Tax - how to as an accidental American

Hello all,

I found this forum by accident and it is great! been reading here for a few hours and I wanted to put down a few questions I have.

I'm an accidental America who has never (really) lived in the USA.

Basically I was born in the USA in the late 80s to a single mother and very soon after I was born I returned home to Ireland with my mother. My father is not involved and is not a US citizen in any case. I grew up as Irish but do have an American passport. A few years after I was born my aunt was transferred from Ireland to USA for work where she has remained ever since. When I was 18 (mid 2000s) I visited my aunt and her company offered me a job. My aunt went and registered me for a SSN (which I received) but before I took the job I decided I wanted to go to college so I returned to Ireland.  I have never worked in the USA and I have never used my social security number. I now live in London and one night at a bar an American told me that I should be filing taxes and that if i didn't i would have a big fine. This scared me so i asked my aunt who said that it wasn't true (as many americans think) but I insisted it was so she asked her accountant. He got in touch with me and told me not to worry (i was earning about $30,000 at that time) and he duly filed for me for two years (2016 and 2017). However in 2018 I had some serious mental health issues due to bereavement and break down of long term relationship and loss of employment I did not file for the last 3 years.

However I have now rectified this situation with my aunts accountant, who is of course now my accountant. At this stage he told me about FBAR and the issues with this. This was a big shock to me and I understand he has successfully accessed an amnesty programme on my behalf.  I want to be tax compliant and the IRS has never contacted me in relation to taxes. However after filing my taxes this year I received two stimulus checks in the post so i guess they know I exist now.  I now earn about $50,000 so I'm a long way off being a high earner however I do want to ensure I am tax complaint therefore I have a few questions:

My UK bank don't know I'm a USA citizen they think i'm Irish, is this an issue? I provided my Irish Passport when I signed up and this clearly states I was born in the USA. They never asked me if I was a US citizen.

Can I access Mortgages in the UK as an US Citizen?

I have a pension through my work. Is there tax implications on this in the US?

What other tips could you give me?

All the best,

Dano!

My UK bank don't know I'm a USA citizen they think i'm Irish, is this an issue? I provided my Irish Passport when I signed up and this clearly states I was born in the USA. They never asked me if I was a US citizen.

Can I access Mortgages in the UK as an US Citizen?

I have a pension through my work. Is there tax implications on this in the US?

Your tax accountant seems to be on top of your US tax filings, so that’s good news.

You should inform your bank that you are also a USC.

You can access mortgages as a USC.

Once you start drawing your pension you should declare it on your US return, and claim foreign tax credits for any taxes you pay on it where you live. Your tax accountant will know what to do.

Honestly it’s no big deal.  You have someone who has caught you up, and hopefully you got all the stimulus money at the same time.

From here it should be quite easy, just a few forms each year that once you get comfortable with them, and job done.

Loads of us have US citizenship and have mortgages, pensions, and aren’t fearful, mainly because we know what we know.  You’ll be fine, just need a bit of time to wrap your head around it all. 

You could always renounce but honestly, I think it’s more faff than just the forms each year.

Thank you both for your replies! very helpful. I've not fully figured out how to quote yet so please bear with me.

I'm currently paying into my pension (through work) and i assume my investment is making a gain year on year, even though im not drawing it down. Do i need to declare this?

hopefully my accountant has sorted all my issues but i understand the IRS operate on a model that doesn't confirm things unless I owe them money.

Thank you both for your replies! very helpful. I've not fully figured out how to quote yet so please bear with me.

I'm currently paying into my pension (through work) and i assume my investment is making a gain year on year, even though im not drawing it down. Do i need to declare this?

hopefully my accountant has sorted all my issues but i understand the IRS operate on a model that doesn't confirm things unless I owe them money.

You will need to report the highest balance on your pension plan each year as part of FBAR and possibly on your return as part of FACTA if you meet the limits. You may also have to complete form 3250 each year to report the pension as a foreign trust but again your accountant will know all this. No extra taxes just reporting.

Just so you know - its very debatable whether you need to file a 3250 or not for UK pensions. I asked this question a while ago and didn't get a response so let's try it again. Does anyone on here know of anyone who has even been penalized for not filing a 3250 for a UK pension?

TaxesForExpats is very clear that 3250s are not required.

I remember a. thread on here a while ago where someone actually went into the US embassy in London with that question and the IRS representative said you would have to be paranoid to file. a3250 for a UK pension and not to worry so much.

A

Just so you know - its very debatable whether you need to file a 3250 or not for UK pensions. I asked this question a while ago and didn't get a response so let's try it again. Does anyone on here know of anyone who has even been penalized for not filing a 3250 for a UK pension?

TaxesForExpats is very clear that 3250s are not required.

I remember a. thread on here a while ago where someone actually went into the US embassy in London with that question and the IRS representative said you would have to be paranoid to file. a3250 for a UK pension and not to worry so much.

A

My understanding is that generally speaking, UK occupational pensions do not require to be reported on Form 3250.

However, this changes if the occupational pension qualifies as a "foreign grantor trust". The most simple way to identify a "foreign grantor trust" would be if the pension is fully funded by the employee, or if the employee contributes more to the pension than the employer does. This is a very simplified version of my interpretation of the rules. If in any doubt i would instruct a professional.

Whether or not you would get challenged either way is of course another question. It would be interesting to find out if anyone had been.   

Just so you know - its very debatable whether you need to file a 3250 or not for UK pensions. I asked this question a while ago and didn't get a response so let's try it again. Does anyone on here know of anyone who has even been penalized for not filing a 3250 for a UK pension?

TaxesForExpats is very clear that 3250s are not required.

I remember a. thread on here a while ago where someone actually went into the US embassy in London with that question and the IRS representative said you would have to be paranoid to file. a3250 for a UK pension and not to worry so much.

A

I have been receiving 2 final salary UK pensions from previous employers for 14 years and have never filed a 3250.  I can’t speak as to other situations.

I report all my pension information on a treaty declaration 8833 form citing the UK-US treaty on qualified pensions are not subject to taxes for gains made etc.