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To Consider Giving up US Citizenship?

(199 Posts)
NotFunBeingAnAmericanInLondon Wed 01-Oct-14 18:49:37

Posting here for traffic.

Desperate to talk to other US citizens settled in Britain who doubt they will be returning to the US for personal reasons.

Am I the only one who's been here so long I didn't notice the FBAR thing? I don't file FATCAs, but I am never sure. What are we supposed to do if our British born, dual US citizen kids have CTFs? I have a SIPP with mutual funds in it, my accountants tell me not to even bother mentioning it now?! Apparently this is a time bomb for later.

Social Security and State Pension are supposed to be reciprocal, but I cannot get any information from anyone.

I used to file my own 1040 forms, but now that there are so many forms to file with the threat of prison if I mess up that I am truly cowed and pay someone else £400 a year to file for me. And I am a housewife with no income!

The state department has just raised the cost of expatriation from $450 to $2500 which worries me even more.

I wonder, should I just give up my citizenship now and make life much easier?It's a lot of worry and stress to carry around for emotional/nostaligic reasons.

3cupsoftea Wed 01-Oct-14 19:30:38

I'm an expat.
I'm worried that I have no idea what any of your acronyms mean!
I file taxes every year but don't pay any tax as we don't earn enough to be taxed in both countries if that makes sense.
I'll be watching this thread!

FuckOffWeasel Wed 01-Oct-14 19:52:02

I'm a SAHP too, and don't really know how much this is all going to affect me. I don't file taxes because I'm lazy awaiting this to back fire spectacularly.

If you're a SAHP abroad are you supposed to file based on your family income? Or can I just put 0? Dh is British.

fuck it I'll just bury my head under the pillow and hope for the best.

NotFunBeingAnAmericanInLondon Wed 01-Oct-14 19:56:10

FBARs = you have to file these in the summer and send them to Detroit. Technically they can send you for prison for not doing so or take a large portion of your savings. You must disclose all foreign bank accounts if you have more than $10,000 total held in bank accounts abroad at any time over the course of a year. Don't forget your kids savings accounts if you are a signatory on them.

CTFs = Child Trust Funds, a Gordon Brown give away for a few years that means your children own mutual funds and you are the trustee. Nightmare from US tax reporting perspective. I've been advised by accountants to ignore them till the children can actually access them. Hope they are right.

SIPP = Self Invested Personal Pension, basically the UK version of a US IRA. The USA and UK are supposed to have reciprocal tax agreements, but different accountants have different ideas about whether this is covered or not.

FATCA= where you report all of your assets abroad if they are worth more than $200,000, if you live outside the US. This doesn't include your home, but would include second homes, stocks, businesses, artwork, etc. Sadly, not my problem!

NotFunBeingAnAmericanInLondon Wed 01-Oct-14 19:59:05

Weasel, you can definitely put 0 and file singly. In fact, you don't need to file at all. But do you have your name on any bank accounts? You probably need to file FBars. They are actually easy to file.

The worry is the long run. I plan to live out my life here. My husband is English, my children were born here, I've lived here longer than anywhere else in my life. So, I need to save and plan for my old age. How to do that when any kind of retirement planning gets caught in the net of "fat cats trying to avoid us taxes?"

Fabulassie Wed 01-Oct-14 20:52:38

Message withdrawn at poster's request.

Fabulassie Wed 01-Oct-14 20:54:58

Message withdrawn at poster's request.

Taz1212 Wed 01-Oct-14 20:57:48

I gave mine up a few months ago! After my mother died it was too much of a mess trying to be compliant with the IRS and with all the FATCA changes it's been a nightmare living here and trying to do anything with our finances.

FarFromTheMaddingCrowd Wed 01-Oct-14 20:58:31

You could try asking on the USA section of British Expats as this comes up quite often. Also try the UK-Yankee site which is for US expats in the UK. There are some extremely knowledgable posters on both sites.

Taz1212 Wed 01-Oct-14 21:05:01

Fabulassie My personal opinion is that it is unlikely that the IRS will find out about bank accounts unless you have completed FBARs. However, when I was taking out bank accounts in the past, some of them did ask if I had dual citizenship and at that time when I was young and innocent I naively put dual UK/US so they might have had me documented as a US person.

For other financial products like stocks and shares ISAs, all the main providers now explicitly ask you to confirm that you are not a US person. It was this mess that finally drove me over the edge to renounce. grin

TarkaTheOtter Wed 01-Oct-14 21:06:12

This thread is very pertinent to me as I recently discovered I need to file. I've NEVER lived in the US but have citizenship through my mother. I'm a SAHM of two. The cheapest quote I could find for help getting caught up was $1200. That's more than my yearly income for any of the three years I have to file. However, I'm so stressed at the idea that this could come back to haunt me that we're taking the money out of savings.

fabulassie no one has mentioned anything about my spouse's income (he is not a US citizen). Can you remember what the form is called so I can ask?

NotFunBeingAnAmericanInLondon Wed 01-Oct-14 21:08:04

You did it Taz! I wish I was in your shoes now. I've been dragging my feet. My mom is ageing and alone in the USA, which worries me. I've been told, don't know if it's true, that if you give up your citizenship you are on a watch list for 10 years and can be harassed when crossing boarders. Seems like a petty thing to do to a housewife with a husband with a normal 9 to 5 job. People don't talk openly about this so it's hard to know what is what.

An accountant just quoted me $5000 to prepare an 8454 form! She said the mutual funds in my SIPP could raise that bill. Oh my.

Fabulassie Wed 01-Oct-14 21:09:20

I may be wrong about that - I don't file with the IRS (head in the sand over here!) but I remember there being some outrage about it on an expat forum.

Taz1212 Wed 01-Oct-14 21:09:33

I never filed anything to do with DH's income. He'd have had kittens if I'd had to! For FBARs you did need to include your DH's NI number when it was the paper form but I thought they'd abandoned that for the online filing (joint accounts obviously)? I don't remember getting DH's NI number from his this year...

NotFunBeingAnAmericanInLondon Wed 01-Oct-14 21:10:12

Thanks for the links fabulassie.
I've never disclosed my husband's income. Now that I have accountants preparing my return, they don't suggest he provide it either. This is an example of what worries me so much. There is a lot of confusion even amongst tax professionals.

Fabulassie Wed 01-Oct-14 21:11:44

Message withdrawn at poster's request.

Taz1212 Wed 01-Oct-14 21:13:20

NotFun I honestly wouldn't worry about any watch list. I know a number of people IRL who have done it and frequently travel back without any hassle. The Consul General was so nice to me when I went to do it and said lots of people are doing it because the tax filing and FATCA are making life incredibly difficult for us.

I can't believe the price increase! I snuck in there in May- I had no idea the price was going up. Funnily enough, DH pointed it out to me just last week when he read an article about it.

NotFunBeingAnAmericanInLondon Wed 01-Oct-14 21:13:30

My dad is an expat in a banana republic. He is blithely ignoring most of this stuff. He is old and will probably die before they catch him. I don't think he is actually avoiding any taxes, he is just avoiding paperwork.

I think it is different in Britain. Britain will comply with all US wishes and has a developed banking system with computer data bases. They are pretty close to giving the IRS anything they want at the push of a button.

NotFunBeingAnAmericanInLondon Wed 01-Oct-14 21:14:55

You are my hero Taz. Isn't it nice to be lucky sometimes? smile

BuildYourOwnSnowman Wed 01-Oct-14 21:15:00

If you give up you will still be liable to tax for a number of years

Fatca means that banks etc globally have a responsibility to report us citizens accounts/share accounts so the IRS are extending their scope. This shouldn't impact you though if you are declaring your income correctly.

I know someone who have it up and it took him ages. They said he was either doing it because he didn't want to pay tax or because he was an enemy of the state and it was treasonous! He did it in the end but it wasnt made easy and he still had to file tax returns for a while.

NotFunBeingAnAmericanInLondon Wed 01-Oct-14 21:16:56

Thats the trouble isn't it? Taz had a good experience, BuildYourOwnSnowman's friend was put through the wringer. You don't know what to expect when you open this can of worms.

Taz1212 Wed 01-Oct-14 21:20:12

NotFun I realised I'd made the right decision when the form came through from the State Dept a few weeks ago and all I felt was relief. grin

BuildYourOwnSnowman You are not liable for tax after you renounce. There is a final form you need to file for the IRS and it determines whether you pay an exit tax. If you don't owe an exit tax that's you done. If you do owe an exit tax, to pay it and then that's you done- no future tax liabilities.

They can still go back over previous year's filings for a number of years, but you have no future tax liabilities.

Fabulassie Wed 01-Oct-14 21:21:14

Americans think that Europeans are taxed to death (and some countries do pay a lot of taxes) but I don't know if there's a more ruthless entity than the IRS. Uncle Sam is implacable.

BuildYourOwnSnowman Wed 01-Oct-14 21:21:16

I should imagine taz experience was more recent though! My friend went through it a year after 9/11 and he did feel that had something to do with it.

I know loads of people considering it as they don't think they will ever go back but sentimentality always gets them in the end! It's tough!

Btw, markers for whether an account is fatca reportable include place of birth so you would need to make clear you are no longer a us citizen to ensure your info isn't reported

Taz1212 Wed 01-Oct-14 21:22:20

I am being bad am already brainwashing into DC the importance of never ever telling any UK financial institution that they are a US person. I'm figuring they can fly under the radar until they either decide to renounce or actually use their citizenship.

Bad me. [evil face]

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