Please help - how to start filing after missing several years

Hi all

I have lived in the UK for 13 years and have not filed a US tax return. I became a UK citizen 8 years ago and retained US citizenship. Please could you point me in the direction to find advice and guidance into how to rectify this. I will have been under the threshold of income to have pay in, if I understand correctly it is $80,000 a year. Please could you help me find information on this.

I have just today heard of the existence of FATCA, and need help understanding this. Please could you point me toward easy to understand information about how this applies to me?

I would be ever so grateful for any help you can offer me. I want to make things right.

Well, I have found IRS Publication 54, and I have found previous years' tax forms here: http://www.efile.com/federal-income-tax-return-forms-prior-past-previous-irs-years/. That's a start.

I've found a Summary of FATCA Reporting for US Taxpayers on the irs.gov website.

Am I on the right track?

Hi Carla, welcome!

Yours is a situation we see frequently here.

I'm not best placed to advise you but I just wanted to assure you that one of our experts will be along soon to help.

Thank you, Larrabee, it's so nice to know I'm not alone! Now I feel like men in black are going to be banging on the door to drag me away.

I have been reading IRS Pub 54 and Instructions for Form 8938. Question: Is a cash ISA held in the UK something that would need to be reported via a Form 8938? (Not that I have a enough to meet the threshold, I don't think, but if I did, would that have to be reported?)

This blog entry from a woman recently finding herself in the same predicament may be helpful:

http://thedualist.net/2016/02/14/assessing-my-options-for-addressing-my-newly-discovered-delinquent-us-tax-situation/

Please could you point me in the direction to find advice and guidance into how to rectify this. I will have been under the threshold of income to have pay in, if I understand correctly it is $80,000 a year. Please could you help me find information on this.

Hi Carla, and welcome,

Well, it sounds as though you've already started the right path with all the research you've done.

Starting with the above, there is the FEIE (Foreign Earned Income Exclusion). Earned income below $100,600 (for 2015) can be made exempt from US tax. BUT, there is a requirement; you must file a US tax return in order to claim it. If you don't file the return (or until you do file), you are not entitled to the exclusion.

Where you need to be looking is the IRS Streamlined Foreign Offshore Procedure. It can be found here:
https://www.irs.gov/Individuals/International-Taxpayers/Streamlined-Filing-Compliance-Procedures

and here:
https://www.irs.gov/Individuals/International-Taxpayers/U-S-Taxpayers-Residing-Outside-the-United-States

and here:
https://www.irs.gov/Individuals/International-Taxpayers/Streamlined-Filing-Compliance-Procedures-for-U-S--Taxpayers-Residing-Outside-the-United-States-Frequently-Asked-Questions-and-Answers

Submitting to this programme requires filing 3 years of past US tax returns, in addition to the current year. Also, you must file 6 years of past FBARs (FinCIN 114). This is a reporting form to the Treasury Financial Crimes Enforcement Network. Information can be found here:
https://www.fincen.gov/forms/bsa_forms/fbar.html
There is a threshold for filing the above, namely a $10,000 aggregate total in all UK accounts in the year. If you are below that threshold, you do not need to file the FBAR.

Lastly, you will also need to file a form stating why you are late in filing (Form 14653). This requires special consideration, and evidently, the IRS has recently decided to place greater attention on this form.

This process will take some time and effort. See reply#6 from robnw here:
http://talk.uk-yankee.com/index.php?topic=86988.0

You may have additional concerns depending on a number of issues relating to your financial life in the UK. Shares and Stocks ISAs? Any type of fund account? Savings accounts? pensions? As you go through this, feel free to return and ask more questions.

The interest from a cash ISA must be declared on a US tax return, and is subject to tax in the US. This applies to almost every other type of UK financial account.

In passing, may I ask how you found out? It's a bit annoying to keep hearing people are finding out about the requirement to file US tax from a UK bank or building society. 

I found out because someone mentioned it to my husband at work. He'd read that American citizens were renouncing their citizenship because of FATCA and I was like, what is FATCA?

I feel truly terrified.

Feeling terrified is a common reaction. Don't, you're going to have to be very pro-active if you wish to solve this. People do survive this. Today, it's your turn.   

Without going into too much detail, you'll need to find your feet first. Start by reading all you are able. FATCA is catching a number of people on both sides of the Atlantic by surprise. Your post is typical of posts made everyday on a site somewhere.

In short, the US needs cash. It has done this by threatening/forcing financial institutions around the world to 'rat out' their US clients. And yes, many US citizens who have lived abroad for a number of years are renouncing their US citizenship (See the article Weller linked).

US tax and FBAR reporting will require any and all information on any account you hold. That includes any 'joint accounts'. UK benefits? Signature authority over accounts at work? Everything.

As said earlier, you'll need to take some time approaching this. You'll need to decide the best method of reporting any income. FEIE is one way, but there is also the use of Foreign Tax Credits (form 1116).

Take the time to get your head around all this first, then come back here when the inevitable questions arise (and they will). Someone will try to help.

If this all gets a bit too much, you may wish to seek professional advice. 

Is this place legit? http://www.usexpattaxhelp.com/unfiled-returns-expats-streamlined-process.php

I don't think I can do this myself and I don't know where to turn for professional advice. I have so very little, I'm really scared it will be taken from me.

Is this place legit? http://www.usexpattaxhelp.com/unfiled-returns-expats-streamlined-process.php

I don't think I can do this myself and I don't know where to turn for professional advice. I have so very little, I'm really scared it will be taken from me.

There are two excellent professionals that have contributed to this site and will understand how the US and UK tax systems relate. I don't know their fees, but they will be far more personal that a company you find randomly on the internet

http://www.britishamericantax.com

http://www.americantaxreturns.com

Thank you ever so much I will phone them both Monday morning. I feel utterly bereft.

I phoned BritishAmericanTax and was asked to send in an email detailing my situation. Their consultant will look it over on Monday. I was told each situation is completely different but mine sounds quite straightforward. Feeling slightly mollified.

I phoned BritishAmericanTax and was asked to send in an email detailing my situation. Their consultant will look it over on Monday. I was told each situation is completely different but mine sounds quite straightforward. Feeling slightly mollified.

I'm sure British American Tax has done many cases like yours and they know what they are doing....it's one of their specialities. I'm glad you are feeling a little less worried.