# Tax



## Granite (Mar 20, 2011)

Hi, Can anyone please give me some advice I moved from the UK 6 years ago to Georgia in the U.S with my company. I have filed taxes every year on the income I have been paid in the States. I have a property back in the UK which I rent out and get some interest on savings from a bank account from UK which I have been paying taxes on, problem being I did not realise I had to pay taxes to the IRS as well on my UK income. Also my CPA never adviced me that i had to pay tax over here for the property and savings i had in the U.K. I have tried number of CPA'S to see if they can help me, but they all say they do not know what to do so we are stuck. I even called the IRS but got put on hold for ages and never got any good answers to my questions. 
My wife and myself just do not know what to do.


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## twostep (Apr 3, 2008)

See PM - I sent you contact information on a long time expat tax person in GA. Please keep us posted as questions such as yours come up frequently around April 16.


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## Bevdeforges (Nov 16, 2007)

You may not actually have to pay taxes on your UK income, but you do have to declare it.

The easiest thing to do would probably be to file amended returns for last year and maybe the year or two before. You file an amended return on a form 1040X, and basically you just kind of add your previously undeclared UK income to what you filed before, tell them you didn't realize you were supposed to declare UK source income - and then you take the foreign tax credit (form 1166) for the taxes you paid in those years against whatever added US tax liability those other bits of income produce.

Chances are, you will have only a small amount to pay (if anything) and if that's the case, you can probably not worry about back filing all the way back to the first year you were in the US.

All the necessary forms are on the IRS website for the prior years. Right now most CPAs are in the thick of tax season, which may be why they are brushing you off. (I can't imagine they wouldn't think to simply file amended returns to see just how much is involved.) 
Cheers,
Bev


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## Zoom (Jul 7, 2008)

This is my advice. Rent out your UK apartment and keep the income in the UK (maybe not in a bank, maybe have a relative or good friend collect it in cash if possible). There's no need to declare it to the USA. If you do, they'll just p*ss it away on phony war # 3 with Libya or some other nonsense. Is this legal? Who knows, Who cares (Are all these "wars for oil" legal? Who knows but the sure thing is they sure are massively immoral, killing tens of thousands of innocent people. It's your money, it's your property. Why should the effed up USA Government be allowed to WASTE your money on evil deeds? They shouldn't (so don't let the thieves get their paws on it - I say, SCREW 'em) REMEMBER, they do NOTHING good for the AMERICAN people, the best thing they are good at is taking our very hard earned money and spending it on pointless wars - I say, Keep it, it's YOUR cash. (you don't give a junkie more Heroin - SAME THING) Zoom


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## Bevdeforges (Nov 16, 2007)

Zoom said:


> This is my advice. Rent out your UK apartment and keep the income in the UK (maybe not in a bank, maybe have a relative or good friend collect it in cash if possible). There's no need to declare it to the USA. If you do, they'll just p*ss it away on phony war # 3 with Libya or some other nonsense. Is this legal? Who knows, Who cares (Are all these "wars for oil" legal? Who knows but the sure thing is they sure are massively immoral, killing tens of thousands of innocent people. It's your money, it's your property. Why should the effed up USA Government be allowed to WASTE your money on evil deeds? They shouldn't (so don't let the thieves get their paws on it - I say, SCREW 'em) REMEMBER, they do NOTHING good for the AMERICAN people, the best thing they are good at is taking our very hard earned money and spending it on pointless wars - I say, Keep it, it's YOUR cash. (you don't give a junkie more Heroin - SAME THING) Zoom


Zoom, chill. Just FYI, what you're suggesting IS illegal. US taxpayers (which includes resident aliens and US citizens living overseas) are required to declare their worldwide income. Thanks to various taxation treaties, you shouldn't be taxed twice on the same income, but it takes a bit of figuring to make sure that happens as it should.

Secondly, you find me a government anywhere in the world that doesn't waste its taxpayers "contributions" on loads of evil, stupid stuff. Your beloved France is no different from the US in that regard.
Cheers,
Bev


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## Granite (Mar 20, 2011)

Bevdeforges said:


> You may not actually have to pay taxes on your UK income, but you do have to declare it.
> 
> The easiest thing to do would probably be to file amended returns for last year and maybe the year or two before. You file an amended return on a form 1040X, and basically you just kind of add your previously undeclared UK income to what you filed before, tell them you didn't realize you were supposed to declare UK source income - and then you take the foreign tax credit (form 1166) for the taxes you paid in those years against whatever added US tax liability those other bits of income produce.
> 
> ...


I believe the main problem is the savings as it is called by the irs an offshore account.


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## Bevdeforges (Nov 16, 2007)

Granite said:


> I believe the main problem is the savings as it is called by the irs an offshore account.


How much is the interest from the "offshore account?" If it's not significant and you've paid the UK taxes on it (and are thus able to offset any US tax with the foreign tax credit), there shouldn't be a problem.

Yes, the US threatens big time about not reporting foreign accounts, but unless you're using those accounts to evade taxes, it's highly unlikely they'll do anything about it.
Cheers,
Bev


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## Andrew James (Nov 6, 2010)

Bevdeforges said:


> How much is the interest from the "offshore account?" If it's not significant and you've paid the UK taxes on it (and are thus able to offset any US tax with the foreign tax credit), there shouldn't be a problem.
> 
> Yes, the US threatens big time about not reporting foreign accounts, but unless you're using those accounts to evade taxes, it's highly unlikely they'll do anything about it.
> Cheers,
> Bev


Hi Bev,

Funny to see you here again...!

The problem is that you are not allowed to file amended returns to disclose UK bank interest as you must go through the Offshore Voluntary Disclosure Initiative. If the IRS thinks you are trying to get around that by amended prior year returns, they will hang you out to dry. 

It sounds like our friend needs to get assistance on the OVDI. This is another example of how expatriate taxes can be very tricky and why I smile when my clients query why "it costs more than it does back in the US"!

Best,

Andrew


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## Bevdeforges (Nov 16, 2007)

When your only tool is a hammer, everything starts to look like a nail.

The OP is in the US. And the OP says that he has paid UK taxes on the interest in the account. Depending on the nature of the account and the balances held in the account, it may or may not have to do with the OVDI.

Despite their fearsome reputation, the IRS has been known to respond reasonably to a simple "mistake" - as long as the amounts of tax involved are not too much.
Cheers,
Bev


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## Russell26 (Apr 1, 2011)

*tax payments*

Hi All, I am new to this site and new to the concept of moving abroad. I have just had a move to California confirmed by my company and we are starting all the necessary investigations we need to do to get there. I have heard through the grapevine that a friend of a friend (i know, one of those stories) didnt have to pay tax on their income when they moved to the US for the first year. Is this right?

Also, whilst writing, we are lookign to move with our 12 year old son to the San Diego area and I need to start looking for possible schools. We are going out in June and would like to set up some appointments with schools in areas we like to try and work out the best area in which to live in, does anyone have any idea where i may find this information please?

Is there anything else you think I should need to know before jumping in to moving without covering all bases.

Many thanks

Russell & Jo


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## twostep (Apr 3, 2008)

Russell26 said:


> Hi All, I am new to this site and new to the concept of moving abroad. I have just had a move to California confirmed by my company and we are starting all the necessary investigations we need to do to get there. I have heard through the grapevine that a friend of a friend (i know, one of those stories) didnt have to pay tax on their income when they moved to the US for the first year. Is this right?
> 
> Also, whilst writing, we are lookign to move with our 12 year old son to the San Diego area and I need to start looking for possible schools. We are going out in June and would like to set up some appointments with schools in areas we like to try and work out the best area in which to live in, does anyone have any idea where i may find this information please?
> 
> ...



On an a bit sarcastic note - ask the friend of a friend to file your taxes for you. Go through some of the posts here, talk to HR , google IRS,gov. Or simply use common sense - government not taxing? There is a very active connection UK/Us when it comes to taxes. You will file combined income on both sides, Break here, break there.

Use the search option pls - schools in San Diego has come up several times recently.

Have you negotiated a contract with relocation UK/US US/UK, employment retention, appropriate medical coverage, housing/temporary expenses ..., exchange flactuation...


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## Bevdeforges (Nov 16, 2007)

Russell26 said:


> Hi All, I am new to this site and new to the concept of moving abroad. I have just had a move to California confirmed by my company and we are starting all the necessary investigations we need to do to get there. I have heard through the grapevine that a friend of a friend (i know, one of those stories) didnt have to pay tax on their income when they moved to the US for the first year. Is this right?


Can't help you on the school question, but don't believe that "friend of a friend" story for a minute. If you are working in the US (i.e. if you are resident in the US and working) you are liable for US taxes and withholdings (US "social security" - which is primarily a pension system, plus whatever health insurance benefits your employer offers).

The US insists on your declaring and paying taxes on your worldwide income if you are resident in the US. I'm not sure of the UK take on this, but make sure you notify the tax authority there that you are leaving the UK. Your employer should be helping you on this - often they offer some form of tax assistance, at least for the first year or so, but that usually consists of a tax preparer or tax preparation assistance.
Cheers,
Bev


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## Macon2004 (Apr 9, 2011)

Bevdeforges said:


> Can't help you on the school question, but don't believe that "friend of a friend" story for a minute. If you are working in the US (i.e. if you are resident in the US and working) you are liable for US taxes and withholdings (US "social security" - which is primarily a pension system, plus whatever health insurance benefits your employer offers).
> 
> The US insists on your declaring and paying taxes on your worldwide income if you are resident in the US. I'm not sure of the UK take on this, but make sure you notify the tax authority there that you are leaving the UK. Your employer should be helping you on this - often they offer some form of tax assistance, at least for the first year or so, but that usually consists of a tax preparer or tax preparation assistance.
> Cheers,
> Bev


The US doesnt care where you live - if you are a US citizen or green card holder you pay US income tax on WORLDWIDE income


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## whybee (Apr 15, 2011)

Granite said:


> Hi, Can anyone please give me some advice I moved from the UK 6 years ago to Georgia in the U.S with my company. I have filed taxes every year on the income I have been paid in the States. I have a property back in the UK which I rent out and get some interest on savings from a bank account from UK which I have been paying taxes on, problem being I did not realise I had to pay taxes to the IRS as well on my UK income. Also my CPA never adviced me that i had to pay tax over here for the property and savings i had in the U.K. I have tried number of CPA'S to see if they can help me, but they all say they do not know what to do so we are stuck. I even called the IRS but got put on hold for ages and never got any good answers to my questions.
> My wife and myself just do not know what to do.


If you hold foreign accounts overseas that the SUMMED balance during the year were equal to or greater than $10k US (ie you have 3 accounts with $4k in each, or 10x $1k accounts) - you need to check a box on your tax return. 

Then separately you need to file an FBAR form declaring these accounts and the maximum they were worth during the year.

There may be something about owning foreign property too on your tax form.

There is a volunteer program currently to help people sort out their overseas FBAR requirements and fixing previous years US Tax forms. However this ends in end Aug this year. All corrections and filings need to be complete by this date. Outside of this volunteer program, you're in a lot worse of a situation.

Would recommend speaking with a tax lawyer about this first. Make sure you shop around and find someone who has dealt with this. There are a lot of opportunistic tax lawyers out there who will panic you into hiring them as this topic is touchy and penalties can be high. Problems with FBAR declarations are a lot worse than not declaring all your world wide income. They also don't recommend dealing with this issue by yourself with the IRS. 

Unfortunately many expats think - we'll my bank account back home is taxing me at a non-resident rate - don't need to do anything in the USA, however the US Gov is after every cent you get and they want to know about it. Interest IS income.

So though you don't have to pay your tax twice - you will get tax credit for the tax you have paid overseas, you still need to DECLARE it - and the Tax you paid on it. Ammending your past tax returns is possibly worthwhile, and there's no issues with doing so if you have been filing FBARs (if at all necessary). The issues arise if you haven't declared FBARs and are trying to correct those too.

Unfortunately many EXPats are in this situation - either they didn't know or it wasn't explained to them.


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## Bevdeforges (Nov 16, 2007)

> There may be something about owning foreign property too on your tax form.


To my knowledge, there is nothing about owning foreign property on the US forms.

Not having filed the FBAR declarations isn't good. But the IRS (like every other arm of government these days) has limited resources, and probably won't go after you if it's clear your failure to file was a good faith omission (and that you didn't actually owe much in the way of taxes).

Put together the back tax returns (or amended returns) and see exactly how much you're looking at (if anything) in back taxes. That will tell you whether or not it's worth finding a tax attorney to help you out with the back filings.
Cheers,
Bev


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