Hello
Guest

Sponsored Links


Topic: Advice needed on UK child benefit, DLA and workplace share scheme in US tax retu  (Read 572 times)

0 Members and 1 Guest are viewing this topic.

  • *
  • *
  • Posts: 12

  • Liked: 2
  • Joined: Jan 2022
Hello

I'm completely new here! So glad to have found you, as I'm honestly so stressed at having discovered that I should have been filing US tax returns.

I am a US citizen but apart from 18 months when I was 2, I have always lived in the UK. So am also a UK citizen.

I have a pretty ordinary financial situation. Mortagaged house, workplace salary sacrifice pension, no large savings. However, I'm concerned about the workplace share scheme that I joined about 5 months ago - although I don't think I have any shares yet so might be able to back out of that one.

I also did get UK child benefit, but not for a couple of years. But I do now receive Disability Living Allowance for one child and have recently applied for the other. I'm in the middle of a stressful period of trying to secure educational support for my child which has been admin hell - and the realisation of US taxes has about pushed me over the edge today!

I fired off a couple of emails to Greenback and Taxes for Expats. I've already heard back from Greenback who said I'd need to book a $250 appointment with an account to ask about implications of UK child benefit. Surely it isn't that unusual??

Any help and advise much appreciated!


  • *
  • Posts: 206

  • Liked: 35
  • Joined: Jun 2017
Welcome to the Forum,

There's good news and bad news based on your comments.

First, the bad news. As a US citizen (often referred to as an Accidental American in your case) you're required to file an annual US tax return. You'll need to become compliant and not just ignore it. Become compliant involves using an IRS program - most likely Streamlined  Foreign Offshore Compliance. You can find details here:

https://www.irs.gov/individuals/international-taxpayers/streamlined-filing-compliance-procedures

Many of us have been through this process, i can seem daunting, but for many with simple affairs, it's not that bad.

You'll have to file 3 years of tax returns (2018 - 2020) that are now considered delinquent - which you do as part of the Streamlined process. Depending on your cash/bank situation you may have to file what are known as FBAR's going back 6 years - but to be honest, it may not affect you.

Now the good news,. You won't be taxed by the US on your child benefit, so don't stress on that account.

Now the really good news - once you've sorted out your tax returns and are compliant, most likely you'll be entitled to Stimulus payments from Uncle Sam - totalling $3,200 per eligible adult (which you should be one).

Hopefully the above will help you - start by reading the link to the IRS website to understand a little more. There are others on the forum who will be able to guide you more and get you through the process - if your circumstances are simple, you shouldn't have to part with large amounts of cash to professional advisors - again, provided your circumstances are simple.
« Last Edit: January 12, 2022, 09:20:49 AM by Smitch »


  • *
  • *
  • Posts: 12

  • Liked: 2
  • Joined: Jan 2022
Thank you so much for your reply.

Hopefully Disability Living Allowance in the child's name paid to me is the same as child benefit, and I won't get taxed on it.

Is it worth me leaving my company's share scheme? I'm not sure if that overly complicated my situation. At the moment I only have money in the share account but no actual shares as it hasn't got that far yet.

Other than the UK benefits for my children and the company share scheme, my finances are completely ordinary!


  • *
  • Posts: 206

  • Liked: 35
  • Joined: Jun 2017
My advice would be one step at a time.

Personally I wouldn't leave any company share scheme - even if there is tax payable on gains, the benefits are far more likely to outweigh any tax eventually payable.

Important thing is to methodically work through getting compliant and filing you taxes on an annual basis - there shouldn't be anything complex and by the looks of it, you won't have any tax liabilities to Uncle Sam.


  • *
  • *
  • Posts: 12

  • Liked: 2
  • Joined: Jan 2022
That sounds great. Are there any particular companies recommended for taking care of the streamlined process? From a google so many companies pop up.


  • *
  • Posts: 206

  • Liked: 35
  • Joined: Jun 2017
You have two options really - do it yourself or get someone to do it for you - experience does say that companies charge quite hefty fees for the process - others on the forum can offer opinions.

Focus on getting your paperwork in order - going back at least 3 years (2018-2020) and also knowing what bank and pension balances were for the last 6 years if you have FBAR filings to make (which are relatively easy) - anyone helping you will need that information, so make it easy for them and get it organised (saves fees that way).

As I'm an accountant, I did it myself back in 2017 but because my situation was quite complex, I got an expert to look over it for me and guide me through the filing - I used Damian Talbot at Warrener Stewart - (cost circa £1,200) - but don't be guided by me - there are others - search the forum from the US-UK Taxes home page with the word 'Streamlined' - you'll find multiple references to other posts and it will help you understand the process a bit more.


  • *
  • Posts: 411

  • Liked: 17
  • Joined: Jan 2012
+ 1 on Smitch's comments. Under the circumstances, i'd definitely lean towards a pro, done right and compliant with Treasury and IRS.


  • *
  • *
  • Posts: 12

  • Liked: 2
  • Joined: Jan 2022
I will definitely be paying someone to do it for me! I am not at all knowledgeable or confident enough to attempt it myself. I fear locating all of my paperwork will be difficult enough!

But will take some time to look through the forum for providers of this service - and welcome any recommendations on this thread :-)


  • *
  • Posts: 206

  • Liked: 35
  • Joined: Jun 2017
There are experts on this forum who are also professionals may be able to help you and who you can probably private message.

@KFdancer posts regularly.


  • *
  • *
  • Posts: 12

  • Liked: 2
  • Joined: Jan 2022
I thought I'd try and get my paperwork in order while I try and find someone to do the actual tax returns. Now I have more questions!

I have a joint current account and a joint savings account with my spouse (who is UK citizen). Do I consider the entire amount here? Or just get the totals and let the tax preparer figure it out based on those accounts being joint?

I also have two bank accounts, one for each of my children, which are in their names but I have control over. Do these need to be included?

I'm pretty sure I will go over the figures for the FBAR. If I do the streamline compliance paperwork now, which years bank accounts do I need to look at? Is it start of 2016 to end of 2021?

Thanks again!



  • *
  • Posts: 206

  • Liked: 35
  • Joined: Jun 2017
You'll need 6 years for FBAR - so beginning in 2015.

In terms of joint accounts, I'm not entirely sure - but others can advise. In terms of your children's accounts, there's a section in FBAR reports for you to disclose accounts where you have signing authority but no ownership. You have to disclose EVERY account that you have signature authority over - including any that may be associated with your employment.

Quick tip (which helped me when I completed the FBAR forms) - they're in PDF format, that you can save offline before submitting - do the earliest year first, save it and then for subsequent years, use the same file, and overwrite and edit the data then resave as the new year's file name - saves having to re-enter name and address and account details year after year (I was a signatory to over 30 accounts, with no beneficial interest) - saves a lot of time.
« Last Edit: January 12, 2022, 03:52:45 PM by Smitch »


  • *
  • Posts: 17840

  • Liked: 4636
  • Joined: Jun 2012
  • Location: Wokingham
Right now, just be gathering information.  Nothing about your situation is scary.  And as smitch said, you'll end up with hefty stiumulous payments TO YOU which will offset any costs you have as you become compliant.

Are your children American?  Or only you?  I'm thinking it's only you as you likely don't meet the residency requirement to pass your US citizenship down, but I don't want to assume.

The good news is you don't have to solve this TODAY.  Slow and steady wins the race with taxes!


  • *
  • *
  • Posts: 12

  • Liked: 2
  • Joined: Jan 2022
Right now, just be gathering information.  Nothing about your situation is scary.  And as smitch said, you'll end up with hefty stiumulous payments TO YOU which will offset any costs you have as you become compliant.

Are your children American?  Or only you?  I'm thinking it's only you as you likely don't meet the residency requirement to pass your US citizenship down, but I don't want to assume.

The good news is you don't have to solve this TODAY.  Slow and steady wins the race with taxes!

Thank you. I've already requested copies of statements where I don't have them and have gathered what I do have.

I'm pretty shocked at the wide range of costs I've been quoted so far. The latest was almost £4k plus VAT! Then there are the likes of Greenback and Taxes for Expats which are less costly. Is there a reason for me not to use the US based companies?

No my children are not US citizens. It is just me that all of this relates to.

And most of all thanks to you all for making me feel a little less stressed and overwhelmed by this all!


  • *
  • Posts: 17840

  • Liked: 4636
  • Joined: Jun 2012
  • Location: Wokingham
I’ll send you some names of independents.

You don’t want “just” a US company, as they won’t understand the US tax treaties that are specific to the UK or the UK benefits. 

Happy to help you get what is a reasonable quote and such.  I’ve figured this all out for my situation, but it’s different to yours.  For example, my kids are USC’s so I get MONEY from the USA by filing a particular way.  And I don’t get child benefit.  So my knowledge gaps are too big to try to guide you accurately.


  • *
  • *
  • Posts: 12

  • Liked: 2
  • Joined: Jan 2022
I’ll send you some names of independents.

You don’t want “just” a US company, as they won’t understand the US tax treaties that are specific to the UK or the UK benefits. 

Happy to help you get what is a reasonable quote and such.  I’ve figured this all out for my situation, but it’s different to yours.  For example, my kids are USC’s so I get MONEY from the USA by filing a particular way.  And I don’t get child benefit.  So my knowledge gaps are too big to try to guide you accurately.

Thank you so much. A list of places to start and help to understand whether a quote is reasonable or not will be a fantastic help.


Sponsored Links





 

coloured_drab