Foreign bank accounts, shares and income as US citizen abroad

Hello fellow Americans abroad,
I'm sure most of you have already woke up in a cold sweat since you heard about FATCA and so have I, so here are my questions:

I own foreign bank accounts, (obviously since I've lived abroad all my life), but have never reported any of them. Now what?

I own a stocks and shares ISA since this year and hold shares of UK companies. Should I be reporting this?

Am I correct in thinking that all these obligations we have could be avoided by holding only US bank accounts and investing solely in the US? I don't mind doing this but it brings me to last question.

Is it possible for a US citizen abroad to open a US bank account without having residence in the US?

It is not that I've been blind to the US citizen tax laws, but I'm young and a student in the UK with dual citizenship. I never reported anything because my income up until now has been low.

Bank and investment accounts are reported on an FBAR once the filing threshold is reached.

Income is reported on an income tax return once the filing threshold is reached.

FATCA will require that UK financial institutions report your details to HMRC who will send that data to the IRS. The UK/US IGA also implies that US financial institutions will report your details to HMRC if you banked in the United States.

Thanks. If I banked in the US, how would US financial institutions know I have anything to do with the UK for a start? and if they did know, then I think the UK has  some form of foreign tax credit relief from double taxation which bureaucratically would be much simpler than having to report everything to the US. Don't you think? 

As a US citizen you are required to file tax US returns if your worldwide income meets the relevant filing threshold. If you are required to be within self-assessment, you would also report income and gains to HMRC - either on the arising basis or on the remittance basis if you are not domiciled within the UK and elect into the remittance basis.

Generally speaking, the US gives credit for UK tax for a UK resident, rather than the other way around.

Information reporting by institutions under FATCA has nothing at all to do with any individual obligations one may have to file tax returns in either country; unless one is evading tax in which case it will become easier for tax authorities to find such people.

I understand this for the most part but I would like to give an example which I don't understand:
As a US citizen, I buy shares of a UK company. I sell it and make a big capital gain. I pay the UK capitals gain tax because I'm classed as a UK resident.
Surely I would have to report this to the US as well because I'm a citizen, I don't know if the tax treaty makes me exempt because I've already paid the UK tax, or would I end up with double taxation? but the paperwork I would have to do in this scenario would be a nightmare probably.

Consider another scenario. I buy US shares in the US. I pay my capital gains tax to the US and because I'm a UK resident I report it to HMRC. I don't know about double taxation but I'm thinking the paperwork would be less. So investing in the US as a US citizen is less hassle than investing in the country of residence. So can I or can I not open a US bank account as a US citizen from abroad?

Good job you are a student since there's a lot to study about US taxation of US persons abroad. Generally you pay the UK first. If the US tax is higher, you pay the US the US-UK difference. But nothing is ever simple about it.

It's tough to get a US bank account without a US address. It's a bit easier to get a USD denominated account in the UK.

Hopefully, you have individual shares (like GSK or BAE) in your stocks and shares ISA otherwise you have what is know as a PFIC which is financial equivalent of leprosy for the likes of us.

My practical advice would be to save nothing and enjoy spending your money. Trying to save as a US person abroad is a nightmare. Sometime soon decide whether to a) move to the USA b) Renounce your US citizenship. It's come to that.

I understand this for the most part but I would like to give an example which I don't understand:
As a US citizen, I buy shares of a UK company. I sell it and make a big capital gain. I pay the UK capitals gain tax because I'm classed as a UK resident.
Surely I would have to report this to the US as well because I'm a citizen, I don't know if the tax treaty makes me exempt because I've already paid the UK tax, or would I end up with double taxation? but the paperwork I would have to do in this scenario would be a nightmare probably.

Consider another scenario. I buy US shares in the US. I pay my capital gains tax to the US and because I'm a UK resident I report it to HMRC. I don't know about double taxation but I'm thinking the paperwork would be less. So investing in the US as a US citizen is less hassle than investing in the country of residence. So can I or can I not open a US bank account as a US citizen from abroad?

A US citizen you are responsible for reporting your worldwide income to the IRS. Assuming that you are taxed in the UK on an arising basis

In scenario 1 you pay the UK capital gains tax and claim a FTC to offset your US tax obligation.

Scenario 2: you resource the capital gains to the UK....you are a UK resident and therefore the UK has primary taxation authority....pay the UK tax and again claim a FTC on your US taxes.

You fill find it difficult to open a US bank or investment account with a non-US address. If you buy any pooled investments (like mutual funds or unit trusts) you must watch out for US PFIC rules and UK reporting funds rules.

Your ownership of a stocks and shares ISA is good UK financial planning, but if you own funds inside there rather than individual shares you will be liable to US PFIC tax and of course you must pay US tax on any ISA gains so the main advantage of the ISA is not available to a US citizen.

Thank you Weller and nun for clearing things up. Luckily I do only hold individual shares and not pooled investments.

So it looks like the ISA is of no advantage to us, and holding US bank accounts wouldn't be much simpler. Thank you for the practical advice Weller, I think I will now go and gamble my savings at the local casino and then pay the UK winning taxes and claim a FTC on the US taxes. It is a shame though that this is what we are left with:
a) move to the USA b) Renounce your US citizenship...land of the free.

Thank you for the practical advice Weller, I think I will now go and gamble my savings at the local casino and then pay the UK winning taxes and claim a FTC on the US taxes. It is a shame though that this is what we are left with:
a) move to the USA b) Renounce your US citizenship...land of the free.

That's a little drastic. The USA's bizarre taxation on citizenship rather than residency makes life inconvenient for US expats, but a little planning can get around many of the issues. The poor souls I have sympathy for are the accidental US citizens.

FYI if you want to renounce your US citizenship you have to be up to date with your US taxes. But more than likely you don't owe any US tax, just a bunch of paperwork.