Expat Forum For People Moving Overseas And Living Abroad banner

1 - 5 of 5 Posts

·
Registered
Joined
·
4 Posts
Discussion Starter · #1 ·
I have not lived in the USA for 40 years and, except part-time waitress job as a teenager, have never paid or filed US taxes. I am a dual citizen USA/Switzerland, currently living in Switzerland.

Since my divorce 5 years ago and for the first time in 20 years, I have an income: alimony (well under the annual 90 something limit, and is it even considered earned income?) and a Swiss bank account with under $3000, plus a (pension) savings of about 20,000. I also have an insurance-based pension plan (for which Swiss taxes have already been paid) and am eligible for Swiss Social Security (AHV) income at retirement in 3 years.

So, can anyone advise me: must I & how would I now start filing US tax?
Would ‘Streamlined Filing Compliance’ be appropriate here?

I would SO appreciate any advice!
Thanks! :)
 

·
Administrator
Joined
·
50,364 Posts
Officially, yes, you are supposed to be filing US taxes. Practically speaking, however, I don't think you should have to bother with the "streamlined filing compliance" thing.

If you want to get current, I'd just file three years of back taxes and see what happens. (If you've only had your income for the last 5 years then chances are you only should have been filing for that period of time.) If you don't owe any taxes for that period (and it sounds like you wouldn't) that should square things with the IRS and you can go forward in good conscience.

Alimony doesn't fall into the "earned income" category, but alimony can be tricky. You may want to download pub 504 from the IRS website and see what the details are. If you are paying Swiss taxes on your alimony, they should be deductible from any US liability you run up. Same applies to interest you're receiving on your bank or pension accounts.

Your Swiss social security pension may be covered by whatever social security treaty exists between the US and Switzerland. Generally speaking, you'll pay whatever taxes are due on it to the Swiss - but some of the treaties have odd exceptions to this general rule. Take a look at the IRS publication 54 - toward the back of the publication there is information about the various tax and social security treaties.
Cheers,
Bev
 

·
Banned
Joined
·
6,189 Posts
I just checked, and the technical explanation for the 1996 U.S.-Swiss tax treaty indicates that alimony is only taxable in the country of residence. That would appear to be great news for the original poster if verified.

The pension(s) might be a bit of a concern in terms of potential PFIC complications, but assuming the pensions are small there shouldn't be any U.S. tax owed (and perhaps no U.S. tax even if they're big).

There's probably a FBAR filing requirement (since $23,000 is above the $10,000 filing threshold, and assuming that $20,000 is a reportable financial account), which in the case of Switzerland especially is something I would do first if required. That'll require filing 6 years' worth.
 

·
Registered
Joined
·
4 Posts
Discussion Starter · #4 ·
Officially, yes, you are supposed to be filing US taxes. Practically speaking, however, I don't think you should have to bother with the "streamlined filing compliance" thing.

If you want to get current, I'd just file three years of back taxes and see what happens. (If you've only had your income for the last 5 years then chances are you only should have been filing for that period of time.) If you don't owe any taxes for that period (and it sounds like you wouldn't) that should square things with the IRS and you can go forward in good conscience.

Alimony doesn't fall into the "earned income" category, but alimony can be tricky. You may want to download pub 504 from the IRS website and see what the details are. If you are paying Swiss taxes on your alimony, they should be deductible from any US liability you run up. Same applies to interest you're receiving on your bank or pension accounts.

Your Swiss social security pension may be covered by whatever social security treaty exists between the US and Switzerland. Generally speaking, you'll pay whatever taxes are due on it to the Swiss - but some of the treaties have odd exceptions to this general rule. Take a look at the IRS publication 54 - toward the back of the publication there is information about the various tax and social security treaties.
Cheers,
Bev
Very helpful, thanks so much!
and a relief too!
 

·
Registered
Joined
·
4 Posts
Discussion Starter · #5 ·
I just checked, and the technical explanation for the 1996 U.S.-Swiss tax treaty indicates that alimony is only taxable in the country of residence. That would appear to be great news for the original poster if verified.

The pension(s) might be a bit of a concern in terms of potential PFIC complications, but assuming the pensions are small there shouldn't be any U.S. tax owed (and perhaps no U.S. tax even if they're big).

There's probably a FBAR filing requirement (since $23,000 is above the $10,000 filing threshold, and assuming that $20,000 is a reportable financial account), which in the case of Switzerland especially is something I would do first if required. That'll require filing 6 years' worth.
Thanks a bunch. I am so relieved! my gratitude.
 
1 - 5 of 5 Posts
Top