Wanting to renounce - accidental american who's never filed taxes before

I've finally come to the momentous decision that I want to renounce my citizenship. I want to live my life without limits, be a free spirit again, and maybe start a business.

I've read a few online guides on how to do this, but they seem somewhat incomplete and are normally pedalled by a firm trying to get you to use their services. I need some help.

Some background
1. My mother is a US citizen and was born in Texas, but I was born in the UK.
2. I have a US passport my parents got for me when I was a child.
3. I've never lived in the USA (only been once on holiday for a week).
4. I've never filed taxes with the IRS. I found out about the requirement a couple of years ago, which was quite a shock.
5. I've never filed any FBAR forms.

My finances:
1. My income is £61k, I don't believe I have ever owed any tax on my UK income.
2. I own a house which I purchased with my wife (non US citizen) 4 years ago for £200k (our first house), maybe worth £230k now.
3. I might owe some tax from a HTB ISA I used to purchase my current house, a couple of thousand pounds bonus from the UK gov.
4. I might owe some tax from a tax-free stipend I received during my PhD which I completed 6 years ago (£13k per year).
5. I've never held any investments.
6. I get free childcare hours, and am on the tax free childcare scheme, for the past three years.

A question first. Is there any way to avoid the $2350 exit fee? This is a lot of money, and I have too many children making finances tight.

My plan to proceed:
If I understand, I should become a "covered expatriate", as I have not filed any tax returns ever. I file form 8854 to certify that I have no taxes due, which is less effort than filing five years of tax returns. Pay the exit tax of £0 because of my relatively modest assets. I then don't file any tax returns at all, but I do need to do one FBAR form for this year (?). And then I'm done?

Am I going about this the wrong way? Anything else I should be aware of? Do I have anything wrong?
Thanks for reading and I hope you can help me.

Hi there, sorry to hear you've found yourself in this situation. You do not need to file in order to renounce as the two processes are completely separate. The compliance sharks have their own agenda. Visit the American Expatriates and/or Accidental Americans groups (https://www.facebook.com/groups/accidental.americans) where many folks have experience of renouncing and you can get a fuller picture to inform your decision making. The US State Department have indicated recently that they are planning to lower the renunciation fee back down to $450 but have not given a time scale for this. Less than a month ago, the Belgian data protection authority struck down FATCA. The whole thing is such a mess.

Thanks for the comment. I'd not realised the tax process and the renouncing process are separate. That simplifies things a little.

Very interesting about the possibility of the fees getting reduced. Although I've just looked it up and they announced it quite a while back (February) , with no news since. Hopefully it doesn't take too many more months. That sounds like it's worth waiting for.

I'll check out those Facebook groups, thanks.

This is NOT a process you want to rush. You want to be fully and wholly aware of each step.  Four months in immigration timelines is nothing.  There is no reason to rush the process.

Do you qualify for the additional child tax credit annually if you were to back file 3 years of taxes?  It’s $1,400 per child per year paid straight to your bank account.  Your children do need to have social security numbers, which it seems they do not have, but I’m assuming.  You (and possibly your children) could probably still file and receive the Covid stimulus money, which would more than cover the cost to renounce.  Things to consider anyways. It’s not all cons to be a USC.  Of course there ARE cons but also pros!

Fortunately my children aren't US citizens, as I've never been a US resident/wasn't born there.

Interesting about getting the stimulus cheques. That would probably cover any expenses paid! I'll look into what would be involved in filing the 5 years worth of tax returns, claiming the stimulous cheques, and then renouncing.

And yes, I think I am maybe going to have to take this slowly and make sure I fully understand every step along the way.

One reason to rush the process is I want to start a little side hustle. If I'm still a US citizen it makes filing those tax returns much more difficult potentially. I may see if I can get my wife to have the income in her name, although I don't want to get in trouble with HMRC over something like that.

I understand the feeling of wanting to get this sorted and have some certainty. It is a very strong, compelling urge for many of us. But from everything that you have said here about your situation, I think you would be well advised to stay away from the US tax system. You would be launching yourself into a quagmire needlessly. Please do not proceed without speaking to a wider range of people. The other group I mentioned is https://www.facebook.com/groups/AmericanExpatriates/.

You are a UK citizen. You live in the UK and always have done, and you have always paid your taxes in full here where you live like any other normal person. The US system of taxing the full-time, lifelong tax residents of other countries is a very sick aberration in the world and the IRS cannot, and will not ever be able to, administer it. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4450547

I think my issue is that the difficulty of renouncing is only going to get worse for me as time goes on. But I will consider it carefully one I known the exact method of renouncing.