Late US tax filing

Hi all,

I hope you are all well.

I am wondering if someone can help please. My wife moved here to the Uk, from the US in 2010. In 2012 we completed 2 years worth of tax returns for her, and she was under the threshold for tax exemptions, so all was fine.

However, we have yet to file her return that was due in April 2013 (just never got around to it), and obviously another will be due in April 2014.

This time, and for the return in 2014, I think she will be over the limit for exemption threshold. Can I please ask what kind of penalties we are likely to face for her not filing in April 2013?

We are currently trying to find help in the UK / US to finally get this filing done, and then do the next one on time in April 2014.

Should we get this done asap or wait for April 2014 and file this years and last years together?


I am sure the tax owed won't be much as we are only slightly over the exemption threshold. But I am worried about penalties for late filings, and any interest we might owe.

Does anyone have any experience of late filings at all?

How important is it to file the FBAR on time too?

Sorry for the questions, but it is all very confusing!

Thank you very much!

.... My wife moved here to the Uk, from the US in 2010. In 2012 we completed 2 years worth of tax returns for her, and she was under the threshold for tax exemptions, so all was fine.

However, we have yet to file her return that was due in April 2013 (just never got around to it), and obviously another will be due in April 2014...........We are currently trying to find help in the UK / US to finally get this filing done, and then do the next one on time in April 2014.

Unless there is reasonable cause, not filing a tax return is never a good thing. Doing so twice in a row exacerbates the problem. Probably, the most appropriate British reply would be to say be prepared for some possible discussions by placing a good set of books down the back of your trousers.

You indicate you are seeking assistance. Follow their instructions, but the ultimate response is undoubtedly,... file.

This time, and for the return in 2014, I think she will be over the limit for exemption threshold. Can I please ask what kind of penalties we are likely to face for her not filing in April 2013?

Whether it's the basic threshold for filing, or the FEIE threshold, it is not always certain that tax will be owed. There are circumstances in which tax may not be due. Generally, penalties are not due unless an actual amount of tax is due. Generally, but not necessarily always. A repeat infringement will not help.

How important is it to file the FBAR on time too?

Potentially, filing an FBAR late can be more dangerous than filing a tax return late.

Thanks for the reply.

Just to be clear, we are only late for 1 year (2012). 2013 is due in April so we will file that on time.

We honestly just forgot to file 2012... hopefully they will be leniant with that.

We would rather not seek assistance, as it seems to cost a fortune. I am trying to understand the forms etc on this forum, as a guide to complete it ourselves.

So if we file a FBAR now, are we likely to face penalties / problems?

Obviously without working out the exact amount of tax due, we don't know the penalties etc .. but the IRS does make it sound pretty daunting. Its a minefield.

We would rather not seek assistance, as it seems to cost a fortune. I am trying to understand the forms etc on this forum, as a guide to complete it ourselves.

Was the 2010 return timely filed in 2011 (including extensions while waiting for her to qualify for FEIE), or, are you saying her income was below the basic threshold and there was no need to file the 2010 return?

As for 2012 (not filed in 2013):

If you prefer not to use assistance, there are 3 alternatives:
1) Do use assistance for 2012, and then use that as a template/guide for filing for 2013 onwards. It may be worth the expense.
2) Try using tax software (like TurboTax?) that will allow filing late returns. If your wife's return is simple, it may not be too difficult.
3) Your wife will have to file for 2012 onwards (forever), so you may try to complete the forms yourself. It will take time, patience, and a good deal of research, but you will learn the system, and following years will be easier. It is possible to do.

It's your decision as to how and when you file the 2012 return. Once filed, the IRS will either agree to the submission, or if they have a problem, they will be in contact with you (this could take up to 3 years). It would be unfair to suggest what their response may be. But, it will have to be filed.

So if we file a FBAR now, are we likely to face penalties / problems?

Only the US Treasury knows the answer to that. File the 2012 FBAR, note that you made a mistake by not filing (and you've timely filed for 2010 and 2011?), and see what happens. There is a risk, but it will have to be filed at some point. Again, paid assistance may offer the best possible outcome given the circumstances. You can complete subsequent years yourself.

Was this willful? http://www.rosenbergmartin.com/Portals/0/PDFs/MBJ_May13_ciraolo.pdf

Thanks again for the info.

We filed the 2010 and 2011 returns on time and there was no need to file a FBAR.

This is the first time we have forgot to file and the first time my wife's earnings require a FBAR.

Thank you. We will take a look at TurboTax and how professionals can help us.

Just to check, you know the criteria for filing an FBAR is based on the total balance during the year of foreign bank accounts she has signature authority with, not her income or earnings?

This is the first time we have forgot to file and the first time my wife's earnings require a FBAR.

The penalty for not filing is 5% of tax owed per month it's late.  If you owe a payment, it's 1% of total owed for each month not paid. 

How do I know this?  My CPA did not file my 2012 return, even though he told us he would and we paid him to do so. 

File ASAP.  You have 4 years to file a late return before the IRS starts talking charges of tax evasion. 

Hi and thank you again.

Re. FBAR, yes sorry, I did mean our balance went over $10,000.

I'm assuming this includes things like work bonuses?

The only reason we went over $10,000 for like 2 days, was that a bonus came into our account. Hoping the IRS / Treasury sees this and realises it is not us trying to hide foreign income. Just an honest mistake.

Thanks

My impression (of the FBAR) is the treasury don't really care what the balances are, or why they were as they were, they just require filling out the form (which by the way has the same reporting threshold of $10k as it did in the 70's when the form first came out, if I remember right....), and as long as you've reported and paid appropriate tax, etc you don't have to worry at all. Even if the balances are in the 100's of thousands, it just means additional forms.

Yeah, the FBAR is with the treasury, not with the IRS at all, I wouldn't be stressed about that if I were you.

I'm also in the same boat as you and your wife. We even went as far as getting the bonus paid into an account that I have nothing to do with (it was DH's bonus) but in a bit of a duh! moment he decided to transfer it into a different savings account by going through our joint checking. So we'll be FBARing for our account going over for approximately 30 seconds.