Tootsie Frickensprinkles

That is correct, Uncle Sam will be wanting those returns for life ... If you're going to be receiving SS payments across the pond my usual opinion of SFW does not really count. Sorry, you will need to bother doing them.

MrMuffin

Sorry you lost me on that last posting... what's SFW?

So for clarification on this point, if your a US Citizen living in another country, you still need to file a federal tax return in the States, even if you have no income or expenses etc.? Is that to ensure that when you reach retirement age you can claim Social Security from the US government and have them pay it to you in the UK?

I have no doubt that you're correct, but with the current state of affairs regarding Social Security and it's future, I would have to think given my luck that I would do tax returns for the next 25 years only for them to change legislation in their favour the day before I reach a suitable age, and they take my Social Security monies away to fund another war.

MrMuffin

Good to know. Thanks for that. I'll keep my fingers crossed.

Tootsie Frickensprinkles

Umm, so f****** what

If you leave the US as a GC holder or USC you are supposed to file federal returns, but, if you have no remaining financial ties and no intent to ever return .. you get my point

If on the other hand you are looking for SS payments and/or there is a possibility of returning, I would stay in the good books, if I were you.

MrMuffin

Ohhhh. Haha. Thanks for the clarification.

Like I said, I'm sure the US govt. will find a loophole and reason not to pay people so they can use the money for something else more important, like campaigning for voters (brother!)

TaraC

I was in the same situation. Just write to the following, and they'll send it to you. I gave them my name, DOB, and last UK address. Had my NI number within a couple of weeks:

HMRC Center for Non Residents
Room # BP 1301
Benton Park View
Newcastle on Tyne, NE 98 1ZZ
England

Yes, if you become a USC you continue to pay taxes to the US govt until your dying day! Also, if you're a GC holder and there's even the remotest possibility you may go back to the US, you need to keep paying taxes. According to our tax planner, however, it works out ok because US / UK taxes tend to cancel each other out. You get to subtract all the taxes you pay to the UK before paying your US taxes.

Lovely, huh!

TaraC

This is from an article I found written by a tax attorney:

" All citizens and green card holders (also US resident aliens) are subject to US Federal taxation on their worldwide calendar year income for life, regardless of where their income is earned, what currency it is in or where the income is deposited to."

Re. social security, I doubt very much that you wouldn't end up with some kind of US pension in the end, and if you've been working in the US for 20 odd years, i think it's worth doing the federal tax return to make sure you get that money. After all, if you look at your contributions info from the govt every year, you can see how much money you've paid in over the years! The UK pension you get in the next 20 or so years working will not make up any shortfall. We did a lot of research on this and decided it was definitely worth the extra effort to ensure our financial future.

MrMuffin

Hi TaraC,

I can understand having to pay US taxes if I had a US income like from rental property or something like that.

But if I am in the UK, and I am employed by a UK firm, and I do the normal pay as you earn stuff, and I get no income in the USA, why would I have to pay USA taxes? I wouldn't be getting any benefits at all from the USA? I can see filing a return just to keep the records straight, but why on earth would I be taxed on money that I earn in the UK if I also live in the UK?

The wording that you sent sounds more like it applies to someone who is a resident of the USA, whether USC or GC, who's home base is in the States, but they work around the world like a consultant or something. That I can see would apply to that statement.

I'm not trying to disagree with you, TaraC as it looks as though you've done the homework for yourselves. I'd be interested to hear from others too on this and will do some digging myself.

I just found this on the yankee site and it sounds as though it might be of help...
http://talk.uk-yankee.com/index.php?topic=30822.0

Cheers, Martin

meauxna

Martin,
US citizens have an obligation to REPORT their worldwide income. Full Stop.

Whether or not you pay tax to Uncle Sam on it is a function of the various tax treaties. Income under about $82000/year fits easily under the 'double taxation' rule.

It does not matter where the USC or PR is resident, those are the rules.

robin1234

MrM, assuming that eventually you will be getting income from Social Security and (likely) retirement accounts such as a 403b or a 401k, you will have a strong incentive to file your US Federal Income Tax Return each year like a good citizen. When living abroad, there is 30% withholding off the top. If you do not owe tax, the withheld amount will be refunded to you

Tootsie Frickensprinkles

Ooo, interesting.

MrMuffin

Very cool. Thanks for that info. Very good to know!

HighSpeedGrandma

Thank you very much for that address TaraC. So, to clarify, I go back to the UK and get a job, and I pay taxes to both the US and the UK government? How does one cancel the other out? When I retire I get benefits from both countries?

robin1234

Let's say you have no income in America (no bank accounts, no investments, no salary or fees or whatever.) You are working in the UK and have a savings account in a UK bank.

You will pay your taxes in England via paye in the normal way. The savings account will probably pay you interest net of tax. If you weren't a US citizen, that would be the end of it - no tax worries. But because you're a US citizen, you'll have to file your US federal tax return, declaring ALL income, including your UK salary and UK savings bank interest. However, you almost certainly won't owe any US tax on it since you've already paid UK tax on it ... and if your income is less than $83,000 per annum (or whatever the exact figure is) no tax is due anyway.

There's also a form you need to submit to the US Treasury each year, in addition to the tax return, declaring all your bank accounts outside the USA. (Treasury Department Form 90-22.1) So a lot of paperwork, but shouldn't cost you more in tax.

nun

You make good points. If you are a US/UK dual national living in the UK you have to do both UK and US taxes as the US taxes based on citizenship, not residency. If you are living in the US you don't have to file UK taxes if you don't have any income, gains etc arising in the UK as the UK taxes on residency.

If you've been in the US far a while, have a US spouse and children and probably SS and retirement accounts I think it's best to go for USC even if it will make you tax situation more complicated.