# Filing USA tax return for American-born UK national



## tkstkstks (Jan 1, 2018)

Apologies if I have posted in the wrong place, I would really appreciate your help.
I am a US citizen by birth, living in the UK (citizen/national by residency; I have lived here since 2002).

I heard through word of mouth that as I am a US citizen, even though I have never worked there, I could have to pay tax there from my UK income.

I have just started earning and would really appreciate your advice as to where and how to start.

I believe from some reading, that I am to fill *form 1040 for the income tax, form FBAR/Fincen 114 for bank accounts, and form FEIE to prove I am a UK resident - to potentially exempt myself from paying tax on certain level of income from IRS. *Is this correct? Can I fill/send these online myself?

Does the new tax bill changes any of the above?

I'd really appreciate your help on this matter, and any advice you can give me as to how to go about this process.


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## Bevdeforges (Nov 16, 2007)

Yes, you've come to the right place here.

Officially, yes, if you were born in the US you are considered a US citizen and thus "should" be filing US taxes. However, unless you have significant investment income, or a high level of earned income (i.e. salary or similar), or complex financial resources, chances are you will actually pay little or nothing in US taxes.

And furthermore, unless you owe a "significant" amount of tax and have US based assets (bank accounts, investment accounts, other property) it's fairly unlikely that the IRS will actually "come looking for you."

First place to check is IRS Publication 54, which explains the filing requirements for "Overseas taxpayers" https://www.irs.gov/forms-pubs/about-publication-54 (This page contains links to both the pdf and html versions of the publication.)

You will note that you absolutely need a US Social Security number in order to file US taxes - so you may want to see if you can dig that up. (If you were born after the 1980s or so, you should have been issued a SSN at birth. Before that, you may not have been issued one until you needed one to work.) 
Cheers,
Bev


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## Nononymous (Jul 12, 2011)

And I'll offer the other viewpoint here. Do nothing whatsoever unless you plan on moving to the US. Do not under any circumstances enter the US tax system.

By the sound of things you are a classic "accidental American" with no tie to the US other than birth. Before you consider filing a return, you should do a little research. Look at the American expats Facebook groups, and the Isaac Brock Society web site. The prevailing wisdom is that if you are not already in the system, stay out - do not begin filing tax returns. 

At this point in your life, your financial affairs are likely quite simple and there is now danger of your owing US taxes. But later on there are potential costs due to investments, retirement savings, or real estate gains (see: Boris Johnson). Your US birthplace could potentially cause problems with access to banking services, in which case there's not much you can do other than renounce.

Do your banks currently know that you are a US citizen, potentially subject to FATCA reporting? If not, keep them ignorant, do not volunteer this information. Stay off the radar.


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## Nononymous (Jul 12, 2011)

Minor but important correction:

"and there is *now* danger of your owing US taxes" 

should read:

"and there is *no* danger of your owing US taxes" 

Also one more point. The US has no ability to collect outside its borders, with the exception of some Swiss banks. The IRS has no resources to come looking for ordinary non-compliant dual citizens living abroad, even those whose bank balances may have been reported by FATCA. It's quite toothless, so the risk of non-compliance is small to non-existent, while the potential self-inflicted damage of compliance can be high, depending on the eventual complexity of your financial affairs.

In your case I would not become compliant, at least not now. If you planned on moving to the US in the future, then it's a different consideration. Your US birthplace may cause problems down the road, either denial of banking and investment services - there are reports from the UK that while US citizens aren't denied basic banking, some investment firms won't touch them - or in loss of job opportunities where you'd have signing authority over employer's accounts. In this case there is no choice but to renounce. (In which case it's worth noting that despite what some may tell you, it's possible to renounce without any tax compliance before or after.)


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## Bevdeforges (Nov 16, 2007)

The only thing I disagree on is your statements about "your only choice is to renounce." But everything you've said about the limitations of the IRS to enforce US tax law on overseas citizens is right on the money.

What I would stress is that there is no need to panic, nor to try to fix anything in haste. (Usually just messes things up much worse.)

You need to assess your risks and your exposure on the US taxation issue in light of your plans for the immediate and more long range time frame. Yes, your US birthplace does raise that exposure level a bit - but I would definitely hold off on any sort of "to file or not to file" decision until a bank or financial institution raises the question of your "tax residences." 

Another clear "exposure" would be if you had bank accounts, investments or other financial assets in the US (or wanted to set up such things there). 

There are other, more subtle, issues - particularly whether or not you have the ability to pass on your US citizenship to any children you may have. (Those sorts of considerations can mess up the best laid plans.)

But in any event, renunciation is not the only choice. It's expensive, for one thing ($2350 at the moment) and involves certain decisions about future actions and options. 

Don't think that you choose between full compliance or renunciation. There are plenty of folks out there who practice various levels of compliance with the US tax rules - from non-compliance through partial compliance and up. All done with a realistic assessment of your risks and exposures.
Cheers,
Bev


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## Nononymous (Jul 12, 2011)

To clarify, by "your only choice is to renounce" I specifically meant cases where an individual's US birthplace causes them to lose access to banking or investment services, or employment opportunities. When that happens, coming into US tax compliance doesn't help, the only option is to get rid of the citizenship and produce a CLN to prove it. This is what's happening to dual citizens in Switzerland, where some banks essentially refuse all but the most basic checking account to American customers. 

(Note that US citizens born outside the US can more easily conceal said citizenship if they are willing to lie on bank forms, in those countries where place of birth is recorded or shown on national ID used to open accounts.)


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