/ If you were born in the USA....

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Minneconjou Sioux - on 20 Nov 2012
....but no longer live there. (eg. Parents moved there to work, you were born there, parents moved away with you in tow).....

you are now deemed to be a US citizen in the eyes of their IRS (inland revenue service). This does not confer any rights to work in the US or to reside in the US but it does confer the expectation that you have filed US tax returns.

And guess what? They will get you at the border next time you visit.

Just an FYI.

as646 on 20 Nov 2012
In reply to Minneconjou Sioux: Wait, what? So because I have dual citizenship and I reside in the UK, I have to essentially pay taxes to two governments?
sarahjk - on 20 Nov 2012
In reply to Minneconjou Sioux: My son was born there, back in UK now, no plans to go that way any time soon. Will they be after him for his pocket money too ?
adstapleton - on 20 Nov 2012
In reply to Minneconjou Sioux:

America is one seriously f*cked up country in many respects and the requirement for non resident 'citizens' to pay tax in America as well as where you earnt the money is a classic example.

Can you renounce your citezanship? I'd be all over that.
dissonance - on 20 Nov 2012
In reply to adstapleton:

> Can you renounce your citezanship? I'd be all over that.

you can but you get charge tax as of that point.
Not sure of the exact details beyond seeing in the technical press one of the Facebook founders got hit by it. The point they renounced citizenship and hence got the bill was just before the price plummeted.
So they ended up with a rather larger bill than they would have got if they left a month or so later.
Minneconjou Sioux - on 20 Nov 2012
In reply to sarahkeast:

You should understand the implications of these rules. They could affect your son in later life. These rules have always been in place but the IRS is just beginning to enforce them.

Just to be clear, you don't have to pay tax in two countries unless the process discovers some owing (there may be various reasons for this) but you may be subjected to penalties for non-filing.
Aid@n - on 20 Nov 2012
In reply to Minneconjou Sioux:

>
> Just to be clear, you don't have to pay tax in two countries unless the process discovers some owing (there may be various reasons for this) but you may be subjected to penalties for non-filing.


I was going to post something like that. I was pretty sure most people didn't actually have to pay, just file. It's still pretty ridiculous.

Also, as to your first post. I moved here when I was young but still have a social security number (which I guess is still valid, it let me vote) so could work in the US if I wished.
Minneconjou Sioux - on 21 Nov 2012
In reply to Aid@n:
> (In reply to Minneconjou Sioux)
>
> [...]
>
>
> > Also, as to your first post. I moved here when I was young but still have a social security number (which I guess is still valid, it let me vote) so could work in the US if I wished.

Yes, but that is presumably because you have official citizenship or have gone through a process to obtain a social security number.

This rule applies even if you are a citizen of another country, but were born in the US. Even if you have never made any application to be recognised there in any official capacity.
matthewtraver - on 21 Nov 2012
In reply to as646:

Yep. Sadly I think that's correct. I'm dual US/UK. I only found out last year that I need to be paying/filing taxes to the US as well (despite having never lived there - well, 4 months?). The US tax system scares the shit out of me. It makes HMRC look like a caring mother (as one tax accountant friend told me...). Also running a limited company in the UK means I *could* be subject to taxes in the US for profits earned in the UK. Ruthless sons of bitches.
matthewtraver - on 21 Nov 2012
In reply to matthewtraver:

Also if anybody wants some info (what little I know) I 'might' be able to help... one recommendation I had is... if you have never filed your US tax (due to ignorance, such as myself) you are probably safest just getting it in quitely and start filing... so at least you have slipped in to the system. I'd probably avoid contacting the IRS directly for any questions and approach a US/UK tax specialist as I think it's the sort of country that will track you down if you approach the IRS and they find anything that might raise alarm bells. I can't recall what late filing penalties are, but I don't think they're astronomical. If you have been running a limited company in the UK you have 7 years in which to declare you have been doing so. Also I think if you're earning under $70,000 overseas (christ, I'd be lucky!) you are not taxed. I could be totally wrong, but I recall it being a high figure (well above average UK salary...)
Minneconjou Sioux - on 21 Nov 2012
In reply to matthewtraver:

They would likely seek interest on any penalties.

The obvious answer is not to visit the US but that seems a little harsh or restrictive. I think your best bet is to start filing US returns but this won't be cheap. Most UK/US tax specialists will be very nervous about the risk and will charge accordingly.
imkevinmc - on 21 Nov 2012
In reply to Minneconjou Sioux: But if you don't file and if you travel to the USA on your sole passport, a UK one, how will they ever know you were born there ?
Minneconjou Sioux - on 21 Nov 2012
In reply to imkevinmc:

Because your passport gives your place of birth.
imkevinmc - on 21 Nov 2012
In reply to Minneconjou Sioux: Ahhhh!!
Nutkey on 21 Nov 2012
In reply to Minneconjou Sioux:
> ....but no longer live there. (eg. Parents moved there to work, you were born there, parents moved away with you in tow).....
>
> you are now deemed to be a US citizen in the eyes of their IRS (inland revenue service). This does not confer any rights to work in the US or to reside in the US but it does confer the expectation that you have filed US tax returns.

Are you sure? I was under the impression (and googling seems to confirm this) that if you are born in the US you are a citizen, with very few exceptions (diplomats..).

> And guess what? They will get you at the border next time you visit.

Are you sure? My american friend living in the UK doesn't file tax returns and has been back to the US many times.

They *will* however, complain that you don't have a US passport. US citizens are required to use a US passport to enter the US.

Ben

MG - on 21 Nov 2012

> And guess what? They will get you at the border next time you visit.

Has something changed recently? This hasn't occurred in the past to various relatives of mine who have dual nationality.
Minneconjou Sioux - on 21 Nov 2012
In reply to MG:
>
> [...]
>
> Has something changed recently? This hasn't occurred in the past to various relatives of mine who have dual nationality.

The impression is that, yes, something has changed and that the IRS are looking to implement something. I don't think it is in place yet but this is much higher up their agenda than it used to be.
Minneconjou Sioux - on 21 Nov 2012
In reply to Nutkey:
> (In reply to Minneconjou Sioux)
> [...]
>
> Are you sure? I was under the impression (and googling seems to confirm this) that if you are born in the US you are a citizen, with very few exceptions (diplomats..).

That is correct, but you will need to formailse the citizenship in order to be able to live and work there. The distinction here is that you don't need to formailse the citizenship in order to be required to file a tax return.


>
> [...]
>
> Are you sure? My american friend living in the UK doesn't file tax returns and has been back to the US many times.
>
> They *will* however, complain that you don't have a US passport. US citizens are required to use a US passport to enter the US.
>
> Ben

See my reply in an above post. I think they are becoming more aggressive on this issue. I don't think the system is in place yet but I think they are looking to create it.
MG - on 21 Nov 2012
In reply to Minneconjou Sioux: Worrying. Any link?
Minneconjou Sioux - on 21 Nov 2012
In reply to MG:

Not sure. My information is internal i.e. I work for a company who considers this to be a potential issue.
MG - on 21 Nov 2012
In reply to Minneconjou Sioux: OK, thanks
thomasadixon - on 21 Nov 2012
In reply to MG:

I was fine (as were my sisters) two weeks ago. One on US passport the rest on UK passports (born in the US, they don't seem to notice at immigration). This is interesting though.
wilding - on 21 Nov 2012
In reply to Minneconjou Sioux:

I'm surprised the UK doesn't do require it's subjects to file taxes.

One advantage is that people from the UK would no longer try to live in tax havens, bye bye Monaco, Guernsey etc as they would be still liable for tax.

It is a little overblown anyway, the US only wants money if your tax rate in the other country is lower than in the US. Anyone in Europe will pay absolutely nothing. It is a problem only if you live in a tax haven.

Children don't have to file taxes, they are on their parents tax form ($4000 deduction).
Captain Fastrousers - on 21 Nov 2012
In reply to Minneconjou Sioux:
> (In reply to matthewtraver)
>
> They would likely seek interest on any penalties.
>
> The obvious answer is not to visit the US but that seems a little harsh or restrictive. I think your best bet is to start filing US returns but this won't be cheap. Most UK/US tax specialists will be very nervous about the risk and will charge accordingly.

I'm not sure I agree that filing a US return will be expensive. If one doesn't have any income earned in the US for that tax year, or hold any property, then it's pretty easy to fill out a short form 1040 ( I did my own taxes for about 10 years in the US). Presumably one wouldn't have to do a state tax return at all (after all, you're not resident in any state).

I agree it's a ludicrous policy that has no benefit to the IRS and is a PITA for anyone affected, but I don't see how it could possibly be adding a further tax burden (at least financial burden).

Will
Captain Fastrousers - on 21 Nov 2012
In reply to wilding:
> (In reply to Minneconjou Sioux)
>
> I'm surprised the UK doesn't do require it's subjects to file taxes.
>

If you've ever registered for self-assessment, then you do, at least for 3 years after leaving the UK. Mine just had a lot of zeros on it....
Captain Fastrousers - on 21 Nov 2012
In reply to Captain Fastrousers:

This is what the IRS has to say on the matter:

http://www.irs.gov/publications/p54/index.html

I was wrong that income earned outside the US is exempt from US taxation, but there is a hefty deduction which would apply to most people affected by this, especially once accommodation costs are factored in:

'If you are a U.S. citizen or a resident alien of the United States and you live abroad, you are taxed on your worldwide income. However, you may qualify to exclude from income up to $92,900 of your foreign earnings. In addition, you can exclude or deduct certain foreign housing amounts. See Foreign Earned Income Exclusion and Foreign Housing Exclusion and Deduction, later.'
Minneconjou Sioux - on 21 Nov 2012
In reply to Captain Fastrousers:
> (In reply to Minneconjou Sioux)
> [...]
>
> I'm not sure I agree that filing a US return will be expensive. If one doesn't have any income earned in the US for that tax year, or hold any property, then it's pretty easy to fill out a short form 1040 ( I did my own taxes for about 10 years in the US). Presumably one wouldn't have to do a state tax return at all (after all, you're not resident in any state).

I'm sure that is fine if you have that level of confidence. You might not want to screw it up though. Where it will get expensive is if you use accountatns with US specialisation as they will be scared of the potentil litigation and will charge accordingly.

> I agree it's a ludicrous policy that has no benefit to the IRS and is a PITA for anyone affected, but I don't see how it could possibly be adding a further tax burden (at least financial burden).

It depends is the best answer I can give. I suspect that 90% of non-resident US citizens will be fine but remember that there could also be non-filing penalties and interest.

The intention here is not to scaremonger but to raise awareness of a potential issue and get informed.
John Stainforth - on 22 Nov 2012
In reply to as646:

I am a 100% British citizen who has retired and been repatriated to the UK. However, I also have a Green Card (Permanent Residence card in the US), which means that I am 100% tax-liable in the US on all my world-wide income each year, regardless of where and how earned. In such a situation, one has to file both UK and US tax returns, declaring all income on both. (This process is cumbersome, and not helped by the fact that the US and UK tax years are not in sync.) As long as you do that, the authorities in the two countries decide how you should pay tax, or whether you come under the "tax treaty" between the two countries, or not. In principle, you should never be double-taxed.

The US Tax Return is mind-bogglingly complicated - mine is typically about 48 pages of multiplying this line by that line in another form, and applying various factors: you really have to get a US tax advisor in such a situation. The UK form is way simpler, but there still is some impenetratable jargon for those working part of the time overseas, such as is your foreign income "remittable" or "unremittable" or "remittable and arising" or "remittable and unarising"? (I kid you not). There are various documents that you can download (typically about 24-pages per piece of jargon) to explain these, but the chances are you will still be none the wiser after you have perused these. Or even if you are wiser, it will still not be exactly clear how the rules apply to *your* case. So you will have to contact the HMRC for help.

That reminds me: I also get taxed by the Netherlands. In typical Dutch fashion, they tax you upfront at 40%, so you have to understand their system in order to (try to) claim back the tax that you were never really owed them in the first place!

Another thing re reporting to the US authorities: in addition to the US tax return, there is also another form (Form TD F 90-22.1: "Report of Foreign Bank and Financial Accounts) that one is also meant to file to a completely different government department (but, of course, they are connected). It is a criminal offence in the US not to do so. Ten years ago that authority wanted to know where you had accounts; five years ago they also needed to know the balance in each account; and last year they wanted to know the maximum amount of money in each account during the year, and the balance at the end of the year.

C'est la vie, or long live democracy!
Neil Williams - on 22 Nov 2012
In reply to wilding:

"I'm surprised the UK doesn't do require it's subjects to file taxes."

It's nice that it doesn't. Most of us with simple tax affairs just pay via PAYE (Pay As You Earn) with our tax codes adjusted for simple stuff like savings interest.

Maybe not perfectly precise - some will pay slightly too much and some slightly too little - but it works.

Neil
boje on 22 Nov 2012
In reply to John Stainforth:
Good comment John - I have lived and worked in the USA, owned property there and can confirm that things can get complicated. My advice is to stick to their tax rules. If you don't there is every chsnce that you will get with away with it, but if not they will pursue you like a pitt bull. Remember Al Capopne ?

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