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Discussion Starter · #1 ·
Hello. I’m an American citizen and I’ve lived in the UK now for 17 years. I have never paid expat tax. My earnings have been such that it’s no big loss to the US, but yes, I know now that I was supposed to anyway. I only just learned this!

Does anyone know that if I file my 2020 taxes now (before April 15, 2021) will I become eligible for one or more of the COVID stimulus payments?

Thank you very much for your answer!
 

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THX1138 -- If you file your 2020 federal income tax return (IRS form 1040,) you'll be able to capture the stimulus payments on line 30 (after completing the "Recovery Rebate Credit Worksheet" on page 58 of the 2020 IRS form 1040 and 1040-SR Instructions.) You'll receive the stimulus payments as part of your tax refund.

2020 Form 1040 (irs.gov)

2020 Instruction 1040 (irs.gov)

If you do file, you'll now be "in the system," but based on your post, you'd be eligible for the "Streamlined Filing Compliance Procedures" (you'll need to back-file your 2017, 2018 & 2019 returns and must certify that past failure to comply was "non-willful.") Streamlined Filing Compliance Procedures | Internal Revenue Service (irs.gov)

You will also be required to file FBARs for the last 6 years (if you met the thresholds.) The FBAR must now be filed electronically: How Do I File the FBAR? | FinCEN.gov

The tax return deadline has moved to May 17, 2020, this year, and overseas filers have an additional automatic 2 month extension. With that said, the IRS still has a backlog processing 2019 returns -- so the sooner you file, the sooner you'll get your refund (I personally waited about 9 months for my own 2019 refund.) You'll capture the first two stimulus payments on your 2020 return -- the third will be captured on your 2021 return.

By the way, just by being an American citizen, you're eligible for the Stimulus payments (unless you are an extremely high earner, and even then there is a "phase-out" table.)

Remember too -- that if you file and take advantage of the "Streamlined Filing Compliance Procedures," you'll be expected to maintain compliance in the future (filing 1040s & FBARs annually.) Cheers, 255
 

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Was just replying when 255's response appeared. Yup - what 255 said. Especially regarding the extension of the 2020 filing deadline to May 17th this year.

Just be aware that the IRS is massively overloaded and backlogged with last year's filing to process, so don't expect to get a check in hand any time soon.
 

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Whether one should continue filing in future years, or attempt to get caught up on past tax returns and FBARs through the streamlined program, is a decision you need to make based on your circumstances. Do you have UK or other citizenship, or do you rely exclusively on your US passport? Do you have US assets, strong family ties, expected inheritance or plans to return?

If you would rather stay out of the US tax system and don't desperately need $3200 in stimulus benefits, you might be wise not to claim the money. If you don't have another citizenship, it might be considered unwise to claim the money then never file anything ever again - in other words, if you do this, you're in. Whether you really need to bother with the streamlined program for catching up is an open question - frankly the IRS doesn't seem terribly bothered by what non-residents do or don't do.
 

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Seems like you are planning to watch your namesake film in reverse ..

You have already fled the city limits and you are considering going back down the ventilation shaft and into the clutches of the OMM.

If you have other reasons to become compliant, the financial lure of the three EIP payments means it is probably as good as a time as any to do so.

Also bear in mind that without a US bank account to deposit the EIP 1,2 or 3 in you may well receive a cheque or pre-loaded debit card through the post.

There can be a bunch of other unintended consequences ... think ISAs, PFICs and other savings and investment strategies that could well be out of bounds for you in future due to the differences in tax treatment between the two countries..

Its your call but do note that as far as I am aware, the automatic two month extension given for overseas filer has not been extended.
So in essence you still only have until 15 June to file a timely 2020 return from the UK.
 

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Does anyone know that if I file my 2020 taxes now (before April 15, 2021) will I become eligible for one or more of the COVID stimulus payments?
The simple answer as 255 said is yes, however, the true answer is much more complicated than that. Be sure you fully understand the implications of what it means to file, if you file seriously consider doing it correctly with the streamlined process as Nonoymous suggested. Be sure you fully understand the FBAR filling process as well. Not doing any of these things correctly comes at a very steep price!

Once you’re in the system, you’re in and it’s not only your earned income that is considered, but gain on sale of assets (stocks, house, etc.) and any earned interest must be reported as well.

FBAR reporting, once beyond the threshold, includes ALL accounts you hold signature cards on (including any with your employer if applicable), retirement accounts have to be handled with much consideration as well. Failure to file any of these properly has massive penalties and unfortunately it’s not black and white with the IRS regulations themselves!

While it may not seem the US does not pay much attention to those “expats” haphazardly filing, there has been a lot of chatter that they plan on stepping up their game and they have easy access to do so once they know of you or decide to go after “expats”. Many have been called out by their own country of residence personal banks and many of those banks have elected to close accounts of US costumers so that they may avoid having to report to the IRS themselves.

Be sure you know what can of worms you are opening for the “free” $$$ and if in the end it is really worth the small amount received vs the massive amount you may owe if not done properly or any expense for an international tax accountant/attorney required for proper filing depending on the complexities of your own personal financial situation! Who’s to say this is not one of the US gov’ts way of tracking expats down and getting them into the system?!?
 

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The "chatter" about future crackdowns mostly comes from the expat tax firms who make their living convincing US persons that they need to meet their filing obligations. Otherwise I've seen no evidence that the IRS has or will take any serious interest in non-filing US citizens abroad, for the simple reason that the ROI is very poor: most would owe nothing and collection is difficult if not impossible. There's no evidence to date that the IRS is using FATCA data to identify and contact non-compliant citizens abroad. Nor is their evidence of FBAR fines being handed out to ordinary taxpayers who make reasonable errors.

That being said, you are completely correct, the OP needs to fully understand the potential implications of entering the US tax system. Filing once to bag $3200 then going dark again would be a risky move for anyone without a second passport.
 

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Discussion Starter · #8 ·
THX1138 -- If you file your 2020 federal income tax return (IRS form 1040,) you'll be able to capture the stimulus payments on line 30 (after completing the "Recovery Rebate Credit Worksheet" on page 58 of the 2020 IRS form 1040 and 1040-SR Instructions.) You'll receive the stimulus payments as part of your tax refund.

2020 Form 1040 (irs.gov)

2020 Instruction 1040 (irs.gov)

If you do file, you'll now be "in the system," but based on your post, you'd be eligible for the "Streamlined Filing Compliance Procedures" (you'll need to back-file your 2017, 2018 & 2019 returns and must certify that past failure to comply was "non-willful.") Streamlined Filing Compliance Procedures | Internal Revenue Service (irs.gov)

You will also be required to file FBARs for the last 6 years (if you met the thresholds.) The FBAR must now be filed electronically: How Do I File the FBAR? | FinCEN.gov

The tax return deadline has moved to May 17, 2020, this year, and overseas filers have an additional automatic 2 month extension. With that said, the IRS still has a backlog processing 2019 returns -- so the sooner you file, the sooner you'll get your refund (I personally waited about 9 months for my own 2019 refund.) You'll capture the first two stimulus payments on your 2020 return -- the third will be captured on your 2021 return.

By the way, just by being an American citizen, you're eligible for the Stimulus payments (unless you are an extremely high earner, and even then there is a "phase-out" table.)

Remember too -- that if you file and take advantage of the "Streamlined Filing Compliance Procedures," you'll be expected to maintain compliance in the future (filing 1040s & FBARs annually.) Cheers, 255
I want to thank you, 255, for your expert and very helpful advice. I don’t mind “entering the system” as it is my understanding now that is a requirement of all expats anyway. I was ignorant of this requirement until recently. I understand it now and would have filed from the start had I known better.

Thanks also to everyone else for your considerable help. This is an excellent forum and I hope to be able to give back to it one day.

regards,
THX1138
 

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Before you jump into US tax compliance, do be aware of the potential pitfalls for someone living in the UK, particularly concerning ISA investments that would be considered PFICs, but also sale of primary residence with substantial gains (wot bit Boris on the bum, back in the day). Your decision will be influenced by whether or not you have UK citizenship.
 

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The "chatter" about future crackdowns mostly comes from the expat tax firms who make their living convincing US persons that they need to meet their filing obligations. Otherwise I've seen no evidence that the IRS has or will take any serious interest in non-filing US citizens abroad, for the simple reason that the ROI is very poor: most would owe nothing and collection is difficult if not impossible. There's no evidence to date that the IRS is using FATCA data to identify and contact non-compliant citizens abroad. Nor is their evidence of FBAR fines being handed out to ordinary taxpayers who make reasonable errors.

That being said, you are completely correct, the OP needs to fully understand the potential implications of entering the US tax system. Filing once to bag $3200 then going dark again would be a risky move for anyone without a second passport.
To each their own as to the risks they are willing to take once they are in the system, but the chatter has come from other sources that I have come across and not from those you implicate. I also did not say that they have yet used FATCA for non-compliant filers, but it would make it simple for them should they want to in the future. I am personally aware of individuals that are in the system that have had their foreign bank accounts closed due to FATCA so anyone wanting to jump in is taking that risk as well. I also never said they are handing out fines to ordinary taxpayers making "reasonable errors", however, for anyone not making an honest effort could be in for a very rude surprise. My advice is simply heed caution before jumping in with both feet
 

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As with many issues related to taxation, the important thing is always "context." The current state of IRS funding and "infrastructure" has a huge bearing on who they are or aren't likely to crack down on. Same goes for where a taxpayer's financial assets are located (i.e. US vs. overseas) and frankly the likelihood that there is non-compliance or out and out misrepresentation involved. Like so many other things, you plays the game and you takes your chances. Up to you to determine you own acceptable level of risk.
 

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I am personally aware of individuals that are in the system that have had their foreign bank accounts closed due to FATCA so anyone wanting to jump in is taking that risk as well.
Just to be clear, this is a FATCA problem that has nothing directly to do with the IRS. Banks denying services to US persons does not happen because these customers are in the US tax system, which is what you are implying there. It happens when banks identify customers as US persons (often through place of birth on ID) and decide they don't want the risk or hassle of dealing with them - regardless of whether these customers are or are not filing US tax returns.

Otherwise I fully agree, don't enter the US tax system without being fully aware of the risks. If by "crackdown" you mean paying more attention to what expats do file, then that is possible. What I said is highly unlikely is any serious attempt to find and punish non-residents (without any US assets or financial ties) who don't file. I'm highly confident that this will never happen.
 
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