USC paying back taxes

[MidAtlanticMerge 9]

Hi all,

I am starting to freak out about my taxes. I am a US citizen that lived in the UK from September 2010 to December 2013. For one year of that I was a student with no income and for the other two years I was working. I didn't file taxes for any of these years, thinking I didn't need to since I wasn't making an income in the US and paid UK taxes.

Now I realize that that was very bad of me and could cause me problems when I go to get my tax returns for the AOS package for my future hubby's CR-1.

Does anyone here know what I need to do to get up to date? I am looking at this link here but its all confusing - http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Physical-Presence-Test

At this point should I just go to an accountant?

Thanks!

[Frips 166]

Short story what my wife did: downloaded appropriate I-1040 form ( for year 2010,2011,2012,2013), downloaded appropriate form 2555 for foreign earned income ...filled everything and sent all together to IRS.

She didn't have any troubles and got her transcripts by mail. The whole process took about 3 months.

[Nich-Nick 3,354]

You will need to file for every year in which you earned over the filing threshold. If you qualify either on physical presence or bonafide residence in the UK, then you can take the foreign income exclusion. You probably don't owe the IRS any money. Download Form 2555 and it's instructions and try to work through that and see how you do with your actual facts and figures. I find that easier than reading the general concept page. Put in your dates, income, etc and take it line by line. Keep in mind that each year has a form for that year.

Have you ever filed your own tax return before?

[Ryan H 3,812]

Moved from IR-1/CR-1 Process & Procedures to Tax & Finances During US Immigration forum.

[MidAtlanticMerge 9]

You will need to file for every year in which you earned over the filing threshold. If you qualify either on physical presence or bonafide residence in the UK, then you can take the foreign income exclusion. You probably don't owe the IRS any money. Download Form 2555 and it's instructions and try to work through that and see how you do with your actual facts and figures. I find that easier than reading the general concept page. Put in your dates, income, etc and take it line by line. Keep in mind that each year has a form for that year.

Have you ever filed your own tax return before?

Thanks for your response.

I don't believe I was over the threshold ever. I was only making about 30 grand in USD. Do I still need to file for those years?

I need to investigate the foreign income exclusion as I believe that applied to me.

I have never filed my own, my Dad was doing it for me until 2010 but then stopped and I never took over.

[MidAtlanticMerge 9]

Short story what my wife did: downloaded appropriate I-1040 form ( for year 2010,2011,2012,2013), downloaded appropriate form 2555 for foreign earned income ...filled everything and sent all together to IRS.

She didn't have any troubles and got her transcripts by mail. The whole process took about 3 months.

Thanks for your reply.

So she just sent it to the IRS without any prompting or explanation? Did she end up owing anything?

Thanks so much!

[Frips 166]

Thanks for your reply.

So she just sent it to the IRS without any prompting or explanation? Did she end up owing anything?

Thanks so much!

She did write an explanation letter. She didn't owe anything. Foreign income exclusion is about 90k$

[elmcitymaven 9,712]

Hi all,

I am starting to freak out about my taxes. I am a US citizen that lived in the UK from September 2010 to December 2013. For one year of that I was a student with no income and for the other two years I was working. I didn't file taxes for any of these years, thinking I didn't need to since I wasn't making an income in the US and paid UK taxes.

Now I realize that that was very bad of me and could cause me problems when I go to get my tax returns for the AOS package for my future hubby's CR-1.

Does anyone here know what I need to do to get up to date? I am looking at this link here but its all confusing - http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Physical-Presence-Test

At this point should I just go to an accountant?

Thanks!

You've been given some good advice here. I had lived in the UK 12 years when I decided to move back to the States with my husband. Like you, I hadn't filed at all during my time in the UK. I started freaking out when I realised I had to back file in order to do the I-864, so I went to visit the nice (actually nice!) people at the IRS satellite office in London. It's located in the Embassy. I was told that if I was below the foreign exclusion threshold for all 12 years I had lived there, I only really needed to file the prior three years for the purposes of the I-864 (which, back then, required that you attach three years of returns). I spent Easter weekend 2007 doing 3 years of taxes. FUN! But not that hard. The hardest bit of the 2555 is remembering that the US and UK have different start and end dates to their tax years. This required quite a bit of pro rata calculation, but in the end, it really wasn't too difficult.

Edit: duh, you're back in the States. Oops! Yes, just file and get transcripts.

Edited September 24, 2014 by the maven

[MidAtlanticMerge 9]

You've been given some good advice here. I had lived in the UK 12 years when I decided to move back to the States with my husband. Like you, I hadn't filed at all during my time in the UK. I started freaking out when I realised I had to back file in order to do the I-864, so I went to visit the nice (actually nice!) people at the IRS satellite office in London. It's located in the Embassy. I was told that if I was below the foreign exclusion threshold for all 12 years I had lived there, I only really needed to file the prior three years for the purposes of the I-864 (which, back then, required that you attach three years of returns). I spent Easter weekend 2007 doing 3 years of taxes. FUN! But not that hard. The hardest bit of the 2555 is remembering that the US and UK have different start and end dates to their tax years. This required quite a bit of pro rata calculation, but in the end, it really wasn't too difficult.

If you are near enough to London, you may be able to file the returns over the counter at their London office. This is what I did and got stamped copies proving receipt the same day, which was very useful.

Thank you for sharing your story!

I am back in the US now so I won't be able to pay a visit to the kind IRS office in London. I would have loved to because I almost can't believe you when you say they're nice.

I think with a bit of elbow grease I will be able to sort it out. My Dad's accountant told me I might owe 13 grand so I was freaking out! I don't think he has any experience with foreign earned income...

[Nich-Nick 3,354]

Thanks for your response.

I don't believe I was over the threshold ever. I was only making about 30 grand in USD. Do I still need to file for those years?

I need to investigate the foreign income exclusion as I believe that applied to me.

I have never filed my own, my Dad was doing it for me until 2010 but then stopped and I never took over.

You don't understand threshold for filing. See for example 2013 instructions. Chart on page 7. http://www.irs.gov/pub/irs-pdf/i1040.pdf

Single--$10,000 earned must file and so on according to the filing status found in the chart.

If you earned $30,000 equivalent, then you file.

Where you likely get off having to pay any tax is the foreign income exclusion Form 2555 or the easier form 2555EZ.

So you file and put in $30k income just like you earned it in the USA using Form 1040.

The foreign income exclusion 2555EZ allows you to report what was earned abroad and discount the tax you would owe on your $30k to probably zero. The excluded foreign $30,000 will be subtracted out on the tax form 1040.

Accountants don't all know how to deal with foreign income if they haven't dealt with it before. H&R Block locations tell people wrong info depending on who works on your file. They all aren't as informed as you would think. I have studied it using info on the IRS site. I have done back taxes for several people on VJ. I just can't teach you how to do taxes in a message post if you have no prior experience with taxes. Everybody has different earning, situations, and it would take me longer to write..if this, then this ...situations than I have time for. I would be typing until next week.

Get started by figuring what you earned Jan-Dec tax year for 2013, 2012, 2011

Make a list. Put down what in US and what in UK.

Married in that year or single the entire year?

Anybody doing your taxes will need that info organized.

Your UK income is self-reported. They require no proof on paper showing your income.

Convert £ to $ using the exchange rate for the year earned. Oanda.com has a way to look up historical exchange rates.

Those 3 years will be all you need. The IRS needs no explanation. No stories or excuses. You can mail in paper forms. As long as you don't owe taxes, they won't be bothered with it being late.

[MidAtlanticMerge 9]

Thanks so much Nich-Nick. You went way above and beyond in supplying me with more info. I totally understand that there are way too many scenarios for you to write anymore!

You don't understand threshold for filing. See for example 2013 instructions. Chart on page 7. http://www.irs.gov/pub/irs-pdf/i1040.pdf

Single--$10,000 earned must file and so on according to the filing status found in the chart.
If you earned $30,000 equivalent, then you file.

Where you likely get off having to pay any tax is the foreign income exclusion Form 2555 or the easier form 2555EZ.

So you file and put in $30k income just like you earned it in the USA using Form 1040.
The foreign income exclusion 2555EZ allows you to report what was earned abroad and discount the tax you would owe on your $30k to probably zero. The excluded foreign $30,000 will be subtracted out on the tax form 1040.

Accountants don't all know how to deal with foreign income if they haven't dealt with it before. H&R Block locations tell people wrong info depending on who works on your file. They all aren't as informed as you would think. I have studied it using info on the IRS site. I have done back taxes for several people on VJ. I just can't teach you how to do taxes in a message post if you have no prior experience with taxes. Everybody has different earning, situations, and it would take me longer to write..if this, then this ...situations than I have time for. I would be typing until next week.

Get started by figuring what you earned Jan-Dec tax year for 2013, 2012, 2011
Make a list. Put down what in US and what in UK.
Married in that year or single the entire year?
Anybody doing your taxes will need that info organized.
Your UK income is self-reported. They require no proof on paper showing your income.
Convert £ to $ using the exchange rate for the year earned. Oanda.com has a way to look up historical exchange rates.

Those 3 years will be all you need. The IRS needs no explanation. No stories or excuses. You can mail in paper forms. As long as you don't owe taxes, they won't be bothered with it being late.

[Nich-Nick 3,354]

Thanks so much Nich-Nick. You went way above and beyond in supplying me with more info. I totally understand that there are way too many scenarios for you to write anymore!

Maybe with that info, you and your Dad can tackle it together by printing off the forms and following the instruction book line by line. Your tax return will not be too complicated but you must use Form 1040 with the foreign income exclusion. There are short forms like 1040A and 1040EZ for simple returns, but they don't have a line for subtracting out the exclusion is why you need the full blown 1040. In your situation, you are mostly reporting worldwide Income to the IRS, but won't end up with taxes due. If you have specific questions, shoot me a PM so you don't put personal info in a public forum.