# US citizen - living abroad and never filed



## FeatherBelle

I am an American who is married to a Canadian. Been living in Canada and married for almost 12 years. Hubby recently discovered that I need to file US tax returns, regardless of the fact that I haven't set foot on US soil in nearly 12 years. 

He also says, that based on his research, the IRS would not believe a word I say when I say that I honestly have no idea that I didn't have to pay US taxes. I thought you paid taxes based on where you live & earn your money, and for me that's been Canada for the past ten years. Hubby says I could get hit with hundreds of thousands of dollars in fines, essentially making it impossible for me to ever travel to the US again, and for me that is not an option as my mother still is there and I would like to see her sometime before she dies. 

Where can I get correct, up to date info on what to do and how to do it in regards to getting all this mess filed properly and also potentially avoiding the heavy fines my husband swears I'd get hit with?

I am fully prepared to get rid of my US Citizenship and become a Canadian Citizen if that helps matters any...as all my ties except my mother, are here in Canada.


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## Guest

*Don't panic!*

Hi FeatherBelle,

First, don't panic. Take deep breaths and don't tense up your shoulders. There are millions of us around the world (mostly here in Canada) who share your dismay and will support you as you make your way through the process of becoming compliant. 

Second, the internet will be both a great help and a source of more pain and fear, so be critical about what you read and be aware of the source. I'm not sure if it is okay to say this here, but one thing you should be aware of is that some tax accountants and tax attorneys are in a position of power when people are vulnerable and so may have motives in their postings or on their websites. Not all of them, of course, just as many are conscientious and ethical, but it might be difficult to know the difference. I guess in a nutshell, educate yourself as much as possible first, then decide if that is the route you might want to go.

Third, outline your own circumstances. Gather all the past paperwork you can find (it's a good chance to clean out files and get them in order - there, something positive can come of this ), including returns you've filed in Canada, bank statements, investment reports, etc. Know your own circumstances!! 

Fourth, to get started on what you need to do, read through as many of the posts here as you can. Do it with a pad and pen, watching for posts that describe circumstances similar to yours and making lists of forms you will need, the way people handled that situation, etc. For example, if you have RRSP's or TFSA's, there will be posts on what forms people used. People have described many of their personal situations which are extremely helpful. Most important when reading here:  *LOOK FOR POSTS BY BEVDEFORGES!* She has provided many with excellent direction, both general and specific.

Fifth, make a list of as many specific questions as you can, about what forms you might need, how do I report this account, etc. This website is one place to look for answers and there are a couple of others I will try to list at the bottom of this email. 

Sixth, go to the IRS website and go to the page for International Taxpayers and read all the information they have posted. Some of it is convoluted and difficult to follow, but you can always go back to websites to look for clarification.

Seventh, try to do at least one 1040 before you throw your hands up in the air and call an accountant, you may find it easier than you think once you're past the panic. Maybe start with the most recent (just because your more aware of your situation right now than what happened 5 years ago).

Eighth, a little calming for you regarding fines, penalties: This will, of course, depend upon your personal circumstances, but it seems that, thus far, this has not happened. Penalties are associated primarily with the forms known as FBAR and for late filings where taxes are owed. If you have filed in Canada, you will most likely qualify for the foreign tax credit or for income exclusion (2 forms you will encounter for this: 1116 & 2225, you'll have to choose which way to go). As for the FBAR (TD F 90-22.1), be aware that there is a program called Offshore Voluntary Disclosure, which will probably not be the way for you to proceed. Please read carefully about OVDI before making any choices! 

Finally, know that you are not alone and there are many of us out there who will help you as best we can. Most of us are just ordinary people who are facing this, too, and we've gone through a galaxy of emotions. If it helps maybe think of it this way: We've felt all this for you already, all the fear, panic, dread, disbelief, anger, sadness, so now, what you can focus on is getting the job done. The job is to get those forms in as soon as possible, using the tools you can find here and at these websites, which I have found helpful:

Internal Revenue Service (you'll need it for forms, etc.)
Serbinski Accounting Firms :: View Forum - Canada / United States Tax & Accounting (the Canadian/U.S. Tax & Acct. portion has some very specific help)
The Border Guide (the "Moving to Canada" section has some good tips)

Oh, just so you know, your situation sounds very similar to mine. I'm not an accountant or lawyer or even close to that, but the one thing that helped was reading, reading, and learning. Think about things, make lists, wait a couple of hours or days before making a decision or choosing a direction. If I have anything I can share with you that will help, I will certainly do so. Good luck from CanadianAtHeart


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## Guest

*Check this Thread on Expat Tax*

Hi again FeatherBelle,

I should have mentioned that further down in the list of threads (on second page of threads, I think) here under Expat Tax is one called "U.S. Taxes for Dual Citizens - Consequences" that has a ton of info that you will find helpful. That was the place where most of us found help.


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## Bevdeforges

Hi FeatherBelle,
First of all - don't panic. You are hardly the first US citizen living abroad who has just discovered that you're supposed to be filing US taxes. (Chances are you won't have to pay taxes, or not much, but you do have to file.)

Any penalties are based on what you owe - and chances are you owe nothing. But it's not a bad idea to get right with your tax obligation "just in case."

I'm in the process of putting together some information postings for US citizens resident abroad about filing their US taxes. The usual approach is for you to file the current year (at this point, 2011 - which isn't due until June 15th) and then backfile 3 additional years. (2010, 2009, 2008) for a total of 4 years.

As long as those filings show that you owe nothing (as they probably will), it will get you straight with the Powers That Be, and you just go on your merry way filing as you go forward.

I'll get cracking on those information sheets. Expect to see them sometime by the end of this week or over the weekend. It's not that difficult - and for the income tax side of things, you only need to report your own income, not that of your husband.

If you want to get started on your own, go to the IRS website and download Publication 54 - which is a tax guide for US citizens living abroad. You get to "exclude" (officially, using a specific form) all earned income. It's your "unearned" income (interest, dividends, rents, stuff like that - basically non-salary) that can get a bit tricky, but in general you get credit for what you've already paid to the Canadian government in taxes on it.
Cheers,
Bev


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## smccarth

*Don't Panic*

Featherbell,

CanadianatHeart and Bevdeforges have given you very good advice. 

I respectfully disagree with your husband about huge fines. While the language in the IRS documentation can be harsh, it's important to keep a few things in mind:

Firstly, they are looking for tax cheats hiding large sums in offshore accounts. Unfortunately, the laws are clumsily written and apply to a lot of expats who have legitimate accounts in the countries in which they reside. 

Secondly, we have been given public support by the Canadian Finance Minister, Jim Flaherty, and the U.S. Taxpayor Advocate, Nina Olsen who both consul the IRS to be fair and reasonable.

If you don't owe any tax, then they can either impose a small fine, or send a warning letter for you to keep current with your future filing.

I am working with a U.S. tax lawyer. He advised that if you make a good faith effort to come into compliance with your filing requirements, then you stand a good chance of either a small fine or none at all.

Finally, I have no intention of renouncing my U.S. citizenship(I'm a dual citizen). Once the dust settles, it will just require yearly filings to keep the IRS happy. That is a nuisance, but hardly grounds for giving up citizenship!


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## byline

As the others said, don't panic! (Been there, done that, and found out that most of my worry was completely unnecessary.)

I'm in a similar situation. I'm married to a Canadian and have lived in Canada for 15 years now; I'm a permanent resident and have applied for my Canadian citizenship. I'm somewhat different from you in that I have travelled back and forth on short visits to the U.S.; my parents are both still living, as is my sister, and I have a number of good friends that I have stayed in touch with.

I didn't realize until this past June that I was supposed to have been filing U.S. tax returns all along, along with the additional FBAR form that goes to the Treasury Department, not the IRS. I have never owed any income taxes in Canada, so of course I won't owe any in the U.S., but was still supposed to have filed.

Fortunately I got connected with an accountant in Halifax who did not use scare tactics the way some others in this field have, and all of his advice has proved sound. So read and listen with a critical eye/ear; at the first hint of fear-mongering, run like the wind.

Seriously, don't let yourself be bullied in submission. As the others said, it's scary when you first find out, but in the end it's just filling out paperwork to get yourself back in compliance with the IRS. Especially if you owe no tax, then it is highly unlikely that you will be assessed any penalties. I submitted my 2010 FBAR and 2008, 2009 and 2010 tax returns last summer, and I haven't heard anything from the IRS. Apparently no news is good news.

Good luck, and keep us posted on your progress!


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## saddened

Hi Featherbell, Just don't panic, easy to say I know. We have all been there and will help as much as we can.. Believe me we are all in this together and know where you are coming from. I have filed 4 years back and still my son has not filed yet. He is a accidental American born here in Canada but because I am "AMERICAN" he is considered a US Citizen as well.. He has to go to the US and get a SSN before he can file.. such a aggravation. There are some very smart people on this forum, Bevdeforges I agree is excellent to talk too and trust..If you need to ask anything in private you can send a Private mail. PLEASE DON'T PANIC IT IS NOT WORTH IT..


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## FeatherBelle

Hi everyone...thank you for your replies. I have never had much money...so I don't think they'll have a problem with me. I'm not panicking...just kinda pissed at the thought that I might not be able to travel to the US again and see my mother. They don't bother to tell you this stuff when you move and then they wanna turn around and punish you for not knowing this? That kind of thing really makes me mad.


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## saddened

FeatherBelle said:


> Hi everyone...thank you for your replies. I have never had much money...so I don't think they'll have a problem with me. I'm not panicking...just kinda pissed at the thought that I might not be able to travel to the US again and see my mother. They don't bother to tell you this stuff when you move and then they wanna turn around and punish you for not knowing this? That kind of thing really makes me mad.


Featherbelle, I have been so upset as well, but have calmed down alot lately. It has been a shock to all of us. I have had many sleepless nights, but there is really no point in worrying, it is what it is..It is alot of BS.


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## FeatherBelle

I'm not worrying about this...I have too much else to worry about right now...trying to build a career at work...going back to school...one of my kids is special needs...so yeah...the government can friggin bite me. I'll file all my paperwork and even do other stuff if it makes it easier. Speaking of which, since I'm still a US citizen does that mean my kids are by default? And if so would it be better to claim them as dependents on my US taxes? And if so...how do I do that? Just apply for SSN's for them?


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## FeatherBelle

FeatherBelle said:


> I'm not worrying about this...I have too much else to worry about right now...trying to build a career at work...going back to school...one of my kids is special needs...so yeah...the government can friggin bite me. I'll file all my paperwork and even do other stuff if it makes it easier. Speaking of which, since I'm still a US citizen does that mean my kids are by default? And if so would it be better to claim them as dependents on my US taxes? And if so...how do I do that? Just apply for SSN's for them?


Also with regards to potentially acquiring SSN's for my children...someone earlier in this thread mentioned their older child having to go to the States and apply for an SSN. I cannot afford to travel to the States anytime soon. Can I download forms and mail them from where I now live or must SSN's be applied for within the US? And if they must be applied for from within the US can I get my mother to assist me in that since she lives in Louisiana?


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## Bevdeforges

Frankly, I have never heard of anyone being denied entry into the US for not having filed their income tax forms. (I even renewed my passport and went to the US the year after I - legitimately - didn't file at all.)

If you were in a situation to not be able to travel to the US because of your tax situation, believe me, you would have had considerable correspondence with the IRS and you'd be well aware of your situation.

As far as the SS numbers are concerned, it depends on the ages of your children and on your ability to pass on your US nationality. (Not all US citizens can.)

I'm a bit pressed for time right now, but I believe Publication 54 tells how to apply for SS numbers from outside the US.
Cheers,
Bev


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## FeatherBelle

Bev,

My inability to travel to the US doesn't have anything to do with filing or not filing...it's that I just haven't been able to afford to go visit my mom. 




Bevdeforges said:


> Frankly, I have never heard of anyone being denied entry into the US for not having filed their income tax forms. (I even renewed my passport and went to the US the year after I - legitimately - didn't file at all.)
> 
> If you were in a situation to not be able to travel to the US because of your tax situation, believe me, you would have had considerable correspondence with the IRS and you'd be well aware of your situation.
> 
> As far as the SS numbers are concerned, it depends on the ages of your children and on your ability to pass on your US nationality. (Not all US citizens can.)
> 
> I'm a bit pressed for time right now, but I believe Publication 54 tells how to apply for SS numbers from outside the US.
> Cheers,
> Bev


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## Bevdeforges

FeatherBelle said:


> Bev,
> 
> My inability to travel to the US doesn't have anything to do with filing or not filing...it's that I just haven't been able to afford to go visit my mom.


The issue is just whether or not you need to go to the US to get SS numbers for your kids. If they're adults, then they may need to go. If they're still kids, it may not be necessary - chances are you don't need to use them as "dependents" for your tax returns to show no taxes due.
Cheers,
Bev


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## saddened

FeatherBelle said:


> I'm not worrying about this...I have too much else to worry about right now...trying to build a career at work...going back to school...one of my kids is special needs...so yeah...the government can friggin bite me. I'll file all my paperwork and even do other stuff if it makes it easier. Speaking of which, since I'm still a US citizen does that mean my kids are by default? And if so would it be better to claim them as dependents on my US taxes? And if so...how do I do that? Just apply for SSN's for them?


Hi, Yes according to US your children are considered US Citizens..which I think is ridculous if they are born in Canada. What a hassle!!


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## Bevdeforges

saddened said:


> Hi, Yes according to US your children are considered US Citizens..which I think is ridculous if they are born in Canada. What a hassle!!


Not always. It depends if you spent enough time in the US after the age of 14 or whatever.

But it's absolutely NOT necessary to get the kids social security numbers just so that Mom can file her taxes. If you're taking the FEIE (earned income exclusion), you don't "need" to take the kids as dependents on your tax forms anyhow (if all or most of your income is already subject to the exclusion). There's also the issue of whether or not the American parent qualifies to take the kids as dependents if they are filing a separate return. If you can avoid the whole issue, it's usually best to do so.

And frankly, if the kids were born in Canada, it's unlikely they are going to show up on the US radar anyhow - even once they get old enough to be expected to file US taxes (if they do qualify as US citizens).
Cheers,
Bev


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## saddened

Bevdeforges said:


> Not always. It depends if you spent enough time in the US after the age of 14 or whatever.
> 
> But it's absolutely NOT necessary to get the kids social security numbers just so that Mom can file her taxes. If you're taking the FEIE (earned income exclusion), you don't "need" to take the kids as dependents on your tax forms anyhow (if all or most of your income is already subject to the exclusion). There's also the issue of whether or not the American parent qualifies to take the kids as dependents if they are filing a separate return. If you can avoid the whole issue, it's usually best to do so.
> 
> And frankly, if the kids were born in Canada, it's unlikely they are going to show up on the US radar anyhow - even once they get old enough to be expected to file US taxes (if they do qualify as US citizens).
> Cheers,
> Bev


Sorry Bev, You are correct I forgot that it depends if you spent enough time in the US after the age of 14.


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## Peg

Complete at least one year of IRS tax forms as Married Filing Separately to see if you would owe taxes. My income has never been over $35,000 and I never had to use more than the foreign tax credit or foreign earned income exclusion plus the personal deductions to reduce the taxes to zero. (the only years where I owed about $100 was when I was self-employed and didn't make enough to pay CPP)

I would not get my kids a social security number if they were born in Canada.


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## hyper_janice

I moved to Egypt from the USA 4 years ago. I have not had a job. Do I still have to fill out tax forms? My husband takes care of the income aspects of our lives. I was told by a tax person I did not have to submit any forms. Were they lying?


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## Bevdeforges

hyper_janice said:


> I moved to Egypt from the USA 4 years ago. I have not had a job. Do I still have to fill out tax forms? My husband takes care of the income aspects of our lives. I was told by a tax person I did not have to submit any forms. Were they lying?


Take a look at the thread called http://www.expatforum.com/expats/expat-tax/99893-us-taxes-do-i-have-file.html

Whether or not you have to file depends on whether or not you have income that exceeds the filing thresholds. The first post in that thread has a link to the current thresholds for filing - but be aware that, if your husband is an NRA (non-resident alien, i.e. non-US citizen), the threshold is pretty low.

If you don't have income in your own name, though, you very well may not have to file.
Cheers,
Bev


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## Madonna

SteveOdem said:


> You have 2 clearly separate and distinct issues:
> 
> The first is US taxes, primarily Title 26 of the US Code. The US tax system applies to global income from all sources, subject to credits, deductions and exemptions. Once you file a return, for most purposes, IRS has 3 years to question it (i.e., audit). Exceptions are in the case of fraud or a material understatement of taxable income (6 years), or certain foreign tax matters (10 years). That's called the statute of limitations. If you never file the return, the statute never starts to run. So it can follow you forever, even your estate.
> 
> The second is FBAR and, more recently, FATCA. Neither of these are in the Internal Revenue Code, are in Title 31 (dealing with things like Treasury, Federal Reserve, Federal Deposit Insurance Corporation), and both are administered by IRS.
> 
> FBAR (Foreign Bank Account Reporting or something similar) requires annual reporting of foreign bank, investment, trust, pension, annuity, certain insurance policies and similar assets that a US taxpayer has any ownership or control over - name need not be on the account (i.e., business account). This is required if the aggregate or total of all such accounts at any time during a calendar year is $10,000 or more, due June 30 following, no extensions. The penalty for failing to do this is obscene - to 100% of the maximum in any unreported account in any year, plus interest. Billions of dollars have been seized, people are in Federal prison and multimillion dollar fines have been levied just in the United Bank of Switzerland case. There is no statute of limitations on this, and it's been on the books for some 30 years.
> 
> FATCA requires reporting of other assets (land, buildings, jewelry, business), if their total value is $50,000 or more. 2011 is the first year for this and I really don't know much about it.
> 
> Your hubby has a point. Unfortunately, ignorance is no excuse for the law.
> 
> Email me off list.


Sounds like fear mongering to me! And, like you're trying to drum up business rather than offer helpful information for law-abiding citizens who are NOT tax cheats!


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## hyper_janice

Bevdeforges said:


> Take a look at the thread called http://www.expatforum.com/expats/expat-tax/99893-us-taxes-do-i-have-file.html
> 
> Whether or not you have to file depends on whether or not you have income that exceeds the filing thresholds. The first post in that thread has a link to the current thresholds for filing - but be aware that, if your husband is an NRA (non-resident alien, i.e. non-US citizen), the threshold is pretty low.
> 
> If you don't have income in your own name, though, you very well may not have to file.
> Cheers,
> Bev


Yes, he is a NRA. I have no taxable income in my own name. So does that mean I don't have to file? I followed the charts in the url but they only had 2 pages while referring to 4 and it does not appear to apply.


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## Bevdeforges

hyper_janice said:


> Yes, he is a NRA. I have no taxable income in my own name. So does that mean I don't have to file? I followed the charts in the url but they only had 2 pages while referring to 4 and it does not appear to apply.


If you legitimately have NO income in your name (the threshold for filing "married, filing separately" is $3700), then no, you don't have to file income tax returns. I'd listen to the tax adviser.
Cheers,
Bev


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## hyper_janice

Bevdeforges said:


> If you legitimately have NO income in your name (the threshold for filing "married, filing separately" is $3700), then no, you don't have to file income tax returns. I'd listen to the tax adviser.
> Cheers,
> Bev


Thanks Bev!


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