US Citizen not filed taxes for about 12 years

Hi,

As the title suggests, I am a US citizen living in the UK and I am long overdue filing my taxes.

I have a few questions below, but to try and help give some context here are a few points:

- I have not lived in the US since just after I graduated University in 2010
- The only real job I have ever had in the US were some part time jobs in my last year of High School and during Summer breaks from University
- I lived in Canada from 2011 to 2016
- I moved to the UK under a spouse visa in 2016, and I received ILR just last year and currently have an application for citizenship pending
- I have never earned more than the foreign income tax threshold whether in Canada or in the UK (currently around $108k but I never earned more than that in previous years either)

I would like to sort my taxes out for a few reasons.

1) we now have a family of 3 children, all under 3, and all of both US and UK passports
2) we have a mortgage on a house we bought in 2019
3) my salary in the UK is creeping up to that threshold
4) I may have some inheritance coming to me after an uncle of mine passed away

Given this context, should I be super concerned? I have never bothered filing based on various bits of advice to start filing under streamlined compliance once it felt like I needed to clear my history.

Would my case be fairly complicated? I was thinking of getting a tax specialist to deal with my case but in future years I'd like to not have to pay to have someone do my taxes, if I can do it myself relatively easily.

Am I right in thinking I should definitely sort my US taxes out now? This is probably a dumb question but thought I'd ask!

Any answers and support greatly appreciated.

Am I right in thinking I should definitely sort my US taxes out now? This is probably a dumb question but thought I'd ask!

The answer is “yes”.

Regardless of of whether or not your UK income can be claimed as exempt you should still be filing.

https://www.taxesforexpats.com/expat-tax-advice/why-file.html

1. First and foremost, it's the law - If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. It's that simple.

You’ll be able to file the last three years.  When you have kids, it’s almost always best to file using Foreign Tax Credits and not Foreign Earned Income Exemption (the one with the filing limit). As US taxes are much lower than UK taxes, you are unlikely to owe.

By using FTC, you can get a refund each year of $1,400 per child per year.  Your child will have needed to have had their SSN in that year to claim though.  You will also get the 2020 and 2021 stimulus money for you and your children if you get compliant quickly. 

So you’ll not only have the weight of being compliant off your shoulders but possibly many many thousands of dollars as well. 

Have you registered your children’s births at the US Embassy?

That's good to know, thanks KFDancer.

Yes, all 3 children are registered and have US passports. Our first child, born in March 2020 was only registered around when she turned 1, because it was a nightmare to get an appointment with COVID/lockdowns.

Our other 2 are twins, born May 2022 and we just got them registered and had their passports delivered just before this past Christmas.

However for all 3 children I don't believe we have SSNs just yet. Our eldest has only been to the US once in August 2021 and we didn't have the necessary info/time ready for then, and our twins have not been to the US yet.

That's interesting to know about the US stimulus funds, to be honest I never would have considered I or my children would be eligible as we're not residents in the US. Given the potential benefit I'm now more keen to get this sorted ASAP - should I go through a solicitor or foreign tax specialist? Do you have any recommendations?

I can confirm from experience that USCs living overseas qualify for the stimulus payments. Our son has no income other than his UK salary which he excludes each year when he files leaving zero income. TurboTax won’t file a zero income return return so he invents $5 interest income from his UK bank in order to file. Zero tax is okay for an e-filing but not zero income with TurboTax.  He received the full amounts of stimulus money each year.

I'd go with a Pro to get up to date, from there you could go it alone. I guess at least with a Pro, you know it's done right.

That's good to know, thanks KFDancer.

Yes, all 3 children are registered and have US passports. Our first child, born in March 2020 was only registered around when she turned 1, because it was a nightmare to get an appointment with COVID/lockdowns.

Our other 2 are twins, born May 2022 and we just got them registered and had their passports delivered just before this past Christmas.

However for all 3 children I don't believe we have SSNs just yet. Our eldest has only been to the US once in August 2021 and we didn't have the necessary info/time ready for then, and our twins have not been to the US yet.

That's interesting to know about the US stimulus funds, to be honest I never would have considered I or my children would be eligible as we're not residents in the US. Given the potential benefit I'm now more keen to get this sorted ASAP - should I go through a solicitor or foreign tax specialist? Do you have any recommendations?

Usually they issue the SSN in the same appointment as the CRBA.  You would have had to fill out the application form for it though.  It takes longer to come through than the CRBA.  Check back through your paperwork and see what you have.

Unfortunately if you don’t have SSN’s for the kids, you can’t start claiming them on your taxes or for the stimulus money.  The SSNs need to have been issued already to claim.

Thanks KFDancer... and ignore me, we definitely have the SSN for our eldest, and it looks like we received it 1.5 months after our appointment with the US Embassy, so hopefully should be receiving the SSNs for our twins soon.

Do you have any recommendations for tax experts to help sort this all out?

Based on the limited information provided, I'd expect several thousands of dollars of refunds from the IRS. Writing as a London based tax professional myself I can say we have filed successfully for many hundreds in clients in similar circumstances. Most folks would use the official penalty-free IRS Streamlined Foreign Offshore Procedures (SFOP) as the lowest risk and lowest cost way of catching up. https://www.irs.gov/individuals/international-taxpayers/u-s-taxpayers-residing-outside-the-united-states