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Topic: Help with Streamlined Offshore process - Delinquent & Didn't Know!  (Read 686 times)

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Hi,

I'm hoping for help from someone here about the Streamlined Foreign Offshore process. I was totally unaware and I feel like an idiot for not realising that I need to submit my US tax return every year. An expat friend first made me aware when she asked me when I was submitting my tax returns (hint: it had never occurred to me). I'm now frantically working through my tax forms and drilling into the IRS website to get the job done. I've just innocently renewed my passport so now I'm hyper aware they might look at my total delinquent tax history.

I moved to the UK 13 years ago when I married my husband, a UK citizen. He works for a not-for-profit making £23,000 a year before UK taxes and I'm a stay-at-home mom with a toddler. We have no savings, one joint bank account and own our home which we bought about 9 years ago.
I know I need to fill in the appropriate 1040 forms, the form for 3 previous tax years (2019, 2018, 2017) and form 8965 for each one of these and the 6 years of FBAR just for good measure.

1. Do I need to fill in form 1040 Schedule B? I've heard of this but no idea why it matters.
 
2. How do I go about acknowledging my husband's income for tax purposes? He doesn't know a thing about US taxes but all the income is from his employment wages.

3. I know about form 2555 (FEIE) but how does this differ from form 1116? It's so difficult to know which one is better for our situation!

4. We already receive a child's tax credit for our daughter here in the UK. Does that change anything for our US taxes?

5. How can I find what the exchange rates for each year of tax? Do I need to use this year's exchange rate for all of them or go back and use the exchange rate at the time the tax return was due? How can I find the tax rates for the FBARS (I realised this needs to be paid in US currency)?

5. Are there any forms I might have missed?

Obviously I'm planning to get into compliance and never planning to have this happen again!! Any help would be so much appreciated, thank you!
 


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #1 on: October 13, 2020, 02:57:46 PM »
Someone with actual knowledge may come along soon to give some answers. 

Meanwhile, could I ask what income you will be reporting? 

Your UK husband's income is irrelevant I believe for you reporting taxes unless you would find it advantageous to file as Married Filing Jointly, otherwise you would be filing as Married Filing Separately and indicating on your return that your husband is a Non Resident Alien. (i.e. non resident in the USA and not a US person)



 
Dual USC/UKC living in the UK since May 2016


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #2 on: October 13, 2020, 04:37:28 PM »
Yes, no income to speak of. I'm hoping this will make the situation easy to resolve.

My husband thinks the tax laws in the US are a bit mad.


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #3 on: October 13, 2020, 05:25:12 PM »
You are only required to file for 2017, 2018 and 2019 if your income exceeded the relevant thresholds of $4,050, $5 and $5.  Did your income exceed any of these thresholds?


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #4 on: October 13, 2020, 09:17:02 PM »
You are only required to file for 2017, 2018 and 2019 if your income exceeded the relevant thresholds of $4,050, $5 and $5.  Did your income exceed any of these thresholds?

No, I had 0 earnings in these years. But should I not post my returns to get up to speed with my US tax compliance? I did have earnings in 2015 and 2016 so I was going to submit FBARs to cover this time period.
« Last Edit: October 13, 2020, 09:19:26 PM by lady_galadriel »


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #5 on: October 13, 2020, 09:21:43 PM »
No, I had 0 earnings in these years. But should I not post my returns to get up to speed with my US tax compliance? I did have earnings in 2015 and 2016 so I was going to submit FBARs to cover this time period.

No interest from joint accounts with your husband?
Dual USC/UKC living in the UK since May 2016


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #6 on: October 13, 2020, 09:29:30 PM »
No interest from joint accounts with your husband?

we only have a joint standard bank account  ::) our account was frequently in the red for a long time. I can count up any potential interest but I seriously doubt it even adds up to £1.
 


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #7 on: October 13, 2020, 09:40:30 PM »
we only have a joint standard bank account  ::) our account was frequently in the red for a long time. I can count up any potential interest but I seriously doubt it even adds up to £1.

I will be very interested to know if you have to file at all since you have no income to report.
Dual USC/UKC living in the UK since May 2016


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #8 on: October 14, 2020, 08:21:23 PM »
No, I had 0 earnings in these years. But should I not post my returns to get up to speed with my US tax compliance? I did have earnings in 2015 and 2016 so I was going to submit FBARs to cover this time period.
As you had no filing requirement, there is no advantage in filing or indeed using the SFOP.


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #9 on: October 14, 2020, 10:57:54 PM »
As you had no filing requirement, there is no advantage in filing or indeed using the SFOP.

I'm now planning on going back to work. So you would recommend filing my 2020 tax return as usual without SFOP? My biggest concern is that all those years of earning before the last 3 years will come back to haunt me. I want to make sure I'm in the clear with the IRS!


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #10 on: October 15, 2020, 08:46:23 AM »
I'm now planning on going back to work. So you would recommend filing my 2020 tax return as usual without SFOP? My biggest concern is that all those years of earning before the last 3 years will come back to haunt me. I want to make sure I'm in the clear with the IRS!

It is not unusual for someone to stop earning money for several years, whether that be having a family or other reasons. I would think that as long as you really haven’t had any income for the past few years you are good to go.
Dual USC/UKC living in the UK since May 2016


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #11 on: October 15, 2020, 05:22:40 PM »
Did you have more than $10K in UK accounts / pensions? IF so you'll need to file FATCA.


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #12 on: October 15, 2020, 06:25:10 PM »
Did you have more than $10K in UK accounts / pensions? IF so you'll need to file FATCA.

I think you mean FBAR, which you do through the Fincen site, FATCA is done through IRS forms with your tax return and the limits are much higher, $200k in UK accounts.

https://www.irs.gov/businesses/corporations/summary-of-fatca-reporting-for-us-taxpayers
Dual USC/UKC living in the UK since May 2016


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #13 on: October 19, 2020, 06:34:37 PM »
Yes you are correct of course. But here's a question. If you have 0 taxable income and no need to file a return do you still need to file FBARs?

A


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Re: Help with Streamlined Offshore process - Delinquent & Didn't Know!
« Reply #14 on: October 19, 2020, 07:09:28 PM »
As you had no filing requirement, there is no advantage in filing or indeed using the SFOP.

What about receiving the stimulus money?  That would be a big advantage! 


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