Originally Posted by TaxRookie (Post 11765708)

I'm glad I found this forum. I need a bit of advice. I've been in the US for a few years and have always had my filing done by an accountant. I read this weekend that I'm supposed to be declaring income from my rented home in England and also I should be declaring assets in England. Is this correct? I've been treating the two as separate. I pay taxes in England and in the US separately. If this is correct, what do I do? Obviously if I owe tax I'll pay it but I'm kind of shocked I only just realised. Also how far back would I need to go? I heard 3 years? Thanks for any advice

Originally Posted by MidAtlantic (Post 11765919)

You need to be talking to your accountant and probably firing him/her.

Originally Posted by lansbury (Post 11765748)

If you are required to submit a tax return to the IRS it has to include your world wide income. If you have been paying tax in the UK that can be used to offset any tax owed in the US. You would be best to speak to your accountant.
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Originally Posted by TaxRookie (Post 11766235)

To cover the world wide income piece, I heard that I should go back 3 years. Is that correct?

Originally Posted by theOAP (Post 11766281)

I'll reiterate what's already been said. You would best be advised to contact either your current tax advisor, or seek someone new who may be more knowledgeable in the correct way to handle your situation.

Generally, you have two choices: Quiet Disclosure or Streamlined DOMESTIC Offshore Procedures.

The quiet disclosure may be accomplished by filing a 1040X (nun's amended return) for each year you made an omission, plus the FBAR (FinCEN 114) filing. Be warned, the IRS has stated they will NOT look favourably on this type of disclosure. Whether that is true or not really isn't known.

The Streamlined Domestic Offshore Procedures is different from the Streamlined Foreign Offshore Procedures. The "Foreign" procedure generally comes with no penalties.

Since you are resident in the US, and have been for a time, you would have to use the "Domestic" procedure. From the IRS:

"The Title 26 miscellaneous offshore penalty is equal to 5 percent of the highest aggregate balance/value of the taxpayer’s foreign financial assets that are subject to the miscellaneous offshore penalty during the years in the covered tax return period and the covered FBAR period. For this purpose, the highest aggregate balance/value is determined by aggregating the year-end account balances and year-end asset values of all the foreign financial assets subject to the miscellaneous offshore penalty for each of the years in the covered tax return period and the covered FBAR period and selecting the highest aggregate balance/value from among those years."


U.S. Taxpayers Residing in the United States

There is, of course, a third way, and that's to start filing a correct return for 2015 (file in 2016) onwards. That comes with risks as well.

Originally Posted by TaxRookie (Post 11766235)

To cover the world wide income piece, I heard that I should go back 3 years. Is that correct?

Originally Posted by lansbury (Post 11766301)

Wasn't the law just changed to allow the IRS to audit back to 6 years without a reason, it was 3. That might change what you need to file.

Again I would strongly urge you to seek professional advice as a wrong decision, especially when it come to FACTA or FBAR, can be very costly.

Originally Posted by lansbury (Post 11766301)

Wasn't the law just changed to allow the IRS to audit back to 6 years without a reason, it was 3. That might change what you need to file.

Originally Posted by TaxRookie (Post 11766300)

I do appreciate the replies, thank you. It's pretty terrifying and I'm struggling to understand all this. I'd never even heard of this until these past few days. It's difficult to imagine paying all these fines and penalties for something I was completely unaware of. My assets in the UK were there before I came to America, I haven't transferred any money out of America in to the UK. One account I've had since I was a student. I don't understand how I could have know I was supposed to declare this. Or am I misunderstanding something?

Originally Posted by Steve_ (Post 11766461)

You're a bit light on what your situation is, are you an LPR, US citizen, in a non-immigrant category.

But anyway Tax 101 - you file taxes in the country you are resident in on your WORLDWIDE income, it does say this in various IRS tax publications. You should have told HMRC you left on P85. File an R105 with your bank in the UK so they no longer withhold income tax in the UK.

If you've got an ISA get rid of it and open up a Roth IRA in the US.

Yes, various things need to be declared on FinCEN FBAR and also IRS form 8938. Yes, rental income is subject to taxes in both places so you'll need to file for a foreign tax credit on Form 1116.

You can adjust previous years returns on 1040X however it's tricky to go back and retroactively file for a foreign tax credit. I'd discuss the issue with someone knowledgeable before filing adjustments.

I'd suggest you have a read of IRS publication 519 which explains the US tax system for people from abroad. The first year you were in the US most likely you should have filed a dual-status return.

However as said you haven't said what your immigration status is, which has a bearing.

Really bad idea to pretend to be resident in the UK by the way for a number of reasons.



Not exactly a secret: http://www.irs.gov/pub/irs-pdf/p17.pdf

Page 5, under "gross income". Page 1 under "foreign source income". Page 6 under "resident alien".

Originally Posted by Steve_ (Post 11766461)

Not exactly a secret: http://www.irs.gov/pub/irs-pdf/p17.pdf

Page 5, under "gross income". Page 1 under "foreign source income". Page 6 under "resident alien".