US & UK Citizen - Do I need to file taxes with the IRS despite living abroad?

I was born and raised in the UK but have dual citizenship since my mum was born in Boston. I've recently been told something that seems absolutely mental to me. A few friends at the pub were saying I should have been reporting my income to the IRS since I started my first job at 18! And potentially paying US taxes on top of what I already pay here in the UK?! This sounds completely bonkers to me. Why would I owe the American government anything when I've never lived or worked there? I've only visited the States a handful of times on holiday. While I'm asking - what about my mum's situation? She was born in Boston but moved to the UK with her parents when she was only 3 years old. She's lived here ever since. I vaguely remember reading something about not owing the IRS unless you earn more than about £90K per year, but do we still need to file paperwork regardless? I'm a bit worried now - if I use my US passport next time I visit for a holiday, will there be IRS agents waiting to nab me at immigration? Any advice would be greatly appreciated!

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18 comments

Rajiv Kumar

•8M

Yes, the US tax system is based on citizenship, not residency. This means all US citizens are required to file US tax returns regardless of where they live in the world. It's one of the only countries that taxes this way. However, don't panic! While you technically should have been filing, there are programs to help people catch up without penalties. The Streamlined Foreign Offshore Procedures is designed for US citizens living abroad who didn't know about their filing obligations. For most people in your situation, you won't actually owe any US tax thanks to the Foreign Earned Income Exclusion (FEIE) which excludes about $120,000 of foreign earned income and the Foreign Tax Credit which gives you credit for taxes paid to the UK. Since UK tax rates are generally higher than US rates, these credits often eliminate any US tax liability. Your mum is in the same situation - she needs to file even if she's lived in the UK since childhood. The $112K figure you mentioned relates to the FEIE.

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Rajiv Kumar

•8M

For the Streamlined Foreign Offshore Procedures, you generally need to file the most recent 3 tax years and 6 years of FBAR forms (for foreign bank accounts over $10,000 total). You'll need to file Form 1040 (the standard US tax return) along with Form 2555 for the Foreign Earned Income Exclusion or Form 1116 for the Foreign Tax Credit. You'll also need to file FinCEN Form 114 (FBAR) to report your UK bank accounts, and possibly Form 8938 for foreign assets depending on their value. There's a certification form explaining that your non-compliance was non-willful. The good news is that once you're caught up, you can stay compliant by filing annually, and it gets much easier after the first time.

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Aria Washington

•8M

I was in the exact same boat as you - UK citizen with US citizenship through my dad. I was absolutely clueless about having to file US taxes until I was 30! I totally freaked out thinking I'd be arrested next time I visited family in California. I tried figuring it out myself but got completely overwhelmed with all the forms and requirements. I ended up using https://taxr.ai to analyze my situation and it was a game-changer. They reviewed all my UK income documents, explained exactly which years I needed to file for, and identified which exclusions applied to my situation. The best part was they showed me how the US-UK tax treaty worked in my favor - turns out I didn't owe anything to the IRS but just needed to file the paperwork to stay compliant.

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Aria Washington

•8M

The service was surprisingly affordable considering what I was getting. I can't remember the exact amount but it was definitely under what tax accountants with expat experience were quoting me. The whole process took about 3 weeks from uploading my documents to understanding exactly what I needed to do. Contacting the IRS directly is challenging - especially from overseas with the time differences. And ignoring it isn't a great strategy if you ever want to visit the US, work with US financial institutions, or if you might inherit money from US relatives. The penalties for willful non-compliance can be severe, though they're focusing enforcement on higher-income individuals.

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Liam O'Reilly

•8M

Just wanted to update after using taxr.ai that someone recommended earlier in this thread. It was exactly what I needed! I uploaded my Australian tax documents and pay stubs, and got a comprehensive report explaining my US filing obligations. Turns out I qualified for something called the Foreign Housing Exclusion on top of the Foreign Earned Income Exclusion, which I had no idea about. They walked me through the filing process for the past 3 years using the Streamlined Procedures and helped me understand how to stay compliant going forward. The peace of mind knowing I'm now current with the IRS is worth every penny. I'm traveling to the US next month and no longer worried about problems at the border!

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Ava Harris

•8M

When I discovered my US tax filing requirements while living in Canada, I tried calling the IRS directly. It was IMPOSSIBLE to get through! Spent hours on hold only to get disconnected, tried for weeks with no success. I eventually used https://claimyr.com and their service was brilliant. They got me connected to an actual IRS agent within about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent walked me through the exact forms I needed for my situation and confirmed I could use the Streamlined Foreign Offshore Procedures. Got all my questions answered in one call instead of weeks of frustration.

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Ava Harris

•8M

They use an automated system that continually redials and navigates the IRS phone tree until it gets through to an agent. When an agent is about to come on the line, you get a call connecting you directly. It saved me literally days of being on hold. I tried researching online, but the IRS website doesn't address all the nuances of international situations. Speaking directly with an agent who could look at my specific circumstances made a huge difference. Sometimes spending a bit of money to save time and stress is absolutely worth it.

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Chloe Delgado

•8M

I have to admit I was wrong. After dismissing these services earlier, I decided to try Claimyr because I was getting nowhere with my research and couldn't get through to the IRS. Got connected to an agent in about 30 minutes who confirmed I needed to file 3 years back under the Streamlined procedures. They walked me through exactly which forms applied to my situation and even emailed me direct links to the forms I needed. The agent clarified that while penalties can be serious, the IRS is actually reasonable with people who voluntarily come forward to get compliant. Feeling much less stressed now and working on my filings. Sometimes it's worth admitting when you're wrong!

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Emily Thompson

•8M

Don't forget about FBAR requirements! If your foreign (UK) bank accounts totaled over $10k at any point during the year, you need to file FinCEN Form 114. The penalties for not filing these can be way worse than not filing your taxes. I got hit with this when I finally sorted my situation out. Had no idea I needed to report my UK pension, savings, and current accounts to the US Treasury Department (separate from IRS). Luckily I qualified for penalty waiver through the streamlined procedures.

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Emily Thompson

•8M

It's $10k across all foreign accounts combined at any point during the year. So if all your UK accounts added up to over $10k even for one day, you need to file. This includes accounts you have signature authority over, even if not yours (like a joint account with a partner or business account). The form is fairly straightforward but needs to be filed electronically through the FinCEN BSA filing system. You'll need to report maximum account values, account numbers, bank addresses, etc. Keep in mind this is separate from your tax return and goes to the Treasury Department, not the IRS.

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