Spacey_

Hi, could anyone point me in the right direction, turns out i am an accidental America, was born there to two none US citizens and never been since (i left when i was a few months old). I have only just found out I need to file US taxes and have been trying to figure it out but i am struggling to collect all the information i need to file.

My situation isn't very complex as I have left university around 3-4 years ago and have only earned through employment, don't own property or invest, i only have a state pension; so i was hoping the filing process would be easy for me, but i haven't been able to find clear instructions on how to file for someone living in the UK. I don't have a W-2 so i am not sure what to attach to the 1040 form nor how to approach filling out, what sections should be ignored and which sections should be filed. So far i have gathered that the main forms: Form 1040, Schedule 1, Schedule B and Form 2555.

Though i suspect i wouldn't need Schedule 1 nor Schedule B since i don't invest so i don't get any interest (Schedule B) nor do i have additional income (Schedule 1).

I found a wiki by 'BritishGuy36' but unfortunately he isn't active anymore so i cannot message him for a sample / example 1040.

Any help / advice would be greatly appreciated.

PS: i just noticed that i had earned small monthly interest from my regular current account (though this stopped now and i haven't had it for a while), would that mean i would need to file Schedule B or Schedule 1) ?

Jack_Russells4ever

I cannot tell you what you should do. I can tell you what I would do depending upon your circumstances. If you have not been contacted by the US IRS and you have no plans to ever live in the USA I would say and do nothing at all about it and leave a sleeping dog lay. If you have been contacted and the IRS is hounding you and you have no plans to ever move to the USA I would contact an expat tax consultant that deals with Americans and their IRS taxes file and pay the IRS what they your tax professional worked out you owe them and then renounce your US Citizenship if your never going to claim it at the US Embassy in the UK or where you presently live and explain the situation.

Your situation could be a nightmare or a blessing depending upon your personal situation. The problem is owing taxes to Inland Revenue and the IRS in the USA due to the amount of complexity of the situation. Right now is probably the worst time in recent history to owe the IRS $ because America is broke to the tune of 30 trillion USD in secured liability and an estimated 200 trillion USD in unsecured liabilities such as pensions and looking under every sofa cushion for money to pay debt. This is what happens when a nation spends beyond its means. America is one of the most indebted nations on the planet. Certainly in the top 3.

Let us know what happens with your situation because it is an unusual occurence.

Pulaski

I agree with JR4E. I would let sleeping dogs lie unless the IRS has somehow found you.

Bear in mind that the IRS only levies penalties for taxes actually due but not paid, and as USCs living outside the US get an automatic allowance ("Foreign Earned Income Exclusion") every year, it's $112,000 for 2022, and generally are allowed to deduct any income tax already paid in the country where they live and work, it is extremely unlikely that you will have accidently failed to pay any taxes so far.

The risk of you accruing a tax liablity in future depends on what you do with you life - if you were to move to a country with a very low, or zero income tax rate, and have annual pay exceeding $112,000 then it is possible that you could owe the IRS. Or if you make a large capital gain on your home, such as Boris Johnson did a few years ago, the IRS could come knocking.

Alternatively you, if you really want to close the door on both US taxes, and on the possibility of ever easily moving to, and working in the US, then you could go through the process of renouncing your US citizenship. If you have only had modest income and don't own significant assets or investments then there will be no tax implication, but bear in mind that renouncing your US citizenship is permanent.

tht

You also need to look up FBAR and file those if your balances are/have been over the $10k minimum across all your accounts at any point in any year.

https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

Pulaski

He appears to be completely off the IRS radar at the moment, and in any case he is not evading any US taxes at the moment either, as he is tax-resident in the UK, so there is absolutely no useful purpose to him poking the IRS tiger in its cage.

tht

FBAR is FinCEN. And the penalties apply irrespective of if you owe tax or not… no useful purpose except being in compliance with US law…

Pulaski

Did you actually read the original question? He is a British Citizen living in the UK who is an "accidental American". Jumping on to the slippery slope of attempting to comply with US tax laws is going to open up a world of hurt for him - once his bank finds out he is "a US citizen" he could find his account closed, and will find a number of prefectly ordinary investment options in the UK, such as a Personal Equity Plan and investments in unit trusts are either no longer available to him, or unduly onerous to even consider.

From the IRS web site: He is a British Citizen who is tax resident in the UK, he pays income taxes in the UK on any bank interest and therefore he does not, and cannot owe any taxes to the IRS, ergo there is no penalty. If he ever wants to live and work in the US then the delinquent FBAR procedure will kick in, but as quoted above, there will still be no penalty.

tht

Yes I read the OP’s post… according to that he is a UK and US Citizen resident in the UK. While what your are saying might be the easy way and “common sense” it’s also not the legal way to do things. If the OP is going to get compliant on tax's they shouldn’t definitely also do the same on FBAR if their balances require it…

Jerseygirl

A gentle reminder:

“Should anyone use inappropriate language, encourage someone to break the law, start a personal attack, or engage in hate speech, they will be barred from all further discussions.”

Spacey_

Hi Jack_Russells4ever
I appreciate the advice though I would rather stay on the right side of the IRS, my bank has contacted me about my citizenship and has asked for a US SSN else i would have been refused access to my account. Thankfully I did have a SSN which one of my parents provided so my bank account is okay now, but i would like to take the next step to be tax compliant, i am just struggling to figure out how people approach the process in the UK, much of the information on the main tax form is written (understandably so) for a US audience.

I was wondering if anyone here had experience with this (filing from the UK) and could give me some tips on how to approach the filing process.

Spacey_

Hi Pulaski this has already pretty much happened with my bank, and i am just starting to learn how much is restricted to me investment wise, but at the moment i am more worried about the FBAR penalties though i don't owe tax, i definitely don't want to owe huge fines for not filing or knowing that i should have been filing. I am currently trying to catch up using the streamline process then consider what and how i should invest going forward. It's a pretty harsh system to tax based on citizenship rather than residency but there's not much i can do as i am a dual citizen.

Spacey_

The 10k penalty is scary, i am trying to file under the streamline process so i can avoid any of these issues but the cost of an international accountant is steep, I have only just started working and have been saving up so no investments yet, my tax situation should be fairly simple as I earn from PAYE, but i just can't figure out or find instructions on how to make a simple tax return as a US citizen in the UK.

Jerseygirl

If you have not had a total balance of $10K at any one time during the calendar year, you do not have to file FBAR.

tht

I have always used TurboTax download version but file online (paid) you may need a higher version to support Foreign income, the more forms it includes the more they jack up the price, I also pay the $60 or so for audit protection, I have to go for the most expensive version because of my own situation, but since you are non resident you won’t need any state returns. I have done the FBAR online since it became available (free), I used to send it FedEx before for proof of delivery.

vespucci

You should be able easily to file online. Many years ago in the UK I phoned the IRS and they told me to fill in paper forms 1040 and 2555-EZ and mail them, which I did, so you could just print out the forms, fill them in, and mail them, but as I said it should be easier to do it online.