I move there will I lose the ability to use the 'Foreign exclusion' for my taxes I've paid in the UK and NZ?


No for tax years when you qualified for the Foreign Earned Income Exclusion (i.e. when you lived overseas). Yes when you're living in the U.S. That's why there's a Foreign Tax Credit, and you should be running the numbers with and without the FEIE anyway to see what's most favorable.



> > What will happen if I just move to the US and start filing returns once I get there (without filing back returns)?


Possibly nothing, but I disagree with Nononymous. Take the time to do this right (including FBARs if applicable).



> This is causing massive stress and I don't think I'll be able to meet the 15 June deadline for 2012 and will definitely not be able to file the past returns before I move to the US.


OK. You can file IRS Form 4868 to extend your tax year 2012 filing deadline to October 15. Make sure it arrives at the IRS by June 15th. There is no extension available for FBAR.



> > Is this serious enough to delay my trip to the USA?


Assuming you do not actually owe back taxes, no.



> > Should I hold off getting a job / bank account in the US until I have sorted out my taxes? - I'll be working for my NZ company for a little bit longer when I'm out there. Then will be searching for work.


With the same assumption, no.

There's not actually any penalty for late filing or nonfiling if your tax form legitimately/truthfully shows a zero (or better) tax liability. FBARs are different: there's a penalty for late/nonfiling, although there's a compliance program for late filers still running, so just get those in as soon as you can if you meet the requirement to file.

For completeness I should also mention that you must register with U.S. Selective Service if you are a U.S. citizen male living anywhere in the world age 18 to 25 inclusive, or if you are a male resident (legal or undocumented) of the U.S. of the same age.


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## Bevdeforges (Nov 16, 2007)

I tend to go with Nononymous' suggestion. Of course the first big question is whether or not you have a US social security number - because without that, your tax returns won't be accepted by the IRS anyhow.

If you do have a SSN, then I'd focus on getting the 2012 forms done and submitted first. What counts for the Foreign Earned Income Exclusion is where you were resident while earning the salary, not where you are when filing the forms, so if you have to put off filing until you get to the US, it's not an insurmountable issue.

As for the FBARs, as long as you have the account numbers and addresses for the banks/financial institutions, you can file the 2012 form. Just use a good faith estimate of your high balance (maybe rounded "up" a bit) and go with that. (They are really more interested in the disclosure of the existence of the account than with what high balance you report.)

Contrary to popular belief, no one at the border will check for tax filings, and the banks don't check that stuff, either. But it's always best for you to file voluntarily before the IRS has some reason to check up on your filings.

However, you are far from the first person to have found out late in the game that you "should have" been filing. Don't panic - take things one step at a time, and if you have to wait until you get to the US, then do so. Just don't put it off too long.
Cheers,
Bev


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## emmarshy (Jun 9, 2013)

Nonymous, BBCWatcher and Bevdeforges.... thanks all for your replies - they have done wonders for my stress levels. This has all conveniently come at the same time as moving!!!

My main concern was not being able to use the streamlined process as two of the conditions are: 
"not been in the US since 2009" and 
"not filed a return since 2009".
... so when I move to the US and file 2012 return I will not longer meet these two conditions. Perhaps I was taking them too literally and filing the 2012 return is actually the start of the process.

So right now I'm going to concentrate on getting 2012 nailed (deadline is so soon), then move to the US and start my new life as normal and not worry about the IRS. Then gather my tax information for past 3 years and file these as soon as I've got all the information together (which may take a couple of months). 

Thanks all, I'm going to go and breathe a sigh of relief then start the mountain of unnecessarily complicated paperwork that is required by the American tax system.... Seriously; I have an MEng and dont understand them - how do the Americans that can't afford an accountant get this correct?


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## Nononymous (Jul 12, 2011)

Well, millions of Americans living abroad ignore their filing obligations, wittingly or unwittingly. That's one valid response to the complexity.

If you don't owe any money there's no penalty for filing late, so don't stay up all night if you don't need to.

Also investigate whether the streamlined process is worth doing - there are some differing opinions on this.


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## BBCWatcher (Dec 28, 2012)

I'd get the FBARs done first. Those have a penalty assigned for nonfiling (unlike tax forms which have no penalty for nonfiling if you don't owe tax), and the Treasury Department is presently in a good mood when Americans get voluntarily compliant. I can't promise that good mood will last.

Every U.S. passport contains a tax compliance notice. Maybe I'm the only person who read it.


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## Bevdeforges (Nov 16, 2007)

Just checked my current passport - the tax compliance notice doesn't really tell you much, except to refer you to Publication 54.

How "urgent" the filing of the FBARs is will depend on how much money you've got in overseas banks and investment accounts. It's really doubtful the IRS is going to waste their somewhat limited resources on someone who neglected to file FBARs in the past for $100,000 or so in absolutely "vanilla" bank accounts. If you've got something approaching $ 1 million or so, including some fancy investments, then I'd get them filed ASAP. 

Given the current IRS "scandal" going on in the US (ho hum - I thought political organizations weren't supposed to be given tax-free status at all!) they are going to have to devote their audit resources toward catching some big, obvious tax cheats and not overseas residents with dead normal bank accounts. 
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

Bevdeforges said:


> Just checked my current passport - the tax compliance notice doesn't really tell you much, except to refer you to Publication 54.


It says a bit more than that, but reference to Publication 54 (with the Web address even) is exactly what they should be doing to keep Americans aware of these requirements, so good for them. There's also a Selective Service notice, again a good idea. Somebody is at least trying here.



> Given the current IRS "scandal" going on in the US (ho hum - I thought political organizations weren't supposed to be given tax-free status at all!)


Yes, exactly, well put. The scandal is that the IRS let all these organizations slide through (mostly on the "right," but also some on the "left"). Fortunately the debate is slowing shifting to that reality, and the IRS agents (bless them) are fighting back. If Congress wants political organizations to be tax exempt then they should change the law, but in the meantime the IRS _should_ be questioning groups with "tea party" or "progressive party" in their names if they apply for tax exemptions. What next, nobody can audit a group with "society to promote financing of terrorism" in its name?

And Congress needs to better fund the IRS so they can do an even better job.



> they are going to have to devote their audit resources toward catching some big, obvious tax cheats and not overseas residents with dead normal bank accounts.


I think I agree with that but with some caveats. For example, I'd be even more inclined to get FBAR compliant if I held a Swiss bank account. UBS, for example, is the gift that keeps on giving to the IRS and Treasury Department, and the IRS is going to keep working through that list in their priority order. In other words, I don't think the clock is unlimited.


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