Ask your questions about Tax and FBAR here.
This thread will be focused closely on tax questions and answers. If the conversation starts to ramble, those comments will be moved to another thread.
Tax Discussion Thread. Instead of focusing on specific questions and specific cases, broader ideas can be discussed on the Tax Discussion Thread.
Tax Compliance (or not) Discussion Thread
Sub-threads (more will be added as they occurs):
Previous Tax thread:
US Expat Tax and FBAR discussion thread, part 1
US Expat Tax and FBAR discussion thread, part 2
Sorry I lost your paragraph breaks when copying your comment to this thread. I’ve now restored them.
I can understand this causing you severe anxiety — that’s pretty common. But based on what’s been reported here and on other sites, IRS doesn’t seem to go after average Joes outside the US with these exorbitant fines (except those in the OVDP/OVDI programs). Your income is pretty low, IRS is short-staffed, and overseas collection is a major complicated hassle for IRS. Seems they only get into those big fines with OVDP/OVDI, big bucks people and/or actual cheaters. One renunciant (“The Mom,” IIRC) even enclosed a scathing letter with her final filing some years back and nothing bad happened.
Hi, thanks very much for your kind reply. Fingers crossed I hear about a renunciation appointment soon so I can just put this all behind me and not think about it after that!
Ron Henderson – meant to say my husband has always dealt with the kids banking since they got children’s accounts. I don’t darken the door of the bank with them ha ha. Don’t want them “tainted” by banks knowing they have an American parent.
I’d say do what feels most comfortable to you. I don’t think that a standard run-of-the mill type refund would raise any red flags. On the other hand, one year I had to pay US tax as I’d got some income from the US (I hadn’t been a US citizen for years at that point). I could have filed to get some of the withholding back. That’s pretty run-of-the-mill, but I preferred to let them keep the overpayment of withholding rather than file, preferring to stay as much out of the system as much as possible. I don’t see that your tax preparer’s suggestion would cause a problem, it sounds quite routine and you are in the system already. After you think it over, it may seem the best and most practical route to take. But if, despite your rational mind telling you it’s okay, you still feel it will cause you anxiety, do whatever gives you most peace of mind – it varies from person-to-person.
The bottom line is do what you want to do, many people would suggest that renouncing is a waste of $2,350.00.
For sure, the IRS are not coming to get you in the UK, that’s a definite.
There are thousands of Americans in the UK and only a handful of them bother to file at all.
Thanks Mike and Pacificaa77 for your kind replies. I will have a think about it all.
I can’t believe it, I was just feeling better after all your kind comments from this post and then I came home to a letter from the bank that says:
“Please confirm where you are resident for tax purposes.”
It reads like they know I am American. I have held the account for 20 years with no issues.
Now I am back to that “what do I do now” feeling.
It is not a big account but just another worry. Really wish they hadn’t closed the consuls so I could have renounced by now.
FATCA give the USA no more power or reason to come after ordinary citizens abroad, the IRS don’t even have the budget to process the data.
Tell the bank what you think it is best that they hear and forget about it.
It’s really that simple.
JadeUK I know it’s easier said than done but honestly you can relax. We have said many times that the IRS is undermanned and underfunded. They are years behind dealing with US residents. The have absolutely no ability to worry about aUK resident earning 19,000. In your case the IRS computers have no information to deal with.
In fact you could stop filing immediately and nothing would happen except you would save accounting fees. Above all don’t start filing FBARs or tell the tax preparer about the account for which you are a signatory.
And you can confirm to your bank that you are a resident of the UK for tax purposes.
My wife and I had sleepless nights at the beginning of this trying to decide whether or not to enter the original amnesty. To our great fortune we decided not to. my wife would have owed a bundle. 6 years later she renounced. She didn’t file a final tax return. We never ever heard a single peep from the IRS. No trouble crossing the border 3-4 times a year every year either.
A few responses to various comments.
Yes it does make me anxious because they act so threatening
Who acts threatening? Surely not the IRS: the IRS has ignored you, and will continue to ignore you. What actual threats have you received? The fact that fines are a hypothetical possibility is not a threat – particularly when the IRS cannot collect penalties from you in the UK.
I just didn’t want to take any extra refunds if it would make them look into me more because of the work banking issue that’s just recently come up.
There is no “work banking issue” as far as the IRS is concerned. Do you know if the bank your employer uses is even aware of your US citizenship? If yes, then it’s possible there’s some FATCA data gathering dust somewhere, that the IRS will never look at. If no, then there is even less to worry about.
but nothing I had to do anything like revoke anything for.
Why would revoking FEIE and switching to FTC be a problem? It’s a perfectly routine decision.
The way they treat citizens on this isn’t right.
Who is “they”? The IRS ignores citizens abroad who do not file. That seems like pretty good treatment to me. The problem is banks, in some but not all countries, being scared of FATCA and treating US-citizen customers poorly.
I definitely wouldn’t want to not be able to travel to the US either as my parents are older and in poor health.
If this is the case then you should reconsider renouncing, or at least delay it as long as your parents are alive. If you renounce you will lose the automatic right to enter the US. While it’s very unlikely that you would encounter problems travelling to the US, your entry as a former citizen is not guaranteed. As far as I can tell you would gain nothing by renouncing, because you don’t actually have any sort of US tax problem other than misplaced fear of the IRS.
can’t believe it, I was just feeling better after all your kind comments from this post and then I came home to a letter from the bank that says: “Please confirm where you are resident for tax purposes.” It reads like they know I am American. I have held the account for 20 years with no issues. Now I am back to that “what do I do now” feeling.
No, it reads like the letter they are almost certainly sending to all of their customers, due to both CRS rules and FATCA. It doesn’t say anything about US citizenship, does it? It only asks about tax residence. What do you do now? You have two options. You could answer honestly and disclose US citizenship. They would ask for your SSN, they might report a small amount of data under FATCA rules (which nobody will look at) and, worst case, they might deny you certain investment services. (Hopefully your children do not use the same bank.) Or you can lie and say nothing, confirm tax residence in the UK and assume that the bank has no information on file about your US citizenship, since you’ve had the account for such a long time.
To the mod: sorry if I used a quote tag weirdly there. If you can edit, quotes 2 and 5 need bolding as well (“I just didn’t want” and “I definitely wouldn’t want”). Thanks.
@ Ron H, No problem. Done.
The need to travel to the US is not a good reason to avoid renunciation.
My wife and son both renounced. no [problem at the border.
Entering the US shouldn’t be a problem.
But once you become a non-citizen, you do lose your automatic right to enter, so the possibility of rejection, though highly unlikely, does exist. Also, depending on your country of citizenship and/or length of stay, you may require a visa.
I’ve entered dozens of times over 40 years as former citizen and had no problems. From reading others people’s reports as well, it seems they treat you just like anyone else from your country of citizenship, no particular hassles because you renounced.
You definitely should have your CLN with you and present it, if asked (FWIW, they often don’t ask).
We have a thread, Entering the US, where people write of their experiences.
I agree the risk is small, but if JadeUK has elderly parents to visit and care for and is prone to anxiety, maybe it’s best to keep that US passport a while longer. Particularly given that I can’t discern any real US tax problem beyond irrational fear. Hell, she’ll be turning a small profit now with the child tax credit.
Hi Ron, the letter has a form with big box asking “are you a US citizen” then you have to tick yes or no. And it says they “have reason to believe FATCA applies to you”. My husband has an account at the same bank and has received no such letter, so there must be some reason I got it. Thinking further it’s probably the US cheques for those Covid payments or whatever they were, ha ha. I didn’t put them in our main joint account at another bank because I did think at the time that might trigger something.
That makes sense, US government cheques are a possible sign of US status. Your choices remain the same:
1. Say yes, hand over your SSN, and accept the possibility of FATCA reporting. This is not an issue given that you’re already filing US tax returns. It would only be a problem if you were trying to invest with this bank and they refused to offer you full service.
2. Say no but be prepared for resistance from the bank.
3. Close the account and walk away.