# Returning to the US



## xpress (Jan 29, 2015)

Hello All

I have a big problem at the moment with my tax compliance and need your advice how to solve this situation.

I became a naturalised US citizen in 2004 and left US in 2006 at age 22 to study/live abroad. Before I left the US, I lived in CA. I do not owe any house or anything. When I lived in the US, I had a student job and filed my taxes.

I studied in the UK, found a job, stayed here. I never filed my US taxes since 2007 because, taking into account the FEIE, personal deductions and exemptions, I do not owe any taxes to the US government. I have not filed FBARS, even though I do have accounts in UK banks as I work abroad and save money here. 

I did not know that I have to file taxes even if I do not live in the US and do not owe anything to the US government. It was my stupidity not to do this.

Now, if I want to return to the US , live there and work - what shall I do? I really want to come into compliance. I again checked my numbers and I do not owe anything in the federal taxes. If I were to return to the US and find a job there - will there be any problems?

How can this situation be solved? Shall I do the offshore streamlined program and file FBARs? What about California taxes? I am not resident in California since 2006 and only visited the US a few times for few weeks in the last 9 years. 

I read the forums, but most people really never want/plan returning to the US. However, is this a big problem if I were to return?

Please help.


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## Bevdeforges (Nov 16, 2007)

It's not a huge problem - just one you probably want to resolve as quickly as possible.

Streamlined Filing Compliance Procedures is most likely the way you want to go with this. It's pretty much a codification of the old policy whereby you file the current year plus three prior years. If those show that you don't owe anything (or not very much), then you're "forgiven" and life goes on.

What they have added to the old policy is the need to file 6 years of back FBARs - but that's fairly simple, especially now since the FBARs all have to be done online. Unless you've done alot of shuffling of funds among different banks, you often can just duplicate the form, changing the year and the high balance totals and submit them all at once.

If you weren't resident in California you didn't need to have filed a return there. (Possible exception might be if you had owned a house and sold it in the year after the last return you filed there. But that's not your case.)

It's probably easiest if you file your back filings before you move back to the US. That way your records are updated well before you have to file your first tax return and/or FBAR as a US resident. Start with the 2014 return (due for June 15th from overseas), and then do the backfilings. If you want, you can use one of the online tax preparation software systems. TaxAct can be accessed as a freebie for the current year and back years are very reasonably priced. Just be sure you use a tax package that can deal with foreign addresses - there are only about 6 or 8 of them that can.
Cheers,
Bev


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## xpress (Jan 29, 2015)

Bevdeforges said:


> It's not a huge problem - just one you probably want to resolve as quickly as possible.
> 
> is most likely the way you want to go with this. It's pretty much a codification of the old policy whereby you file the current year plus three prior years. If those show that you don't owe anything (or not very much), then you're "forgiven" and life goes on.
> 
> ...


Bev, many thanks for your advise. This is a relief that my problem can be resolved. I do not mind filing the forms - I am just afraid there might be problems when I return to the US because I have not filed.

I want to get into compliance as soon as possible. Do I need to file 2011, 2012 and 2013 returns + current 2014 returns in the same package? or do I file 2011, 2012 and 2013 as part of the streamline and do a regular filing for 2014 before the June deadline?

As for California, I was a resident before I left in 2006. I do not own any house there. I do not generate any income in California - this means I do not need to file anything? I googled some topics on this and I understand California is one of the toughest states to lose the residency.


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## Bevdeforges (Nov 16, 2007)

Probably the easiest way to do things is to file the 2014 tax return first. Then, do the 3 prior years (2013, 2012 and 2011) which you'll have to send in on paper and marked as being part of the Streamlined Compliance program (full instructions about this on the IRS website).

For the FBARs, you have to file them online - and it's probably best to do them all at once. (Check the instructions U.S. Taxpayers Residing Outside the United States)

On the IRS site, you'll notice that there are separate instructions for the Streamlined Program if you are resident overseas or resident in the US. There isn't a whole lot of difference between the two, but probably best to submit the whole thing from overseas (with an overseas address) than to wait and use the US resident variation. (Gets it over with before you have to deal with all the hassles of an international move, if nothing else.)
Cheers,
Bev


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## DavidMcKeegan (Aug 27, 2012)

Bev is right, the Streamlined filing is the best way to get back on track with your US taxes, and fortunately it sounds as if you will qualify no problem. For the Streamlined program you will need to file 2011, 2012, 2013 and 2014. 

I am going to have to disagree however on filing the 2014 return first. I think it could cause unnecessary confusion if they were to receive the 2014 return and begin processing, without first processing your late returns. As such my advice would be to either submit all four years at once, or submit the Streamlined package, and then the 2014 return shortly after.

California is a tricky state for expats but as long as you have no significant ties or income coming from California, you should be fine to not file the CA return.

Good luck!


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## xpress (Jan 29, 2015)

DavidMcKeegan said:


> Bev is right, the Streamlined filing is the best way to get back on track with your US taxes, and fortunately it sounds as if you will qualify no problem. For the Streamlined program you will need to file 2011, 2012, 2013 and 2014.
> 
> I am going to have to disagree however on filing the 2014 return first. I think it could cause unnecessary confusion if they were to receive the 2014 return and begin processing, without first processing your late returns. As such my advice would be to either submit all four years at once, or submit the Streamlined package, and then the 2014 return shortly after.
> 
> ...


Thank you for your help. I reviewed the IRS instructions and they say that one needs to file returns for the past 3 yrs which are overdue. My understanding is that the streamline package can include returns for 2011, 2012 and 2013 (each consisting of form 1040, form 2555 to claim the exclusion, schedule B as I have some small interest) and 6 FBARs. I can do it now, say in February. 2014 forms can be then be filed as normal until June as it is not due yet. Will this satisfy the criteria for the streamline?

There is also some very confusing statement which I need to make/certify. Will it be OK if I say I didn't know I had to file as I thought I lived outside the US and have no US income and do not owe any taxes? Will they accept this?

As for CA, I do not have any income from the CA employers , no house on my name - nothing.


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## DavidMcKeegan (Aug 27, 2012)

Yes you can file in that way (file the Streamlined package now and then file the 2014 closer to June). 

Not knowing or understanding that you had to file US taxes is a legitimate excuse, and one that is true for many expats. Just be truthful with them and you should have nothing to worry about (especially if you will not owe anything to the US).


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## xpress (Jan 29, 2015)

Thank you. I am not worried about federal, my concern is more California. I read California does not recognise FEIE, so I am afraid being taxed on all income, even though I have not lived there after 2006; however, I lived there before.


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## Bevdeforges (Nov 16, 2007)

The "I didn't know and had no US source income, so I thought I didn't have to file" is the same one just about everyone is using. It seems to fly just fine. Some folks worry that the explanation isn't "enough" - but when dealing with the IRS, keep it short and keep it simple. But no, KISS doesn't stand for "keep it short and simple" - at least not the way I learned the acronym. <bg>
Cheers,
Bev


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## DavidMcKeegan (Aug 27, 2012)

It is hard to say if the California return will be needed without knowing more about your situation, but an accountant should be able to confirm if you decide to hire an accountant for the filing. If you want to file on your own, it may be beneficial to call the California tax authority and explain your situation to them...at least that way you have some confirmation.

Good luck!


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