OMG – Am I a US Taxpayer?

As we press to educate our elected representatives on how the injustice of US CBT affects all Australians, it is inevitable that some people will come to the unpleasant realisation that the term “US Taxpayer” may apply to them, that OMG moment that changes everything. The first reaction may be panic, or fear. Slow down, take a deep breath, and educate yourself! The absolute last thing you should do, if you are not currently compliant with US tax rules, is to hire a tax accountant. Once you hire a tax accountant you will be filing US tax returns, whether you actually need to or not. We are not suggesting that you break the law, but rather that you consider carefully how the law actually applies to your situation before taking action.

On this page we will collect links to sites that will help you work through your OMG moment and get to the other side. What that other side looks like depends on what is best for you, in your particular circumstances.

Start here: Must Read for US Persons in their OMG moment and Introductory Material

Then consider the Petros Principles – you’ll find links to all 12 here.

If you want to lose your US citizenship, take a look at the Renunciation and Relinquishment thread at The Isaac Brock Society.

If you want to file your US taxes, check out the expat tax thread at Isaac Brock, or the US Expat Tax Questions group on Facebook.

And look at all the links on our Other Sites page.

If you come upon any other resources that help you through, please share them in the comments.

10 thoughts on “OMG – Am I a US Taxpayer?”

  1. This is a very important post. The OMG moment (also referred to as “Oh My Gosh” moment) is usually terrifying and confusing. It’s extremely important that you take the time to objectively evaluate your situation. It’s also important to realize that many people are so upset by learning about U.S. citizenship-based taxation that they are NOT capable of a reasoned decision. Instead they react and that reaction often means simply following the advice of whatever professional they talk to. So, be careful. This can (and often does) lead to total disaster.

    Also, a couple of observations, based on many discussions with people over the years …

    1. Many people react by thinking that “they have done something wrong”. Nothing could be further from the truth. You have done nothing wrong. You were simply (if you are still a U.S. citizen) not aware of U.S. laws, that are so contrary to international norms, that many have a hard time believing that these laws even exist. You are NOT alone. You are in the company of millions of people.

    2. When people hear that they must file taxes, they automatically think that filing U.S. taxes is like filing taxes (which is what they understand) in their country of residence. Nothing could be further from the truth. The U.S. tax system is loaded with all kinds of #YouCantMakeThisUp rules that apply to people outside the United States. So, before you make a decision to file U.S. taxes or renounce U.S. citizenship (or whatever else you are considering), take the time to really understand how these U.S. rules would apply to your situation. Be particularly careful with the possible application of the S. 877A Exit Tax if you are considering renouncing.

    Finally, do NOT feel pressured. You have time do do your due diligence. Remember also, (as is stated in this post) that tax professionals can help you with ONLY one thing – filing taxes.

  2. my ” omg” moment only occured 2 months ago when i accidently clicked “americanabroad org”. i was trying to google a place for traditional thanksgiving dinner. since then, i have studied every day about the subject and re- examing my tax situation.

    i am a chinese american ( neutralized) and am married to a German. now, we live in a sleepy town of 12,000 population 30 km outside of frankfurt. i have been a housewife. my husband is shocked and terrified to know we could lose all the money we had worked so hard for….

    1. Hi china-america-germany – glad you found us here. Take a deep breath and relax. It is extremely unlikely that you’ll lose everything. Continue to research your situation. If you have no assets or other current connection to the US (other than your citizenship), it will be very difficult for the IRS to collect from your German assets. If you have been a housewife, then it is possible that you have no actual tax liability in the US – and the penalties for failure to file can be waived in streamline. If the IRS doesn’t know you exist, then they are unlikely to find you. Understanding the risks – and the likelihood of enforcement – is key. Check out the American Expatriates Facebook group (https://www.facebook.com/groups/AmericanExpatriates/) and/or the Isaac Brock Society (http://isaacbrocksociety.ca/). Both have several German residents participating. Isaac Brock can be difficult to navigate – try posting your questions in either of these threads: http://isaacbrocksociety.ca/renunciation/ or http://isaacbrocksociety.ca/expat_tax/

  3. Hi Karen, fellow Brisbane-based dual citizen, AU perm resident since 1999. In the process of starting to investgate applying for an immigration visa for my dual Auusie/British wife, have stumbled into this body of information… OMG moment may be putting it lightly, I think I’m going to be sick.

    I am trying to read through what I can, but is there anything you can offer immediately to help me know where to look. I have had no assets or income in the US since I left.

    Thanks

    1. Hi Garet, glad you found us. If you’re planning on returning to the US, then you’ll probably want to come into compliance. The streamlined program will allow you to come into compliance without penalties. You would have to file 3 years of tax returns and 6 years of FBARS and complete a statement explaining why you failed to file US returns (because you didn’t know it was required). There are a large number of compliance professionals out there who are advertising their services for this streamlined program. Their motivation is to collect fees both now and on an ongoing basis. It’s best to get a rough idea of what you may be up for before you actually contact a tax professional. If your income in Australia is mainly employment income plus super, then the returns should be simple and inexpensive to prepare.

      If you’re moving out of Australia and will no longer be a resident taxpayer here, then make sure you understand the Australian tax consequences of the move. There are new rules about CGT and principal residence that you need to be aware of. And any SMSF or discretionary trusts that you own will need Australian resident trustees (and will be a big headache on your US return).

      One last piece of advice – think about how your (and your wife’s) Australian assets will be taxed by the US once you move there. If that changes your decision about moving, then there’s really no rush to file any US returns.

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