# FBARs/SSN UK/US Dual...



## somewhereintheuk

Hello,
What a relief to find a forum where this is discussed rather than the myriad adverts from lawyers and accountants and tax-preparers putting the frighteners on everyone...

So, briefly, I'm a UK/US dual national by birth, lived in the UK all my life, work here, pay taxes here, only ever visited the US on vacation... 

I opened a new bank account (current account) a few months ago and was asked if I was a US citizen. "nothing to hide!" thinks me, said yes, then it asked for my SSN - I figured this was about money laundering or somesuch, dug it out, filled it in, the account opened and I thought little more about it...

Cut to last week when I read the article in the Guardian about people's accounts being stopped, something called FACTA and FBARs and wotnot... Consequently I've done quite a bit of reading.

So the basic question is what to do - I'd rather not get into filing tax returns (I've just run through it and I'm fairly sure my liability will be a big fat zero at present), but am I now on a radar because of entering my SSN and FACTA? And depending which other accounts I have which may be being reported (I have no recollection of whether I've been asked about nationality in the past), it's feasible I might have popped over the $10k limit here and there?

Should I just file FBARs? Should I just ignore it all? Should I attempt to get compliant? (I've currently no plan to move to the US, or derive an income from any work there)

Basically I'd like to be able to visit the US freely for holidays and not have to worry about having any debt due to the IRS.
Thanks in advance


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## underation

somewhereintheuk said:


> Hello,
> 
> So the basic question is what to do - I'd rather not get into filing tax returns (I've just run through it and I'm fairly sure my liability will be a big fat zero at present)


Yes - for the present, as you say. The trouble is, if you file US tax returns, you’ll have to forego savings accounts such as ISA (tax-free in the UK but not in the US). Plus other disadvantages. And even so, the tax due may not remain zero.



> ...but am I now on a radar because of entering my SSN and FACTA?


No. The US can’t compel you to file returns. US tax law is not law in the UK.



> Should I just file FBARs? Should I just ignore it all? Should I attempt to get compliant? (I've currently no plan to move to the US, or derive an income from any work there)
> 
> Basically I'd like to be able to visit the US freely for holidays and not have to worry about having any debt due to the IRS.
> Thanks in advance


It largely depends on your future plans.

The options are to renounce - costs $2350 but is very easy; you can visit the US, after renouncing, but of course you lose the right to live and work there; you just become a non-citizen. It solves all the banking problems. (I renounced because of the banking problems - no troubles since then)

Or to carry on as you are without filing; you keep the citizenship benefits, such as living/working in the US, but you remain subject to banking restrictions.

Or, if you do decide to start filing, take investment advice about which accounts you can legally and safely put your savings into.

With regard to FATCA - your accounts are probably being treated as FATCA-reportable, which means they get reported to HMRC and HMRC sends the reports to the IRS; which is annoying (or at least it annoyed the hell out of me  ), but doesn’t actually have any other impact, since you’re not laundering money or evading tax or financing terrorism.


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## somewhereintheuk

Thank you for your reply 
Renouncing seems like rather a big jump, and I'm not running any balances in ISAs. 

The question then comes back to the FBARs - now my current account is definitely being reported, do these need to be filed to avoid racking up some level of something with the IRS (including $10k penalties)? Or are the two systems completely separate?


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## underation

somewhereintheuk said:


> Thank you for your reply
> Renouncing seems like rather a big jump, and I'm not running any balances in ISAs.
> 
> The question then comes back to the FBARs - now my current account is definitely being reported, do these need to be filed to avoid racking up some level of something with the IRS (including $10k penalties)? Or are the two systems completely separate?


The FBAR requirement comes from a different part of US law than the tax requirements. It’s filed with a Treasury website (Financial crimes?) but is administered by the IRS. Whether it’s advisable to file FBAR if you’re not filing returns, I do not know.


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## underation

My personal view - if you want the citizenship, it’s reasonable to accept the obligations along with the benefits.

Whereas, if you’re not interested in the citizenship, it’s reasonable to renounce both the obligations and the benefits.

Pick-‘n’-mix tends to be riskier. (IMO)


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## Bevdeforges

First of all, let me remind you (and anyone lurking here) that ALL posts and replies here are merely the opinions of the posters. Even when it's a moderator who replies (like myself). No one posting here has any "inside information" other than, perhaps, personal experience. So take all replies with the usual "grain of salt."

OK, that said, at this point there seems to be little to nothing to indicate that the IRS is cross matching FBAR reports to what the banks report, nor are they cross matching either FBARs or the bank reports to individual income tax filings.

A couple of things to consider: What the banks are reporting (at least according to the bi-lateral agreements, which are available online) are the account coordinates (bank info, account #, holder name and SSN) and year-end account balance. (As of right now, they don't seem to be reporting any interest information.) And, many, if not all, of the bi-lateral agreements specify types of accounts that the bank do not have to report (usually standard "tax-free" savings type accounts with limited maximum balances). 

The IRS receives NO information regarding your salary (as long as you aren't working for a US government entity or something like that) if you are living and working outside the US, and most likely isn't receiving any information about most other forms of income sourced from within your country of residence.

At this point, it's pretty much up to you what you choose to report to the IRS if you choose to file US tax returns - though what you report had better agree with any "official" documents the IRS is likely to receive.

Don't forget, either, that there are filing thresholds - i.e. minimum amounts of income you need to have before you are required to file. (Plus, the IRS would have to make some assumptions about your filing status to decide which threshold applies - which is a whole other discussion for another time.)

There is a (fairly) recent law that says that they can take your US passport away from you if you have an outstanding debt to the IRS of $50,000 or more - but you would have gotten some sort of notice from the IRS if this were your case.

So, ultimately, the choice is up to you about whether or not to file and what information you choose to give them if you do.

Oh, one other point is that the IRS normally goes after "delinquent" accounts based on their estimate of how much can be collected from the account. If you're one of the many "overseas Americans" who owes $0 tax year after year, chances are they aren't going to bother you (especially if you live overseas).

As Rod Serling used to say (on Twilight Zone), "for your consideration..." (And, you do want to consider all the angles before spending $2350 on renunciation.)


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## somewhereintheuk

Again, thank you, that's really helpful. Just reading the bilateral agreement it seems that ISAs aren't actually reportable (not that I actually have one).


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## underation

somewhereintheuk said:


> Again, thank you, that's really helpful. Just reading the bilateral agreement it seems that ISAs aren't actually reportable (not that I actually have one).


Edit: not FATCA-reportable by the banks, if it’s a cash ISA

1040-reportable, yes. And no tax credits.


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## Nononymous

First off, my standard response (copied from a text file, I did not type all this just now):

If you are an "Accidental American" - a dual citizen who has lived all or most of your life outside of the US, with no US financial ties - and you discover that you have US tax filing obligations, the absolute WORST thing you can do is rush off to a tax advisor and begin preparing US tax returns. 

Stop, slow down, do some research. If the IRS hasn't found you yet, they aren't going to find you anytime soon. Furthermore, if you are a citizen in your country of residence, and have no US assets or income, the IRS has absolutely no ability to penalize you in any way, shape or form. (Unless you live in Switzerland, in which case all bets are off.)

There are good reasons for not filing, even if you would owe no US tax due to the FEIE or FTC. (1) It’s better to preserve your anonymity by staying out of the system and limiting the information seen by the US government, even if you are subject to FATCA reporting. (2) It might be relatively simple now, but in future you could have issues with pensions and investments and so on where US taxes can in fact be owed, even if you’ve never had US-source income. (3) Compliance costs can be expensive if you are not able to prepare the returns yourself.

The most likely trigger for Accidentals discovering their filing obligations is a FATCA/CRS letter or question from their bank. The best response is to simply answer "no" to any questions about US citizenship or tax residency. In come countries (e.g. Canada) simple self-certification is all that is required, one small lie and the problem is solved. In other countries (e.g. Switzerland) enforcement is taken more seriously and there are significant restrictions on the services available to US citizens. If you are born outside the US, it is easy to conceal US citizenship and continue with life undisturbed. If however you have a US birthplace on your national ID, life can be quite difficult and often the only option is to renounce US citizenship at a cost of $2350. (Note that you do NOT need to become tax compliant to renounce, nor do you need to pay any exit tax the US might think it has a right to collect.)

Even if you are subject to FATCA reporting, that does not mean the IRS will come after you, as they would have no other information and no ability to collect penalties. Whether you renounce or not, there is no reason to become tax compliant. Accidental Americans who discover these obligations should NOT enter the US tax system.


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## Nononymous

somewhereintheuk said:


> I opened a new bank account (current account) a few months ago and was asked if I was a US citizen. "nothing to hide!" thinks me, said yes, then it asked for my SSN - I figured this was about money laundering or somesuch, dug it out, filled it in, the account opened and I thought little more about it...


Alas, you definitely have something to hide, and you should absolutely be hiding it!

To the immediate problem: this account. I personally would close it as soon as possible. Assuming you don't have millions parked in it, there will likely be no ill effect. It may not be reported, or if it is, come next year, it will be one drop in a vast sea of unreliable data that the IRS doesn't seem to be able to do anything with. But cut off the problem at the source by closing the account.

If you can revert to your previous bank accounts, great. If you need to open a new account, do so without identifying yourself as a US citizen. Presumably you are an "accidental" - born in the US to UK parents, with UK citizenship from birth but a US birthplace? This isn't a huge obstacle. It doesn't sound like UK banks are being terribly strict in their vetting of customers, and if required to show a passport as ID when opening a bank account, UK passports only show city of birth not country, so depending on the name, it can be fudged. (Los Angeles might be difficult, but surely there's a Springfield somewhere in Cumbria.) 

Once you've stopped the possibility of FATCA reporting you can contemplate your next move at leisure. The options have already been laid out for you, save for the one I prefer: do nothing and lie. File no US tax returns or FBARs, save the renunciation fee, but be very careful not to disclose US citizenship to any financial institution. It's a strategy that probably doesn't work in countries that are strict/paranoid about FATCA, like Switzerland, but is very easy in countries where the banks can't be arsed to really look for Americans, like Canada and Australia and to some extent the UK.


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## underation

Hmm. I don’t know of any UK banks that are looking for US citizens, beyond the due diligence which UK law requires; but nor do I know of any UK banks that aren’t doing the due diligence; except perhaps for basic bank accounts or non-FATCA/reportable savings accounts.


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## Nononymous

The key question is: how diligent is the due diligence?

And the answer: in some countries, very; in other countries, not very.


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## underation

Hmmm. I don’t know if any UK banks are actually as a matter of policy searching for US citizens, beyond the due diligence UK law requires. 

On the other hand, I haven’t heard of any UK banks that aren’t doing the due diligence.

Edit - This is a semi-duplicate of the post upthread which I mistakenly thought had gone missing in my cache. This one can be deleted.


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## underation

> I don’t know of any UK banks that are looking for US citizens, beyond the due diligence which UK law requires; but nor do I know of any UK banks that aren’t doing the due diligence; except perhaps for basic bank accounts or non-FATCA/reportable savings accounts


It helps to be aware that besides FATCA due diligence, there’s also CRS due diligence, and questions that are asked by providers of stocks-and-shares ISAs, and the providers of trust funds, and the providers of US mutual fund investments.


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## Nononymous

somewhereintheuk said:


> So, briefly, I'm a UK/US dual national by birth, lived in the UK all my life, work here, pay taxes here, only ever visited the US on vacation...


Should also note, if you were born in the UK (or at least not in the US) then this is very easy to solve, you won't have a US birthplace on any ID, so just close the account you opened, and do not identify yourself as a US citizen when you open any new accounts. No further action needed.


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## underation

Nononymous said:


> Should also note, if you were born in the UK (or at least not in the US) then this is very easy to solve, you won't have a US birthplace on any ID, so just close the account you opened, and do not identify yourself as a US citizen when you open any new accounts. No further action needed.


There wouldn’t be any problem to solve, for a UK citizen with no US indicia opening an account and self-certifying tax-residence only in Britain. That’s the usual situation, and it doesn’t require any solving.

The OP’s in a different situation, having certified as tax-resident in two countries. That’s the status quo. It can easily be changed, if that’s what the OP chooses to do, without getting embroiled in pointless deception.


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## alan-in-mexicali

PERSONALLY..I would open a new account at a different at a new bank and keep quite about the US citizenship IF ASKED... and let the OLD BANK close the account when it feels it is not being serviced... IMMEDIATELY stop any "automatic deposits" and all automatic payments"... THIS IS UNDERSTANDING that you have zero assets in the USA, do not work or have NEVER worked in the USA AND own no real property in the USA.... Let us ASSUME that you have your salary automatically deposited in this account... IF the IRS wants to F you over... they can go to your employer this way... IF you open a NEW account, change your aromatic deposit… the IRS then has to go to court to get any information as to WHERE the salary is now going....FAT CHANCE of that happening!!


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## Nononymous

Outside the US, the IRS most definitely cannot go to someone's employer, or touch someone's bank account, or find out where their salary is being deposited. Their powers are in fact extremely limited. Which is why they generally don't waste their time pursuing non-residents with no US assets or income sources.


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## underation

Nononymous said:


> Outside the US, the IRS most definitely cannot go to someone's employer, or touch someone's bank account, or find out where their salary is being deposited. Their powers are in fact extremely limited. Which is why they generally don't waste their time pursuing non-residents with no US assets or income sources.


UK residents in the position described by the OP (UK-only income and assets; not filing US tax returns) aren’t in any danger of being “pursued” by the IRS for payment of tax debts, since no such tax debts exist.


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## underation

Nononymous said:


> Alas, you definitely have something to hide, and you should absolutely be hiding it!


A UK-resident US-UK dual citizen doesn’t need to hide from the IRS. This is a fallacy.

UK residents who are tax-resident in another country get their accounts reported to that country. It’s the law of the land.

US citizens are tax-resident (i.e. subject to taxation) in the US; consequently their UK accounts get reported to HMRC, and HMRC reports them to the IRS.

Some US expats are afraid the reporting could lead to the IRS “coming after” them, but this is not a problem for most expats; if a US expat has no outstanding assessed US tax debts (as is the case for most expats), the IRS has no reason to come after them. The IRS can’t force UK residents to file US tax returns to report UK income; and can’t penalise them if they don’t.

It might be prudent to file FBARs though, if you think you might someday want to move to the US.


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## underation

Nononymous said:


> Outside the US, the IRS most definitely cannot go to someone's employer, or touch someone's bank account, or find out where their salary is being deposited. Their powers are in fact extremely limited.


Their _powers to tax_ are extremely limited. UK residents get taxed on their UK income by the UK, not by the US.


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## DavidMcKeegan

This is typically an unpopular opinion in this forum, but if you wanted to be completely worry free and compliant, the steps to get caught up are pretty straightforward. 

If you choose to get caught up, you can take advantage of the Streamlined Program and back file the last three years of tax returns (2016-2018) and six years of late FBAR's (technically that would be 2012-2017 as 2018 FBAR's are not yet late). You will include with that a disclosure statement (Form 14653) explaining that you did not know previously that you had to file US taxes. 

If you are unsure on how to fill out the forms, you can hire an accountant to do the Streamlined for you. We personally have filed hundreds of these applications and have had no issues. Then in future years you can use the professionally prepared returns as a guide and try preparing on your own if you would like to save costs.

I personally sleep better knowing everything is filed and the odds of paying double taxes are slim thanks to the tax treaty and the totalization agreement that is already in place. 

It is a personal decision but you should at least know all of your options. Technically this route is the only legal way to move forward and it really can be hassle free.


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## underation

DavidMcKeegan said:


> It is a personal decision but you should at least know all of your options. Technically this route is the only legal way to move forward and it really can be hassle free.


Small correction. It’s not actually the OP’s only legal option. The OP can carry on as is; or renounce; or start filing US tax returns. All perfectly legal under the law of the land.

If the OP decides to move to the US, the law of the land will be US law, and it will be the US, not the UK, which has primary taxing rights on the OP’s worldwide income.


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## Nononymous

DavidMcKeegan said:


> I personally sleep better knowing everything is filed and the odds of paying double taxes are slim thanks to the tax treaty and the totalization agreement that is already in place.
> 
> It is a personal decision but you should at least know all of your options. Technically this route is the only legal way to move forward and it really can be hassle free.


Horses for courses, as it were. 

I do however greatly respect the fact that you, unlike many of your peers, are at least honest about the (very low to nonexistent) risks faced by non-compliant US persons who have no US assets or income sources, particularly those with citizenship in their country of residence.


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## underation

Nononymous said:


> Horses for courses, as it were.
> 
> I do however greatly respect the fact that you, unlike many of your peers, are at least honest about the (very low to nonexistent) risks faced by non-compliant US persons who have no US assets or income sources, particularly those with citizenship in their country of residence.


Risk of what?

UK residents with no US assets or income don’t owe any US taxes as long as they don’t file US tax returns. Regardless of whether they’re citizens or not.

Immigrants from the US probably want to keep the US passport though, if they have no other. If you want to make use of the citizenship benefits, IMO it’s reasonable to comply with the citizenship obligations.


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## underation

DavidMcKeegan said:


> This is typically an unpopular opinion in this forum, but if you wanted to be completely worry free and compliant, the steps to get caught up are pretty straightforward.


Should a law-abiding tax-paying UK-resident dual citizen be worried about the IRS?

The IRS has no reason to attack such an individual, and as far as I can see, doesn’t in fact try.

There may be good reasons for a law-abiding dual citizen to decide to exercise his/her right to file US tax returns; fear of the IRS isn’t one of them.



> If you choose to get caught up, you can take advantage of the Streamlined Program and back file the last three years of tax returns (2016-2018) and six years of late FBAR's (technically that would be 2012-2017 as 2018 FBAR's are not yet late). You will include with that a disclosure statement (Form 14653) explaining that you did not know previously that you had to file US taxes.


Applying to enter a US offshore disclosure programme such as Streamlined appears to me to be equivalent to jettisoning one’s right under UK law to be considered innocent until proved guilty.

A non-tax-evading US citizen can surely simply start filing. The return will show that no US tax is due. No need to backfile a bunch of prior-year zero-tax-due forms, or submit a self-abasing statement effectively confessing to wrongdoing; no wrong has been done.

There used to be a US right not to incriminate oneself. Is that one still on the books?


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## Bevdeforges

The IRS position (repeated many places on the IRS website and in various IRS publications) is as follows:



> If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.


and also:


> Your income, filing status, and age generally determine whether you must file a return


There is no mention of whether or not there are US taxes due. 

While we often discuss the matter of "what you can probably get away with" in filing from overseas, the strict legality is as stated by the IRS (and explained here by David and others). As David has said more than once, it is up to the individual what steps to take for their own situation.


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## underation

Bevdeforges said:


> While we often discuss the matter of "what you can probably get away with" in filing from overseas,


I don’t - and have explained why I think it’s unwise.



> ... the strict legality is as stated by the IRS (and explained here by David and others).


_US_ tax law. UK residents live under _UK_ tax law. The two aren’t compatible, given that each purports to have the right to tax the worldwide income of a UK-resident who has US citizenship. A treaty sets out the agreement between the two countries as to how the incompatibility should be resolved. It includes the Article on Administrative Assistance, which sets out the agreed procedures for information sharing. The IRS can use the agreed procedures to ask for relevant information about US citizens - and, as we all know, it does.

UK-resident US citizens comply with the law by certifying their US citizenship to banks, and providing US TIN. That’s all that’s required under UK law - way more than enough, IMO. 

The idea that on top of FATCA, a UK resident should have to write to the IRS enclosing a hyper-detailed breakdown of their UK income, complete with “information returns” ad infinitum, signing the whole shebang under penalty of perjury to demolish any remaining rights - sorry, it just doesn’t fly. That’s not the law of the land.


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## underation

underation said:


> The idea that on top of FATCA, a UK resident should have to write to the IRS enclosing a hyper-detailed breakdown of their UK income, complete with “information returns” ad infinitum, signing the whole shebang under penalty of perjury to demolish any remaining rights - sorry, it just doesn’t fly. That’s not the law of the land.


And actually, whether it’s US law seems unclear.

The IRS says in the 1040 instructions (near the back, in the Privacy notice) that a US citizen has to report income on which they’re liable for (US) tax, and cites the statutes. UK residents who don’t file US tax returns aren’t liable for US tax on their UK income because it gets taxed by the UK.

As I’ve said before, the fact that the IRS can only charge a penalty for not filing returns if tax was owed, seems (to me) to be consistent with the hypothesis that the IRS actually has no statutory basis for requiring the filing of zero-tax-due returns. 

We’ll never know, since, as with IGA1, nobody has a basis for taking it to court.


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## DavidMcKeegan

underation said:


> Should a law-abiding tax-paying UK-resident dual citizen be worried about the IRS?
> 
> The IRS has no reason to attack such an individual, and as far as I can see, doesn’t in fact try.
> 
> There may be good reasons for a law-abiding dual citizen to decide to exercise his/her right to file US tax returns; fear of the IRS isn’t one of them.
> 
> 
> 
> Applying to enter a US offshore disclosure programme such as Streamlined appears to me to be equivalent to jettisoning one’s right under UK law to be considered innocent until proved guilty.
> 
> A non-tax-evading US citizen can surely simply start filing. The return will show that no US tax is due. No need to backfile a bunch of prior-year zero-tax-due forms, or submit a self-abasing statement effectively confessing to wrongdoing; no wrong has been done.
> 
> There used to be a US right not to incriminate oneself. Is that one still on the books?




This has been said before but your logic and reasoning is flawed and inaccurate. Just being a US citizen requires you to report your worldwide income to the USA each year as the US taxes based on citizenship and not residency. Being in another country does not remove that requirement. 

Also, you don't magically owe $0 to the USA just by being abroad. There are special forms (1116, 2555, etc) that need to be filed to get that tax liability down to zero and that is an important part of the yearly filing. 

I wont argue further, I am just explaining the legal route forward (and least risky considering no one knows what the IRS will do in the future for non-compliance).


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## underation

DavidMcKeegan said:


> This has been said before but your logic and reasoning is flawed and inaccurate. Just being a US citizen requires you to report your worldwide income to the USA each year as the US taxes based on citizenship and not residency. Being in another country does not remove that requirement.
> 
> Also, you don't magically owe $0 to the USA just by being abroad. There are special forms (1116, 2555, etc) that need to be filed to get that tax liability down to zero and that is an important part of the yearly filing.


No. The US doesn’t have taxing rights on UK income received by UK residents; that’s why no tax is owed. FTCs are just mechanisms to make the numbers add up.



> I wont argue further, I am just explaining the legal route forward (and least risky considering no one knows what the IRS will do in the future for non-compliance).


It’s a demonstrable fact that the IRS can’t punish law-abiding UK-resident USCs who don’t have any US income or assets, and don’t file US tax returns; but it can and does punish those who try to comply.

It’s totally unfair.


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