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USA Citizen Director of a Small Company in UK

USA Citizen came to UK when 6 Months Old , no USA Tax Reference should he apply for USA Tax Ref.

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I have a client who is USA Citizen but came to the UK when he was 6 months old, he is now  24 years old and a small company director here. As he does not have any USA IRS reference does he have to let, IRS know his situation and apply for USA Tax Reference and file in their Tax Returns. He has no income what so ever in the USA, and he is single, not married. The client is registered with the HMRC in the UK and pays all tax due to them.



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By Roland195
27th Aug 2019 14:03

From my limited experience, yes. The US is one of the few countries in the world that tax citizens on worldwide income regardless of residency, and can & regularly do pursue these matters far past fairness or common sense. Unfortunately, to renounce citizenship costs a few thousand dollars and you have to have your tax affairs up to date at the time - there are firms who specialise in this but are obviously expensive.

It is likely he does not in fact owe Uncle Sam anything but the reporting requirement still exists. He is technically still required to register for the draft too...

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Replying to Roland195:
By Accountant A
27th Aug 2019 14:14

Roland195 wrote:

From my limited experience, yes. The US is one of the few countries in the world that tax citizens on worldwide income regardless of residency,

My understanding too. He needs to engage a US tax advisor ASAP.

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By David Treitel
27th Aug 2019 16:13

Great question. This is exactly the kind of client that I see daily in our practice. Most folks in these circumstances would use the IRS Streamlined Foreign Offshore Procedures (SFOP) to catch up. A US income tax return for 2018 is required to be filed with the IRS by US taxpayers if worldwide income and gains exceed just $5 (!) (married filing separate), $400 (self-employed), $12,000 (single) or $24,000 (married filing jointly). If needed, a US income tax return for 2018 was due to be filed by 17 June 2019; but might have been easily extended until 16 December 2019 by filing an IRS Form 4868 by 17 June - followed by writing a letter to the IRS by 15 October 2019. An FBAR for 2018 must, however, if needed be filed with the US Treasury by 15 October 2019. It is worth mentioning that because a UK limited company exists, it is quite possible that there could be transition tax to be paid for 2017 and GILTI tax for 2018 and future years. Did the company make a timely check the box election when it was incorporated?

With kind regards

David Treitel | Managing Director | American Tax Returns Ltd
The Old Exchange, 12 Compton Road, London, SW19 7QD

Tel: 020 3542 6330
Email: [email protected]

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Replying to David Treitel:
Red Leader
By Red Leader
27th Aug 2019 18:02

Hi David,

Do you concur with the quote regarding the costs of relinquishing citizenship, even in the case of simple tax affairs?

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