# Help - Dual National not working



## robthomas (Jun 6, 2012)

Hey Guys

I've read through the forums a lot - great stuff!

My question is this:

I was born in the states, but have only been back there for university - otherwise I have lived in India (I am a dual citizen) - I am 28 years old.

I come from a business family, and I've never really worked up until now - I know it sounds awful, but I just lived at home and lived off my parents doing nothing. I did have an account in India where about 10-12 thousand dollers per year were sent to me by my dad as an allowance. 

I haven't filed any taxes because I wasn't working, and I didn't think I needed too - I've read the forum and feel differently now.

Basically, I'm not trying to defraud or cheat taxes - I just want to get in the system, but I'm not sure they'll just accept my answer that I was a lazy spoiled git, as sad as it is. 

Would the IRS automatically know about my Indian account opened on my Indian passport? It's only a few thousand dollers, and I'm scared to go into backfiling. I'd just like to start filing now that I am actually going to start working.

The reason I am asking is this: my dad has had enough of my laziness and he's giving me an opportunity to start working with him, and to prove myself over time, and I'm getting married so I need to get my act together. 

Ideally, I'd like to start filing from this year onwards, and be in system officially and keep up to date from here on in. Is this possible, or should I file for backtaxes even though I didnt work, and the minimal allowance paid to me was in an indian account on an indian passport? 

Is it possible for me to start filing my first return at the age of 28? In this part of the world, living with and off your parents for a while is not uncommon, and I'm scared this won't translate to the IRS. Shall I file the back taxes even though I'm scared the living of the parents might not culturally translate well.

I'm not a crook, and I'm dissapointed the laws are so scary and hard to understand that even people like me who just want to enter the system are scared.

Both my parents are Indian btw.


----------



## robthomas (Jun 6, 2012)

I forgot to add

My dad gifted me 2% equity in the family business (a private corporation - llc) - he did this when he founded the business (2 percent each for all 4 of his children) as a formality for good luck / thought having kids there in name but negligible share would be good luck. It makes about USD 150,000 profit a year, so its a very small business, but has allowed me to leach off him for years.

The business has never paid dividends, and has nothing to do with america as my dad owns 92 percent and he's indian. I only found out I was a shareholder about 6 months ago when my dad began to convince me to start work.

It's only registered in India, and only does business with Indian companies. At 2 percent do I have to declare it? I'm scared its a liability and it's an unwanted gift! I want to give it back to my dad if there's a problem before filing taxes!


Sorry to dump all probelms like this.

Your valued guidance would be appreacited.


----------



## Bevdeforges (Nov 16, 2007)

Don't worry - I think your plan of just starting to file now will work fine. Plenty of "lazy gits" don't start filing in the US until age 28 (or later) thanks to Mom and Dad putting them through grad school.

Just start reporting your Indian bank accounts on the FBAR form (the Treasury form that you file separately from the tax forms) this year. It's highly unlikely they'll come after you for a small bank account. Believe me, they have bigger fish to fry!

And the ownership in your father's company is not your problem at only 2% (I think the threshold for having to report is closer to 10% - and even then, it depends a bit what your 2% is worth). If your father and all of your siblings also have US nationality, it might be necessary for the company to declare that there are US persons holding in total more than the 10% threshold - but that's not your problem. (And again, the IRS has far bigger fish to fry.)

Like the ad says, just do it. You're far from the first person to start filing at age 28 (or even older!).
Cheers,
Bev


----------



## robthomas (Jun 6, 2012)

Thanks!!!

So basically:

I am a salaried US citizen living abroad, earning only a salary:

I only have to file form:

1. the 1040
2. the 2555 

Are there any other forms that I would have to fill to file my tax return?

As a salaried employee living abroad, do I owe any Social Security (my employer is NON US entity, so they do NOT deduct social security) - do I owe any social security tax, and if so, what form would be applicable?

Finally, my wife is NOT a US citizen, and she does not have a SSN or a Tax number - should I file married filing seperately or shall i file together (is that even possible if she doesnt have a SSN or Tax Number?)

Thanks for all your help guys!

Almost there


----------



## jimmyjam (Jan 9, 2012)

*in your situation you need legal advice - do NOT try to file by yourself*

Dear Robthomas,

Indeed you are not the only adult living abroad who has become aware of the need to file and the draconian penalties for not doing so.

Like you, many in your situation wonder, how will the US ever find out about me? The answer is, first of all, FATCA. Your bank will have to report your balances to the IRS soon, first those over 50,000 but this threshold may be lowered in the future once they get the reporting going. Your bank will have to search through its client database, if it finds evidence of any US links (such as US birthplace or US money transfers etc) it will require you to give all your information to the IRS. Also, of course, if you ever want to return to the states you will have to renew your US passport and they can get you that way. Bev will tell you they are not "trapping" people this way (yet), but I can tell you americans abroad are very worried about this.

Your situation is not a clearcut, easy one: you have "passive" income, interests in offshore businesses, and you receive offshore gifts from your parents (green-card holders? ex-green card holders? foreigners?) 

I honestly believe would be foolhardy to just file as best you can without getting professional advice. Doing so could make you and your family incur confiscatory penalties and legal fees that could be life-changing.

The IRS is especially hostile to non-reported PASSIVE income which is what you have; gifts from foreign parents, perhaps returns from a family business, etc.

Depending on the amounts you have received for you living expenses, everything your parents have given you (did they buy you a car? pay for trips? expensive clothes? pay your rent? etc) could be subject to high taxes and penalties. There are forms that have to be filled in for all of this; these forms change each year and the thresholds change as well. 

If your parents are green card holders, did they renounce their green cards?
If they did not, are they still filing their US taxes from India and reporting all their businesses and accounts? If you regularize independantly, you could drag your parents into a regulatory nightmare.

If they still have their green cards, they are still US citizens and should have been paying US gift tax on funds given to you (above a certain amount each year). If they are not US citizens, you as a US citizen should have reported gifts on a form 3520. If they used to be green card holders, but formally gave up their green cards in the past, they are considered expatriates and you have to fill in a special form I think its 1780 to declare any gifts from expatriates at the highest possible tax rate (any expenses they paid for you over 18,000$ a year)....

If you have signing power and shares in a family company you cannot attempt to begin to regularize filings yourself. If other family members are also green card holders or US citizens the company may be a "FCO - foreign controlled organisation" have to be fully reported along US accounting rules. In any case there are numerous forms on which you will have to report the accounts over which you have signing power, the number of shares and net value of the company, etc... 

Your situation is far out of the "plain vanilla" case of a bloke who was working in Europe, paying 50% taxes, and forgot to declare his 11,000$ savings account.

In addition, in the future, any transfer of assets or money between you and any of your family members who are US citizens or not will have to be reported to the US and, eventually depending on the amount, taxed by the US.

You will be forced to consider the IRS impact of everything you sign and every transaction you do in India.

Have a look at this excellent article;

Why people expatriate | HodgenLaw, PC

Start reading through the ACA American Citizens Abroad website, look at the links to articles in the press, the letters to politicians, etc..

Start learning a much as you can and get legal counsel before you do anything.

That is my humble advice from someone who is preparing renunciation with lawyers and advisors.


----------



## jimmyjam (Jan 9, 2012)

*married to non-us spouse*



robthomas said:


> Thanks!!!
> 
> Finally, my wife is NOT a US citizen, and she does not have a SSN or a Tax number - should I file married filing seperately or shall i file together (is that even possible if she doesnt have a SSN or Tax Number?)
> 
> Almost there


US citizens, married to non US citizens abroad are also exposed to many problems.

I highly, highly recommend not filing by yourself, you must get help. 

Anything you give to your non-citizen wife (for example if you buy a house and include her name on the deed) must be declared and can be taxed by the US. 

IF you die, your Indian assets will be subject to US estate tax causing problems for your wife and children.

If your wife has assets, you may want to avoid having any signing power over them as they would have to be reported to the IRS.

US citizens with non-citizen spouses are in an extremely complex situation and for many, renunciation of US nationality is the only solution


----------

