To not want to pay tax as an "Accidental American."

[budinbloom]

Help! Is anyone facing/has faced this recently?

DH is a dual UK/US national from birth. (English Dad, American Mum, born in the US but left for the UK as a baby and never lived or worked there since). He received what we now know is a "FATCA" letter recently and after copious googling and increasing panic, it looks like he is supposed to file tax returns to the US and potentially pay tax on the funds he holds in his ISA. Luckily, they aren't threatening to close his account....yet but the internet says that is what's happening in other countries!

We're still flapping but becoming resigned to the fact that, we have to pay to enter a foreign tax system in the first place before we can exit and renounce his US citizenship if we are to even plan for our future retirement. We're still at the going backwards & forwards stage - should we/shouldn't we? It's so unfair? What do we do? How would they know? We can't lie/nor do we want to? At the same time, we don't want to pay ANY tax to a foreign government on our already taxed UK income. He's always been PAYE here! Is the final solution renouncement but this process which will involve backfiling tax returns which we should never have to do, in the first place and will costs thousands (yes, we've got a few general quotes for the work).

We really want to keep hold of his stocks and shares ISA. Do we only really need to sell the funds in them but keep the actual direct company shares? No-one seems to admit to having anything other than cash ISAs but is that because they have already sold them in advance of filing for the first time? No idea what to do without paying even more for expensive legal/tax advice.

It's really shit, especially for people like my DP who are UK born, lives in UK, but is US citizen through his mother. It seems so unfair to have this imposed on you through no choice of your own.

Generally, if you've paid tax on the income abroad, then you can claim either a credit or a deduction on your US tax return so you don't have to pay again.

AFAIK, this applies if you the US has a tax treaty with the country (and it does with the UK).

I think unless you have insanely high income, and it wasn't obtained from an US source, you shouldn't have to pay.

But what I think is less than worthless. Go ask an accountant.

It has nothing to do with Trump it has existed for years. You should also be aware that if ever the US enter a war, technically your DH could be sent draft papers to join the US military.

The US owns its citizens from birth. It's ridiculous. It's the main reason why we never have filed for our DC to get US passports.

athing they either are citizens or they are not, applying for passports or not makes no difference. If they fulfill the criteria, they are citizens and will have to file returns.

Not according to the Child Citizenship Act of 2000 -

A child born outside of the United States automatically becomes a citizen of the United States when all of the following conditions have been fulfilled:

At least one of the child’s parents is a U.S. citizen by birth or naturalization;
The child is under 18 years of age;
The child is residing in or has resided in the United States in the legal and physical custody of the U.S. citizen parent pursuant to a lawful admission for permanent residence.

The third criteria doesn't apply, so we would need to pursue naturalisation (which would in turn lead to getting a US passport, which was my lazy way of saying it)

It's a stupid and fucked up system.

Sorry, ignore me Arf I'm obviously agreeing with you.

I moved to the UK seven years ago and became a citizen. Despite having no US income, I've filed a tax return every year through TaxAct. They let you have a foreign address and phone number. I don't have to pay as I don't earn enough but I get a tax refund for having a child. You also have to fill out an extra form saying you don't need Obamacare to avoid paying that fee.

OP, I was in the same position as your DH. Duel national who moved to the UK as a child.

I started filing US taxes when I left Uni but never earned enough to pay tax. 5 years ago I moved to the USA and renounced my British citizenship.

Brit living in the US here. It’s not hard, US citizen through choice or not, you have to file US tax returns. Unless you’re a high earner, it likely won’t make any difference to you. You will need to file a return though. Our DC will be affected by this in a few years unless anything changes.

A good accountant can usually find ways around things and save you money. We’ve had all manner of advice over the years, including setting up as our own company, adding holiday days to length of time spent in the country in order that we’re counted as resident for tax purposes... Being British and owning a property in the UK, we’ve been able to offset any repairs to said property against our US tax. There can be advantages!

No need for all this drama! Get someone properly qualified to advise you. I wouldn’t go to the trouble of renouncing citizenship. It’s actually very useful to have a US passport. And if there were to be a Third World War or you needed super advanced medical treatment, I’d hedge my bets this side of the Atlantic, to be honest!

I was quoted £800 for one year of returns, 14 yrs ago.

I vaguely recall we paid someone about that for 7 years of returns, 12 years ago. DH had stuck his head in the sand for all that time, but then when we wanted to move back to the US he had to catch up on the missing returns so he could sponsor me.

Having said that, the accountant was a bit useless, and forgot to check a box on the form, which meant we got a letter from the IRS saying we owed thousands of dollars, and when we called the accountant he shrugged and said 'Oh well'. The IRS actually turned out to be more helpful and allowed us to check the box and resubmit the forms and all was good.

The child is residing in or has resided in the United States in the legal and physical custody of the U.S. citizen parent pursuant to a lawful admission for permanent residence.

Interesting - I didn't know that was a criteria for automatic citizenship.

We did apply for US citizenship for ours because we thought it was worth having (we've since moved to the US). It was quite complicated and they only just qualified. They were born in the UK to a US citizen father who was born outside the US and who had spent most of his adult life outside the US, so it was a bit tricky.

In fact it's just ridiculous that any of us has US citizenship at all really, considering in DH's family only one person out of dozens was actually born in the US.

I think this happened to Boris Johnson and he had to pay up

I am a US citizen living with my UK spouse currently, and yes - have filed and paid my US taxes while here (which is pretty rubbish).

I have an excellent accountant, who specializes in US tax for expats (specifically UK). Please DM me if you want her details. This year it cost me 500 pounds for 1 year's of return, including the FBAR with all my bank accounts/earnings, etc. Just to also note, a thing to watch out for is that you don't just report current/ISAs etc. You also have to report your retirement/pensions. So it gets to be tricky! I'd highly advice getting specialist support to get through this. Good luck!

We backfiled and dh renounced. Glad to be out of the quagmire. Embassy were pleasant - dh just said he was an accidental citizen and that he didn't want the extra paperwork every year.

Athing those rules only apply if your kids didnt automatically acquire citizenship at birth under these requirements.

"technically your DH could be sent draft papers to join the US military."

when I looked at the rules, only registered males could be sent papers; registration was not compulsory for males who have barely spent time on US territory; anyway, it works out my boys don't have to register.

ps: these threads amuse me... I know so many Americans abroad who have never filed since they immigrated. Only one has been caught so far (frantically backfiling last year).

@ArfArfBarf could you pm me the recommendation please? I have been looking for US-U.K. tax advice.

Also I use turbotax to file my us taxes as a non-resident non citizen (I have financial interests in the USA so have to file). It works for me but I have to print the forms and post them rather than just filing electronically.

Hi @hawse would you be able to pm me that recommendation please! TIA

Here is the link to the UK USA double tax treaty. <a class="break-all" href="https://www.google.co.uk/url?sa=t&source=web&rct=j&url=assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507431/usa-consolidated_-_in_force.pdf&ved=2ahUKEwj5nPXh28TbAhXIIMAKHTmTBo4QFjACegQICRAB&usg=AOvVaw2bMfOvb9FsdnB6p1Hq_z0J" rel="nofollow" target="blank">www.google.co.uk/url?sa=t&source=web&rct=j&url=assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/507431/usa-consolidated-_in_force.pdf&ved=2ahUKEwj5nPXh28TbAhXIIMAKHTmTBo4QFjACegQICRAB&usg=AOvVaw2bMfOvb9FsdnB6p1Hq_z0J

lljk I’m the only one in my family who files the rest think it’s a crazy expense with so little risk of being caught and my mum is “ideologically opposed (to doing paperwork)”.

Dh has a few relatives who are dual citizens but they don't bother with filing? How could they get caught?

Banks are sharing information with US authorities now and a US inheritance can put you on the IRS radar.