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  #11 (permalink)  
Old 9th July 2019, 02:25 PM
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It is true that the IRS will often send letters asking you to file a return if they have not received one on your behalf. However if you don't respond, the IRS will just generate a return for you based on the details they have and it often is a worse tax liability than if you would just file a return with your correct details (as the IRS often won't consider things like tax credits, etc). So ignoring letters like that often won't prevent any IRS scrutiny and could even make things worse.

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Old 9th July 2019, 02:57 PM
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Originally Posted by DavidMcKeegan View Post
It is true that the IRS will often send letters asking you to file a return if they have not received one on your behalf. However if you don't respond, the IRS will just generate a return for you based on the details they have and it often is a worse tax liability than if you would just file a return with your correct details (as the IRS often won't consider things like tax credits, etc). So ignoring letters like that often won't prevent any IRS scrutiny and could even make things worse.
Substitute returns. In the US, yes. In the US, as I understand it, itís up to the taxpayer to prove innocence. But how would a substitute return work in the UK, where US tax law is a citizenship obligation rather than the law of the land?

A UK resident with a US birthplace isnít breaking any UK law or offending against UK social mores if s/he doesnít file a US tax return. Itís wrong, IMO, for law-abiding members of UK society to be scared into thinking the IRS might ďcome after them.Ē

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Old 9th July 2019, 03:17 PM
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Originally Posted by underation View Post
Substitute returns. In the US, yes. In the US, as I understand it, itís up to the taxpayer to prove innocence. But how would a substitute return work in the UK, where US tax law is a citizenship obligation rather than the law of the land?

A UK resident with a US birthplace isnít breaking any UK law or offending against UK social mores if s/he doesnít file a US tax return. Itís wrong, IMO, for law-abiding members of UK society to be scared into thinking the IRS might ďcome after them.Ē


If they are a US citizen then US tax law would apply to them as well regardless of whether they have dual citizenship or live outside the USA. How the IRS might "come after" someone if they are non compliant would depend on the individual circumstances and if the individual has US accounts, etc.





I

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Old 9th July 2019, 03:34 PM
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If they are a US citizen then US tax law would apply to them as well regardless of whether they have dual citizenship or live outside the USA.
Yes, when theyíre in the US they can be required to file US tax returns if theyíre over a certain threshold.

UK law does not require this.


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How the IRS might "come after" someone if they are non compliant would depend on the individual circumstances and if the individual has US accounts, etc.
If UK residents with US citizenship have US income or assets I agree it would be sensible file US tax returns, if required to do so under US law. And I imagine they generally do.

If they donít have US income or assets, and their income is entirely UK-source, itís HMRC that taxes that income, according to UK law.

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Old 9th July 2019, 03:43 PM
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Quote:
Originally Posted by DavidMcKeegan View Post
It is true that the IRS will often send letters asking you to file a return if they have not received one on your behalf. However if you don't respond, the IRS will just generate a return for you based on the details they have and it often is a worse tax liability than if you would just file a return with your correct details (as the IRS often won't consider things like tax credits, etc). So ignoring letters like that often won't prevent any IRS scrutiny and could even make things worse.
Bit hard to generate a substitute return for someone with no US assets or income. The IRS will have no information with which to work.

Only exception here could be interest or investment income from a foreign account that is reported under FATCA. But certainly not employment income, or earnings from various registered accounts (e.g. Canadian RRSP, TFSA etc.) that are specifically excluded from FATCA reporting.

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Old 9th July 2019, 03:57 PM
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Bit hard to generate a substitute return for someone with no US assets or income. The IRS will have no information with which to work.

Only exception here could be interest or investment income from a foreign account that is reported under FATCA. But certainly not employment income, or earnings from various registered accounts (e.g. Canadian RRSP, TFSA etc.) that are specifically excluded from FATCA reporting.
In the UK, a residentís interest / investment income is taxed by HMRC - allowing credit for foreign tax paid if the treaty gives taxing rights to the US.

HMRC doesnít allow credit for US tax which is voluntarily paid by a US citizen UK resident.

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