I'm so nervous....haven't filed since I've moved

I'm now into my 4th year in the UK, and I have never filed. However, I have never earned over £30k in a year and I don't own a house or any of that other confusing investment type stuff, like land or shares...or whatever.

So, my gut feeling is if I filed this year and for the past 3 years... I wouldn't owe anything anyways.  It would just be a matter of going on record, really.

Also, what documents do I need here in the UK to help file taxes? We don't get 1040s...or whatever they were called??? I forget!!

Sorry for being so dim! And a scardy cat about all this!

Some assumptions to start with:
You've earned £30,000 roughly for each of the past 3 years, from an employer. You are not self-employed. You have a current bank account and possibly a small savings account. You do not have dividends, etc., or any other source of income including UK benefits. If there is anything different, or in addition to the above, the following may need adjustment. Are you single, or married?

Don't be too nervous. You're in company with thousands of others. Sorting this out may take some time and effort, but normally there are no 'bad things' that will happen to you if you act now.

First, let's dispel one major misunderstanding. Because you earn less than the form 2555 threshold of roughly $100,000 per year does not mean you don't owe tax on that income. The only way to claim the exclusion and avoid the tax due is to file a tax return. Without filing, you owe the money.

You are a prime candidate for the new 'Streamlined Filing Compliance Procedures'. You would need to file returns for each of the past 3 years. See the following links:

http://www.irs.gov/Individuals/International-Taxpayers/Streamlined-Filing-Compliance-Procedures

http://www.irs.gov/Individuals/International-Taxpayers/New-Filing-Compliance-Procedures-for-Non-Resident-U.S.-Taxpayers

EDIT: this contains some examples:
http://www.irs.gov/Individuals/International-Taxpayers/U-S-Taxpayers-Residing-Outside-the-United-States

You will need to follow the instructions for the programme. The forms you will likely need to begin are form 1040, Schedule B, form 2555, and form 8965 (for 2014 only). Depending on your circumstances, there may be others.

You may also need to file 6 past years of FBAR's (FinCEN 114), if you meet the requirements and threshold for filing each of those years. You may need to file form 8938 if your bank account(s) had over $200,000 in aggregate at 31 December for any of those years.

You need your own accurate records for income in case of questions, but nothing needs to be filed with the tax return. UK banks and employers do not issue anything similar to a 1099 on a calendar year basis, so it will be your word regards the accuracy of your return.

Remember, the UK tax year (and P60's) are based on the UK tax year, which is different from the US tax year.

DO NOT consider the OVDP programme unless you have wilfully practised tax evasion.



 

What theOAP said.

In your situation, once you file I bet you will have $0 US tax to pay. As the fine for late filing is based on how much you owe the IRS you won't have any late filing fees either.

Thanks for the help. I have never had more than a couple of thousand in my bank account at any one time...and to be honest, none of it was ever in my account, but in my partner's.

Do you recommend the Taxes for Expats people?  I am extremely busy and have issues with anxiety, so I think having someone to do my taxes for me could be very helpful, unless the company isn't very good.

I tried working with them last year and got fed up.  They wanted documents I didn't know about and didn't explain anything.  But then, I wasn't bin a very good place and could have had a skewed perception of what was going on.  Needless to say, I didn't go through with filing.

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I recommend you have a go yourself using the excellent summaries typed above.

If you find yourself struggling with filling in paper forms, you can buy TurboTax or TaxAct (I have never used either) which I believe may work; or you can engage an American tax adviser located in the UK, who will be familiar with all of the issues you discuss and in the same time zone.

Definitely have a go at doing it yourself; once you sit down and go through the first one, the rest will likely fall into place. If it's a simple return, Turbo Tax or Tax Act can become your BFF.

Of course if you have a few thousand to spare, you can hire a firm. IMHO many (most) will do what's easiest for them, and file based on the most conservative interpretation of IRS regs. and the US tax code. That may not be the best for you however, and may not be any more correct than your own interpretation. Again - that's just my opinion.

I had my returns prepared by accountants (both CPA's with a lot of tax experience) for a couple of years when I was still in the US. One did a couple of things incorrectly as I found out later, which cost me a bit. The other did a good job, but told me privately afterward that my tax situation was so simple it was not worth paying their minimum fee. He said "do it yourself in the future".