theOAP

The general statement "I have US citizenship through family" needs to be questioned.

The few instances I've had experience with involved a parent, born in the US, but whose parents (the grandparents) were only there temporarily. The 'grandparents' were present on a work visa or for study, returned back to the UK shortly, and in no way were connected to the diplomatic corps. The 'parent' was a US citizen, but did not meet all aspects of the specific '5 years, with at least 2 years beyond the age of 14' rule automatically allowing the children to become US citizens.

It's also interesting when you casually suggest to the 'son/daughter' to inquire if their 'US born parent' is filing a US tax return. In one case the reply was "I'm British. Of course not". I recently heard that this particular 'US parent' had received the FATCA letter, which was closely followed by a renunciation.

Branners1982

My husband was in the exact situation. He is a US citizen but never lived in the USA. We moved here in 2015 and all he had to do was back file his taxes. He rather fortunately had a family friend who was a US tax accountant. Once all the back taxes were complete and we moved to the US, my husband sent his tax forms to the IRS, most recent first. He sent 2 years worth each month. He had about 10 years worth to send. Luckily he never earned over the threshold amount of annual salary. We have not had any issues with the IRS. Hope this helps!

Pulaski

Given that the IRS can only reopen tax filings for six years unless there is evidence of fraud (in which case I believe it's 20 years), filing anything beyond the most recent six years was pointless, and it is likely that anything beyond even the most recent three years was pointless.

robin1234

I'd go further and suggest that the IRS doesn't really care that much about retrospective filings by U.S. Citizens who suddenly show up in America as taxpayers, but who have never filed before or who have a gap of many years in their submissions.

Cook_County

It is very odd indeed that your husband willfully chose not to the IRS offshore streamlined procedures. How did you handle his delinquent FBARs?

Pulaski

I suspect you are correct. Interest shown by the IRS in the taxes of "little people" is very low; I hear that the numbers of audits of people earning less than $100,000 have been slashed in recent years.

Cook_County

I guess this implies that the President Elect might have a possible income greater than $100,000 - or the IRS thinks he does...

Steve_

The IRS has various programs in place over the years for people in this situation although they're typically tailored for people who failed to file who probably knew they should have filed. The IRS is pretty laid back about "incidental" US citizens who are Joe Average and have low incomes and either didn't know they were US citizens or just found out about the the tax filing requirement.

The IRS only keeps returns for six years, so basically, you have to file six back years' worth of returns. If you're someone who has been earning over the FEIT limit (see Form 2555) or has significant (more than a couple thousand USD) worth of US-source income, you're going to want to see a US accountant first because you almost certainly owe back tax. Other potential "oh shit" situations are, you own or control a foreign corporation (could be PFIC, has to reported on 5471) or you own or control anything that is reportable as a foreign trust on form 3520.

The main thing is the foreign tax credit for your non-US income on Form 1116 (or otherwise exempt it via Form 2555). If you don't get that right the IRS can tax your foreign income.

For years now I've been trying to get accurate information from the IRS on how to report UK ISAs, Canadian TFSAs and similar accounts and that is a whole thread unto itself but there are various complications that can arise from them.

And also the whole FBAR, Form 8938 doodah.

Steve_

I've spoken to loads of Canadians over the years who've been in this situation, a lot of whom thought they lost their US citizenship by marrying a Canadian for example and were unaware it was restored by a SCOTUS decision in 1978.

If you're under the FEIT limit (which 90+% of people are) and your tax situation is otherwise fairly straightforward, just file back taxes for six years. The FBAR thing is technically separate as it's done by Treasury directly, so just start filing.

There is a huge caveat that under the relevant FATCA agreement, Treasury will definitely find out about your foreign accounts as the agreements are coming into force. I got a nastygram because I had a US phone number on one of my accounts. Strangely not had one from any UKFI even though I've got the same US number on those accounts too. Clearly Canadian software is superior.

TXLonghorn

First, take everything you read here regarding taxes with a grain of salt. I've seen so much bad information posted here.

Second, don't just file the returns and FBARs (AKA silent filing). If you're a US citizen you had a filing obligation. You need to file under the offshore streamlined program. Under this program you'll need to file 3 years of US returns and 6 years of FBARs. Fortunately you were living in the UK so you are not subject to the 5% penalty that you would have been subject to if you were living in the US. Good luck!

TXLonghorn

Here's some more information for you: https://www.irs.gov/individuals/inte...nce-procedures

Note that there are two streamlined offshore procedures - domestic and foreign. You would want to do the foreign.

Cook_County

The IRS streamlined offer is outside of the statute; however it is a decently safe offer, but only suitable for someone who is decently safe in the first place. It is not the only way to approach the IRS for a delinquent.

MidAtlantic

The streamlined procedure is for those whose failure to file arises from "non-willful conduct". The OP says nothing about this so it is impossible to say if this is the right option.

TXLonghorn

I don't know what decently safe means. It's either willful or not. Doesn't seem to me to be willful based on the limited facts. OVDP (another option) seems like overkill and carries a 27.5% penalty.

Cook_County

There are other methods of coming forward available such as traditional IRS voluntary disclosure, a reasonable cause argument and first-time abate.


Wilfulness is impossible to be certain on without the decision of a court.