Should I file back FBAR for one year I had mort. ext money in account for 2 days

Hello everyone! I hope you don't mind me asking if anyone has advice!

I've lived in the UK since 1998 when I was student. I got married and pregnant my last year of uni and then ended up staying home  for many years as we had 3 kids in total, the oldest of whom was autistic so needed full time care. My husband is British and we are not wealthy (broke actually!).

I started teaching some kids exercise type classes about 4-5 years ago. A lot of the reason was to help kids like my son and just hoped to break even. I made a loss first couple years (hall rentals, insurance, equipment etc) but last couple years made a small profit, the best year was about £2500. I filed uk taxes as a sole trader and obviously owed nothing. I understood I was under US tax reporting figures.

Today I was reading a news article about the rising number of US expats giving up their  US citizenship  which talked a bit about FBAR which I had never heard of. I told my husband about it and laughingly said that it's a good thing we are always in negative balance and have zero savings so I don't have to file that either. He asked more questions and I said the article said if you go over $10,000 at anytime aggregate across your accounts you have to report your accounts. He reminded me that in 2012 we extended our mortgage to facilitate some house improvements to accommodate our family (particularly our autistic son) and the £30,000 was in our checking account for about 2 days before it went back out to the builder etc.

Now I am worried. I'd never heard of FBAR. I've never filed US taxes over here or an FBAR. Do I need to do this now? Do I just file one FBAR and nothing else for 2012 as that's the only year we had any money at all in any of our accounts? Are we then going to have the hassle of them digging through our accounts etc (I am stressed just thinking about gathering all this info.) Am I likely to be liable for charges (as we struggle as is and it would likely bankrupt us if so).

Stressed out thinking about it! Thanks in advance for any  input!

I don't think you have anything at all to worry about.  Provided you meet the following requirements you won't have any penalties imposed.  I would simply go onto the FINCEN site to fill out a report for 2012 and give the reason for late filing just like it is.  You normally never exceed the limits but this one time you did have over $10k in a checking account for a couple of days as you extended your mortgage.

http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-FBAR

Delinquent FBAR Submission Procedures
Taxpayers who have not filed a required FBAR and are not under a civil examination or a criminal investigation by the IRS, and have not already been contacted by the IRS about a delinquent FBAR, should file any delinquent FBARs according to the FBAR instructions and include a statement explaining why the filing is late. All FBARs are required to be filed electronically through FinCEN’s BSA E-Filing System. Select a reason for filing late on the cover page of the electronic form or enter a customized explanation using the ‘Other’ option. If unable to file electronically you may contact FinCEN’s Regulatory Helpline at 800-949-2732 or 703-905-3975 (if calling from outside the United States) to determine acceptable alternatives to electronic filing.
The IRS will not impose a penalty for the failure to file the delinquent FBARs if income from the foreign financial accounts reported on the delinquent FBARs is properly reported and taxes are paid on your U.S. tax return, and you have not previously been contacted regarding an income tax examination or a request for delinquent returns for the years for which the delinquent FBARs are submitted.

PS
FBAR is just a reporting requirement, no taxes are levied on account balances

Thank you for your reply! I will get started on that tomorrow morning I think.

Have I been told correctly that I did not need to file taxes either? I made £0 for many years and only a very small amount the past 2 years. I've read tonight people saying that you don't HAVE to file under $9000 but you 'should'. I'm just hoping I am not in trouble. What are the reasons I 'should 'have? I don't plan to live in the US (my husband's degree is not transferable).

Thank you for your reply! I will get started on that tomorrow morning I think.

Have I been told correctly that I did not need to file taxes either? I made £0 for many years and only a very small amount the past 2 years. I've read tonight people saying that you don't HAVE to file under $9000 but you 'should'. I'm just hoping I am not in trouble. What are the reasons I 'should 'have? I don't plan to live in the US (my husband's degree is not transferable).

I expect someone much more knowledgeable will reply to the question on whether to file or not with your low income. 

I have just filed my FBAR online today and it is fairly easy, and free, to do.

Thanks for your feedback durhamlad! Glad to hear the form is not too onerous! I'll look on here tomorrow if anyone has any further advice.

You have to file a tax return if your income exceeds the filing threshold for your filing status. Note that this amount normally changes every year.

You would likely file as Married Filing Separately, so compare your gross income for the calendar year of interest to the IRS table which specifies who must file under the various categories. Do not rely on ANYTHING other than official publications.

Even if you don't need to file, it may be in your interest to do so. And yes, do the FBAR form. Stupid, but it's a simple form, doesn't incur tax, and you no longer need to worry.

You are more likely than not to be due refunds from the IRS if you file US returns, so I would suggest you use the streamlined offshore procedures at this stage.

Thanks for your replies!

Guya, how would I be due refunds? That doesn't make any sense to me! I didn't work for many years and have lived in the UK since 1998. It just sounds like a lot of trouble if I don't need to do it. My husband is a UK citizen and has never lived in the US so he's not involved in the US taxes at all.

All the 'it would benefit US citizens to file even if they don't need to' comments I'm seeing in various places fail to explain any details of what the benefits would be. I'm not seeing any for me.

Thanks for your replies!

Guya, how would I be due refunds? That doesn't make any sense to me! I didn't work for many years and have lived in the UK since 1998. It just sounds like a lot of trouble if I don't need to do it. My husband is a UK citizen and has never lived in the US so he's not involved in the US taxes at all.

All the 'it would benefit US citizens to file even if they don't need to' comments I'm seeing in various places fail to explain any details of what the benefits would be. I'm not seeing any for me.

If you ever wanted the option of moving your family to the U.S. it would benefit you.  To sponsor a U.S. visa you need to be up to date on tax filings.  Filing, even if you don't need to, means there is a paper trail showing compliance.  Without it, you'll have to spend time gathering documents showing you didn't need to file.

That's one example.

Thank you for your reply KFDancer. I do not forsee ever moving back. My husband's degree is not recognised in the US, we couldn't meet the requirements (that they require of my husband of 16 years!) for him to get a greencard. If something ever happened to him I don't think I I would go back as my kids grew up/are growing up here and I would be too worried about healthcare etc over there. (I have UK citizenship too.)

I like having my US citizenship just identity-wise as I grew up there etc, but I don't actually get anything from it. If it becomes a burden in any way (having to pay lots to files complicated taxes yearly etc). I would seriously think about giving it up which I find very sad.

Thanks for your replies!

Guya, how would I be due refunds? That doesn't make any sense to me! I didn't work for many years and have lived in the UK since 1998. It just sounds like a lot of trouble if I don't need to do it. My husband is a UK citizen and has never lived in the US so he's not involved in the US taxes at all.

All the 'it would benefit US citizens to file even if they don't need to' comments I'm seeing in various places fail to explain any details of what the benefits would be. I'm not seeing any for me.

Of course it makes sense; read the tax forms, read the instructions and familiarise yourself with your tax system and based on the data you have already provided you'll figure out why the IRS might owe you money.

Have you worked through the 1040, Schedule A, Schedule B, 8965, 1116 and so forms yet?

Hi guya, thanks for your replies! I read the IRS info and because the US has never withheld any taxes (as I don't work or live there) I would never be eligible for any refunds that way. I am not eligible for EITC (Earned Income Tax Credit) as I did not live in the US at least 50% of any year. As I said it would not make any sense for me to be due anything anyway as I pay no money into the US system, don't live there and have nothing to do with it. Reading all the IRS info that does seem to be the case.

Renouncing costs about $2500 and you need to be up to date on tax filings.  You would also need to hold citizenship for another country (UK).  It's used more often by accidental Americans, for example, your children who are US citizens even though they may have never stepped foot into the US.

You may actually be required to file US tax returns from the sounds of things. Even though your income was small, the filing threshold for someone who is self employed drops drastically to only around $400, and it seems that you have been above that threshold (for the last few years at least).

Fortunately you are still unlikely to owe anything to the US, however to be perfectly legal you should file.

Another potential benefit of filing (if your children are also US citizens) could be the child tax credit. If you qualify for that you can receive up to $1000 per child in the form of a refund....Definitely would be worth looking into further.

Good luck!

Thanks for the replies! I'll look into it more. The stuff I read last night said that if you qualify as a UK sole trader (I do) and not a ltd company etc you don't follow the self employed criteria for US taxes.

Regarding renouncing, I am a UK citizen also and I do understand the cost but I'm starting to totally resent the way the US handles this. I know it cost $2500 but I might actually look into it in years to come. My husband has his  business too and as he's getting busier he was thinking of becoming a ltd company and making me a bigger part of the business now that the kids are getting older. Looking at this stuff if it's going to complicate that for us I would seriously consider renouncing.


**Edited to add: I looked at the IRS page and you are correct it does say you need to file for $600 or more. 2014 the was first calendar year I made more than that so I guess I'd need to file on the April filing date this year?