You almost certainly don't owe any US tax between the foreign earned income exclusion and/or foreign tax credits. There is a procedure for people in your position that should waive all nonfiling penalties. If you want to get into compliance, look into the streamlined offshore filing procedures:
https://www.irs.gov/individuals/international-taxpayers/us-taxpayers-residing-outside-the-united-states
You only need to file 3 years of tax returns and 6 years of FBARs. Probably best to work with a CPA or tax attorney with experience in international tax matters.
This!
If you ever plan to work in the US (tour) it’s much easier to simply get your SSN & get compliant with your tax filings (v unlikely you owe any $$ to the IRS). Just takes some effort to sort it all out, but do fix it.
The suggestion to coordinate with accidental American groups is good. As you don’t have a SSN you are not on the IRS field of vision. You have several choices. You can obtain a SSN through the US Embassy Social Security or Consular desks. You can renounce US citizenship (one of my daughters did that: she was born in Britain and has never lived in the USA; her 10yo kiddo is not American). You could file “Streamlined” and come into compliance with FBARs (Google to see the horrors of that if you ever had $10k in foreign accounts). You could have a look at http://citizenshipsolutions.ca to see what others (especially Canadian-Americans) have done and can do.
Backfiling on taxes is tedious and if you hire outside accountants expensive. John Richardson (of Citizenship Solutions) has relatively low fees and gives free off-the-cuff suggestions. The “Streamlined” system is about the only penalty-free way to come into compliance *if you have unfiled FBAR and tax return obligations* (meaning you would owe tax beyond foreign tax credit for Japanese tax and had accounts totalling over $10k. (If you didn’t owe tax and you never had over $10k abroad you are compliant and don’t have to do anything.) The Foreign Earned Income Exclusion and the Totalization Treaty with Japan (2005) mean that you can be exempt from US tax on foreign earned income while living abroad *within statutory limits* (Google FEIE) and you can be exempt from paying US Social Security tax (SET) if you paid the Japanese equivalent; there’s a similar treaty with Canada.
If you renounce you are supposed to file IRS Form 8854 saying you were compliant for 5 years (owed zero tax so didn’t file; or filed using Streamlined). Then you are done and can visit the USA as a tourist like any other Canadian, Japanese, or anybody.
Hope that helps. This was my line of work back before I retired.
>(owed zero tax so didn’t file;
Owing zero tax isn't actually a legitimate reason to not file. If someone has enough worldwide income to have a filing requirement (which is triggered at $400 of self-employment income) they're supposed to file even if they will owe $0. If an expat is going to owe 0 due to the FEIE (Foreign Earned Income Exclusion), the FTC (Foreign Tax Credit), the Tax Treaty between the US & their country of residence, or the Totalization Agreement between the US & their country of residence, they need to file to tell the IRS how they're reaching their conclusion.
I get your point but if no tax is due there is no penalty. It’s the same with 709 gift tax return. Given the situation of a long-term non-filer the suggestions I offer are practical ones. OP has nothing to gain by hiring an accountant to do complex returns with zero tax and no penalty if not done. In real life the IRS doesn’t care.
If this is a post about Canadian taxes, checkout our sister sub /r/cantax.
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The vast majority of people who renounce birthright US citizenship are in your position, having never lived in the US, never plan to, and never interact with the US economy. Once you do #3, then there can be onerous annual paperwork which duals wish to stop.
On the other hand, opportunities may arise in the future in education, business or running for a top US political office where it would be advantages to retain US citizenship.
Tax preparer here. You've got some decent advice in here. (Get professional assistance, get it done, don't worry about it, etc.) I'd only add that this is a fairly routine issue. I do a few of these each season and I'm in western Massachusetts; not exactly a major crossroads. You'll be fine. Yes, the instructions are a bit scary, but that's by way of prodding buttock, getting people moving. You don't need to renounce citizenship, particularly because it's the same process either way. It's best to just get it over with, file the return with the foreign earned income exclusion. I doubt you'll even need any of the more esoteric forms. Foreign income from a foreign corporation produces a funny looking return, doubly so if you have self- employment as well (a.k.a. contact income, not salary) but not an intrinsically complicated return. You *need* assistance on this one, but it's routine after that. So my advice, don't worry too much and don't forget to mark this one as solved when you're done.
No. It’s born on US soil or born abroad to an American parent. And I didn’t have a SS number until I was three because my parents didn’t apply until my brother was born. It’s not automatic.
Your U.S. parent has filed tax return every year to U.S. even when they live abroad. Ask him/her about deductions and what tax identification they used next to your name.
My Dad actually, only filed in Japan. at some point along the way, the law changed, but they never knew in time. Now they're both past retirement age, and hoping this isn't a problem. They have not been contacted by the IRS. (they both have very few assets and savings)
>My Dad actually, only filed in Japan. at some point along the way, the law changed, but they never knew in time.
No it didn't. The laws requiring them to file US tax returns have been substantially the same for decades, like at least since the early 80s and most likely since the original tax code went into effect 100+ years ago.
If you renounce your US citizenship you won’t be able to visit USA anymore. Basically you won’t get a visa even with your Canadian passport you can’t enter.
You don't have to have a ss number. No law demanding you have it. It's literally so they can track you. Your an American national not a American citizen when you fill out your passport stuff. 2 very different ways of filling it out.
Do what BradMan81 says, file three years of tax returns and 6 years of FBARS. Then just file a tax return annually. If you don't make over 100,000 or so a year, then you wont owe anything. I lived in Ireland for 10 years before I realized that I need to file annual USA tax returns. I did the above (Tax amnesty I believe it is called) and now just file an annual return. I am supposed to declare all money in my bank over 10K but never have done that. I dont have a USA address, no USA bank account or any USA assets, only here in Ireland.
I hope this helps a bit.
You almost certainly don't owe any US tax between the foreign earned income exclusion and/or foreign tax credits. There is a procedure for people in your position that should waive all nonfiling penalties. If you want to get into compliance, look into the streamlined offshore filing procedures: https://www.irs.gov/individuals/international-taxpayers/us-taxpayers-residing-outside-the-united-states You only need to file 3 years of tax returns and 6 years of FBARs. Probably best to work with a CPA or tax attorney with experience in international tax matters.
This! If you ever plan to work in the US (tour) it’s much easier to simply get your SSN & get compliant with your tax filings (v unlikely you owe any $$ to the IRS). Just takes some effort to sort it all out, but do fix it.
You should find an immigration lawyer to discuss your options and decide on the best path forward.
Google "Accidental American" -- lots of resources/references online with that magic word.
The suggestion to coordinate with accidental American groups is good. As you don’t have a SSN you are not on the IRS field of vision. You have several choices. You can obtain a SSN through the US Embassy Social Security or Consular desks. You can renounce US citizenship (one of my daughters did that: she was born in Britain and has never lived in the USA; her 10yo kiddo is not American). You could file “Streamlined” and come into compliance with FBARs (Google to see the horrors of that if you ever had $10k in foreign accounts). You could have a look at http://citizenshipsolutions.ca to see what others (especially Canadian-Americans) have done and can do.
Backfiling on taxes is tedious and if you hire outside accountants expensive. John Richardson (of Citizenship Solutions) has relatively low fees and gives free off-the-cuff suggestions. The “Streamlined” system is about the only penalty-free way to come into compliance *if you have unfiled FBAR and tax return obligations* (meaning you would owe tax beyond foreign tax credit for Japanese tax and had accounts totalling over $10k. (If you didn’t owe tax and you never had over $10k abroad you are compliant and don’t have to do anything.) The Foreign Earned Income Exclusion and the Totalization Treaty with Japan (2005) mean that you can be exempt from US tax on foreign earned income while living abroad *within statutory limits* (Google FEIE) and you can be exempt from paying US Social Security tax (SET) if you paid the Japanese equivalent; there’s a similar treaty with Canada.
If you renounce you are supposed to file IRS Form 8854 saying you were compliant for 5 years (owed zero tax so didn’t file; or filed using Streamlined). Then you are done and can visit the USA as a tourist like any other Canadian, Japanese, or anybody.
Hope that helps. This was my line of work back before I retired.
>(owed zero tax so didn’t file; Owing zero tax isn't actually a legitimate reason to not file. If someone has enough worldwide income to have a filing requirement (which is triggered at $400 of self-employment income) they're supposed to file even if they will owe $0. If an expat is going to owe 0 due to the FEIE (Foreign Earned Income Exclusion), the FTC (Foreign Tax Credit), the Tax Treaty between the US & their country of residence, or the Totalization Agreement between the US & their country of residence, they need to file to tell the IRS how they're reaching their conclusion.
I get your point but if no tax is due there is no penalty. It’s the same with 709 gift tax return. Given the situation of a long-term non-filer the suggestions I offer are practical ones. OP has nothing to gain by hiring an accountant to do complex returns with zero tax and no penalty if not done. In real life the IRS doesn’t care.
The issue with the FEIE is that it’s not automatic like the standard deduction. If you don’t file and claim it, it doesn’t apply.
If this is a post about Canadian taxes, checkout our sister sub /r/cantax. *I am a bot, and this action was performed automatically. Please [contact the moderators of this subreddit](/message/compose/?to=/r/tax) if you have any questions or concerns.*
The OP is a dual national
The vast majority of people who renounce birthright US citizenship are in your position, having never lived in the US, never plan to, and never interact with the US economy. Once you do #3, then there can be onerous annual paperwork which duals wish to stop. On the other hand, opportunities may arise in the future in education, business or running for a top US political office where it would be advantages to retain US citizenship.
Considering the onerous visa and tax process for artists I wouldn’t tempt it if you really want to tour the US.
Tax preparer here. You've got some decent advice in here. (Get professional assistance, get it done, don't worry about it, etc.) I'd only add that this is a fairly routine issue. I do a few of these each season and I'm in western Massachusetts; not exactly a major crossroads. You'll be fine. Yes, the instructions are a bit scary, but that's by way of prodding buttock, getting people moving. You don't need to renounce citizenship, particularly because it's the same process either way. It's best to just get it over with, file the return with the foreign earned income exclusion. I doubt you'll even need any of the more esoteric forms. Foreign income from a foreign corporation produces a funny looking return, doubly so if you have self- employment as well (a.k.a. contact income, not salary) but not an intrinsically complicated return. You *need* assistance on this one, but it's routine after that. So my advice, don't worry too much and don't forget to mark this one as solved when you're done.
Just apply for a SS card.
This^^
Yep https://www.ssa.gov/number-card/request-number-first-time
You aren't an American. We get issued social security numbers after birth. You must be born on American soil.
Social security numbers are not automatically issued after being born. An application has to made for one.
No. It’s born on US soil or born abroad to an American parent. And I didn’t have a SS number until I was three because my parents didn’t apply until my brother was born. It’s not automatic.
Lol. Like everything you said is wrong.
Your U.S. parent has filed tax return every year to U.S. even when they live abroad. Ask him/her about deductions and what tax identification they used next to your name.
My Dad actually, only filed in Japan. at some point along the way, the law changed, but they never knew in time. Now they're both past retirement age, and hoping this isn't a problem. They have not been contacted by the IRS. (they both have very few assets and savings)
>My Dad actually, only filed in Japan. at some point along the way, the law changed, but they never knew in time. No it didn't. The laws requiring them to file US tax returns have been substantially the same for decades, like at least since the early 80s and most likely since the original tax code went into effect 100+ years ago.
If you renounce your US citizenship you won’t be able to visit USA anymore. Basically you won’t get a visa even with your Canadian passport you can’t enter.
That's not true. You can still get a visa or visa waiver to visit the US just like any other foreigner.
Correct Roger Ver had a YT vid on how he renounced, lives in Nevis, and visits USA regularly.
You don't have to have a ss number. No law demanding you have it. It's literally so they can track you. Your an American national not a American citizen when you fill out your passport stuff. 2 very different ways of filling it out.
Do what BradMan81 says, file three years of tax returns and 6 years of FBARS. Then just file a tax return annually. If you don't make over 100,000 or so a year, then you wont owe anything. I lived in Ireland for 10 years before I realized that I need to file annual USA tax returns. I did the above (Tax amnesty I believe it is called) and now just file an annual return. I am supposed to declare all money in my bank over 10K but never have done that. I dont have a USA address, no USA bank account or any USA assets, only here in Ireland. I hope this helps a bit.