Is it necessary to file US tax returns if you're not working or earn under $80K?

Whoa - this is complicated.

I know    I was hoping it wouldn't be quite so difficult.

You are also delinquent and will be disclosing your husband's SSN and address to the IRS and the US Treasury soon.

"Delinquent" indicates I owe money, which I don't. None of us (me, husband, his brother) owe any money, from the tax threshold I've found on the IRS's page. I owe one or two years of returns and one FBAR for this year, so the FBAR isn't overdue, to my understanding. My husband and his brother definitely should have filed returns, but thought their green cards were abandoned. They also don't need to file any FBARs, besides our joint FBAR for this year. My husband MAY owe taxes for this year's earnings, but the tax rate in Canada is so high, it's unlikely. We'll definitely file a return in the US for this tax year when that time comes.

I found this online:
You still should file a return with the U.S. every year, whether you have income or not. You are not legally required to do so if you don’t owe U.S. taxes, but it’s an important preventative measure as there is a Statute of Limitations on tax disputes.
If this is true, it sounds like I'm not legally required to file if I don't owe taxes. Maybe this is incorrect information, though.

From what we've found, the 8854 is only for LTR's, which he may have not been. He wasn't a permanent resident for a long enough period of time. Is there any way to figure out if he was considered an LTR by the US?

The IRS site says "long-term residents who have terminated their long-term resident status for tax purposes must file a Form 8854". What do they mean by "for tax purposes".

Also, it says something about Homeland Security determining that you've abandoned permanent resident status being the date of termination of your long-term residency. When my husband entered the US in mid-2006, the immigration officer wrote in his passport a note saying his permanent residency was abandoned (just saw it in his old PP), and my husband says he was under the understanding his green card was considered abandoned at that point. When you look up what causes you to lose your green card, moving permanently outside the US was a reason. I do realise that this is not the legal way to give up your green card, but could this 2006 date be when permanent residency ended? We went to Denver in 2008 (before ESTA was required) and my husband told the IO he used to have a green card, but abandoned it, and even showed it to him. He was admitted as a tourist and has been since then, using an ESTA. That's why I'm confused about his status.

You need to get the story straight as a family before filing.

"Getting the story straight" indicates we willingly are defrauding the IRS, which we clearly aren't.

"Delinquent" indicates I owe money, which I don't. None of us (me, husband, his brother) owe any money, from the tax threshold I've found on the IRS's page. I owe one or two years of returns and one FBAR for this year, so the FBAR isn't overdue, to my understanding. My husband and his brother definitely should have filed returns, but thought their green cards were abandoned. They also don't need to file any FBARs, besides our joint FBAR for this year. My husband MAY owe taxes for this year's earnings, but the tax rate in Canada is so high, it's unlikely. We'll definitely file a return in the US for this tax year when that time comes.

Owing or not owing any US tax has nothing to do with your being "delinquent". There are potentially serious consequences for not filing taxes, FBARs, immigration and expatriation forms even if you owe no US tax. You appear to be delinquent in filing a number of forms required under US law and even if you owe no tax you could be subject to substantial fines.

I found this online:
You still should file a return with the U.S. every year, whether you have income or not. You are not legally required to do so if you don’t owe U.S. taxes, but it’s an important preventative measure as there is a Statute of Limitations on tax disputes.
 

I do not think that this is correct. As has been previously stated the level of income in one criterion for whether you have to file US taxes, the amount of tax you owe is not.

There are a lot of differences in the UK-US Tax Treaty and the US-Canada Tax Treaty which could affect your husband's 2011 return.

The FBAR is normally due on June 30; unless there was an extension for filing, it is overdue.

What I really need to figure out now is:

How do we find out if my husband was considered a long-term resident?

How do we find out if his green card was considered abandoned by Homeland Security, considering an immigration officer considered it abandoned six years ago? I've read that if HS considers it abandoned, that means it ended his period of long-term residency.

The IRS site says "long-term residents who have terminated their long-term resident status for tax purposes must file a Form 8854". What do they mean by "for tax purposes"? Their wording is confusing - are they referring to LTR's who abandon FOR tax purposes, or are they saying that for tax purposes an LTR must fill out form 8854?

Apparently, he did file a return in 2007, so if his LPR status was considered abandoned in 2006 as the IO told him it was, he would be fine.


Thank you everyone for your help. Once I find out those above questions, things should be a bit easier. This has become an absolutely ridiculous situation. I simply thought I owed one or two years of returns, and now this has turned into an incredibly stressful situation for me. The US is the only country in the world that does this to its expats, besides Eritrea, who a Canadian court ruled was acting illegally requiring taxes from their citizens abroad. My rant is over. Thanks again.

Also, sorry for ALL the questions. Everything online gives advice on how to keep a green card while living abroad. We want to get rid of it! On this site (http://www.visalaw.com/99oct/20oct99.html) I've found something that says "failure to file a return is almost always considered a sign that LPR status has been abandoned" - wouldn't nearly 7 years of absence and not filing a return be considered an abandonment?

The FBAR is normally due on June 30; unless there was an extension for filing, it is overdue.

The FBAR was due on June 30, 2012 for the tax year January 1, 2011 to December 31, 2011, is that correct? So an FBAR for the 2012 tax year is due on June 30, 2013? If so, I don't have anything to file until next year.

EDIT: I found the answer: "The normal annual filing date for FBAR is June 30 for the previous tax year."

Regardless, I still won't be penalised by the IRS for any of MY tax "delinquencies", according to a new (as of late 2011/early 2012) IRS policy for US citizens living in Canada. I looked into it, and the Canadian government urged the IRS to change their policy on penalising US citizens in Canada who were unaware of the FBAR rules:

"revised regulation will exempt from late-filing penalties those US citizens living in Canada who were unaware of the FBAR rules, or have another reasonable explanation for non-filing, and who owe no US taxes."

Also, the IRS released a statement in late 2011 regarding US citizens living in any country abroad saying:

"U.S. citizens who owe no U.S. tax and/or who have reasonable cause defenses to penalties, will not be subject to penalties for failing to file U.S. income tax returns or Foreign Bank Account Reports (FBARs)."


So, according to this new policy, US citizens living abroad who were unaware they needed to file tax returns and FBAR's won't be penalised as long as they file when they learn they need to. I think we should stop scaring people here into thinking the IRS is going after them, when they owe no money.

What I really need to figure out now is:

How do we find out if my husband was considered a long-term resident?

How do we find out if his green card was considered abandoned by Homeland Security, considering an immigration officer considered it abandoned six years ago? I've read that if HS considers it abandoned, that means it ended his period of long-term residency.

The IRS site says "long-term residents who have terminated their long-term resident status for tax purposes must file a Form 8854". What do they mean by "for tax purposes"? Their wording is confusing - are they referring to LTR's who abandon FOR tax purposes, or are they saying that for tax purposes an LTR must fill out form 8854?

Apparently, he did file a return in 2007, so if his LPR status was considered abandoned in 2006 as the IO told him it was, he would be fine.


Thank you everyone for your help. Once I find out those above questions, things should be a bit easier. This has become an absolutely ridiculous situation. I simply thought I owed one or two years of returns, and now this has turned into an incredibly stressful situation for me. The US is the only country in the world that does this to its expats, besides Eritrea, who a Canadian court ruled was acting illegally requiring taxes from their citizens abroad. My rant is over. Thanks again.

Also, sorry for ALL the questions. Everything online gives advice on how to keep a green card while living abroad. We want to get rid of it! On this site (http://www.visalaw.com/99oct/20oct99.html) I've found something that says "failure to file a return is almost always considered a sign that LPR status has been abandoned" - wouldn't nearly 7 years of absence and not filing a return be considered an abandonment?

Just because a green card is no longer valid for immigration purposes does not mean it was abandoned. The only way to be certain of the date of abandonment is to look at the Form I-407 which would have been filed. http://photos.state.gov/libraries/164203/dhs/I-407.pdf

If there is no I-407 then it is likely that the individual concerned is still treated as a US person for US tax purposes. One could ask Homeland Security for a copy of the I-407. This is however an immigration question so may need advice from a US immigration attorney.

The FBAR was due on June 30, 2012 for the tax year January 1, 2011 to December 31, 2011, is that correct? So an FBAR for the 2012 tax year is due on June 30, 2013? If so, I don't have anything to file until next year.

EDIT: I found the answer: "The normal annual filing date for FBAR is June 30 for the previous tax year."

Regardless, I still won't be penalised by the IRS for any of MY tax "delinquencies", according to a new (as of late 2011/early 2012) IRS policy for US citizens living in Canada. I looked into it, and the Canadian government urged the IRS to change their policy on penalising US citizens in Canada who were unaware of the FBAR rules:

"revised regulation will exempt from late-filing penalties those US citizens living in Canada who were unaware of the FBAR rules, or have another reasonable explanation for non-filing, and who owe no US taxes."

Also, the IRS released a statement in late 2011 regarding US citizens living in any country abroad saying:

"U.S. citizens who owe no U.S. tax and/or who have reasonable cause defenses to penalties, will not be subject to penalties for failing to file U.S. income tax returns or Foreign Bank Account Reports (FBARs)."


So, according to this new policy, US citizens living abroad who were unaware they needed to file tax returns and FBAR's won't be penalised as long as they file when they learn they need to. I think we should stop scaring people here into thinking the IRS is going after them, when they owe no money.

You are referring to the Overseas American Program which will be launched on September 1, 2012. It is a fairly program where the IRS will assess compliance risk based on facts such as previous compliance or non-compliance. It will be for the IRS to accept individuals or reject (and indeed criminally prosecute in a few cases).  The facts you describe are not "good facts" - you describe previous filing and then simoly giving up. This could be interpreted by the IRS as wilful behaviour.  In my professional life, subject to other possible facts such as serious illness, death or written incorrect advice from the IRS - these are not the kind of facts I would probably put through the new program as the risk sounds too great.

I would suggest obtaining individual advice from a professional as to which is the best route to filing with the IRS.

If you owe no tax on your returns you will not face any penalty. In that case I would just file taxes for the years you are currently delinquent. However, your earnings may not be the entire story and I would make sure you have taken account for foreign accounts such as pensions, investments, certain mortgages etc held by you or jointly with your husband. having to go back and file 1040X for omitted foreign accounts will be a real pain.

You are also saying that you are not delinquent on FBAR as your foreign accounts only went over $10k in the 2012 tax year. If this is the case just file FBAR along with your 2012 taxes.

Your husband is in a potentially more difficult situation than you because he did not take the time to properly relinquish his Green Card by filing I-407 and maybe 8854.

What I really need to figure out now is:

How do we find out if my husband was considered a long-term resident?

How do we find out if his green card was considered abandoned by Homeland Security, considering an immigration officer considered it abandoned six years ago? I've read that if HS considers it abandoned, that means it ended his period of long-term residency.

The IRS site says "long-term residents who have terminated their long-term resident status for tax purposes must file a Form 8854". What do they mean by "for tax purposes"? Their wording is confusing - are they referring to LTR's who abandon FOR tax purposes, or are they saying that for tax purposes an LTR must fill out form 8854?

Apparently, he did file a return in 2007, so if his LPR status was considered abandoned in 2006 as the IO told him it was, he would be fine.


Thank you everyone for your help. Once I find out those above questions, things should be a bit easier. This has become an absolutely ridiculous situation. I simply thought I owed one or two years of returns, and now this has turned into an incredibly stressful situation for me. The US is the only country in the world that does this to its expats, besides Eritrea, who a Canadian court ruled was acting illegally requiring taxes from their citizens abroad. My rant is over. Thanks again.

Also, sorry for ALL the questions. Everything online gives advice on how to keep a green card while living abroad. We want to get rid of it! On this site (http://www.visalaw.com/99oct/20oct99.html) I've found something that says "failure to file a return is almost always considered a sign that LPR status has been abandoned" - wouldn't nearly 7 years of absence and not filing a return be considered an abandonment?

So, according to this new policy, US citizens living abroad who were unaware they needed to file tax returns and FBAR's won't be penalised as long as they file when they learn they need to. I think we should stop scaring people here into thinking the IRS is going after them, when they owe no money.

As has been stated, the rules for abandoning a GC for IMMIGRATION purposes is DIFFERENT from the rules for TAX purposes.  All the links/advice that you are using just justify that he has abandoned don't necessarily apply for tax purposes.

As has also been stated and linked, your husband may fall under one of three sets of rules.  No one here can properly advise you without knowing which of the three rules he falls under. Those of us that are tax professionals would be wise not to advise you further on this subject because we do not understand the full fact pattern and it is an immensely complex area.

So for your question, how can you determine if he is still a long term resident.  First, figure out which rules apply.  Then look at those rules and see what was the criteria for abandonment.  Then also see what are the follow up tax requirements after abandonment.  For example, old rules required you to continue to file tax returns for 10 years following abandonment.  Newer rules require the 8854 and calculation of an exit tax.  I have already posted the link to the three sets of rules.

As for your situation, if you are only delinquent on tax returns for two years and won't owe tax and not yet delinquent on FBARs, you may be fine for penalties.  As nun is trying to politely say though, you better make sure you have a strong understanding of your situation and truly don't owe.  We see people treat UK pensions, ISAs, etc. wrong all the time and assume there is no tax impact or the tax impact is the same as if it were a US pension, etc.  If you do owe tax or are delinquent on FBARs, it is not an accurate statement that you will be fine as long as you file now.  You are taking those quotes out of context and I can assure you I have seen folks severely penalised in a personal and professional capacity. 

Also while your situation may seem straightforward, if your husband still should have been filing, then you have some decisions to make on your taxes.  For example, maybe it is better for you to file jointly, if your husband will owe money.  This is why you have been given advice to consider your circumstances as a family unit.

Further no one can tell you if you need to attach anything else.  You can file delinquent returns in a number of ways (as guya listed).  Your decision on how to file will determine if you need to attach something else.  Your decision on how to file needs to be carefully thought out based on how certain it is that you don't owe anything and that your husband is filing correctly.  It also depends on how much risk you are willing to bear.  Recognise if you want to make use of the new program, it is specifically something you have to ask for, it doesn't automatically apply to you.

And given that your posts are now picking advice out of context and referring to websites out of context, I can no longer give you any further advice myself or I may be come partially liable to your situation.  As you seem to think this is all straightforward and we are scare mongering, you won't need our advice any further anyway.  All the best.

Apparently, he did file a return in 2007, so if his LPR status was considered abandoned in 2006 as the IO told him it was, he would be fine.

What form did he file in 2007? Was it a 1040NR or a regular 1040? If he filed a 1040NR and it was accepted it might help towards your husband's NRA status. If it was a 1040, why did he stop filing?