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How U.K. Expats Deal With Back Taxes In The US?

How U.K. Expats Deal With Back Taxes In The US


U.K. expats living in the U.S. must deal with the same tax obligations as any American citizen, regardless of whether they reside in the country permanently or temporarily. The IRS taxes U.S.-source income for all taxpayers who have established a “tax residence” in the United States and requires that expats file a tax return every year.




In addition to filing regular U.S. income taxes, expats may also need to pay back taxes owed for previous years when they failed to file or did not owe any money in prior years but underreported their income. When an expat owes back taxes, the IRS generally offers them an installment agreement with monthly payment plans that can help manage the debt over time and avoid penalties and interest charges.

In some cases, expats may qualify for a reduced rate or even full tax forgiveness if they can prove economic hardship. Expats should also be aware that the IRS may require them to pay a special additional tax on certain retirement savings plans and investments, including pensions and Individual Retirement Accounts (IRA). This additional tax is known as the “expatriation tax” and pays for any taxes owed on overseas investments.


US Taxation For British Expatriates

The United States has a complex taxation system, and this can be especially difficult for those who are not familiar with it. If you are a British expatriate, there are some basics that you should know about US taxes in order to ensure that you are compliant.

First, you must understand what type of US taxpayer you are. If you are in the US for more than 183 days a year then it is likely that you will be considered a Resident Alien or Green Card Holder and therefore subject to income tax on your worldwide income. If you are in the US for less than 183 days then, depending on the specific details, you may be considered a non-resident alien and only taxed on your US-sourced income.

Once you understand your status, you should be aware that if you are a Resident Alien then you will need to file two forms each year: Form 1040 and Form 8843. The former is used to report all of your income sources and the latter is used to document your days of physical presence in the US. You may also need to declare any foreign accounts you hold on Form 8938 and/or FBAR.

Finally, if you are a British expat who has lived or worked in the US for more than 10 years then you should be aware of the expatriation tax. This is an additional tax that applies to those who have renounced their US citizenship and/or green card status, and it is separate from the normal US income tax. As such, if you are a British expat with more than 10 years of residence or work history in the US, then you should ensure that you understand the expatriation tax and its implications before deciding to renounce your status.


What Is The US UK Tax Treaty?

The US-UK Tax Treaty is an agreement between the United States and the United Kingdom that helps to clarify how income derived from sources in one country should be taxed in the other. Furthermore, this treaty helps prevent individuals from being taxed more than once on the same income.

The US-UK Tax Treaty covers a variety of taxes, like income taxes, capital gains taxes, and inheritance taxes. It additionally specifies the number of exemptions that may be available to certain individuals or entities from taxation–such as students studying in the UK or business firms based in the US.

The treaty also contains provisions for how disputes about tax liabilities should be handled, as well as rules on the exchange of tax information between the two countries. In addition to providing guidance on taxation, the treaty also contains provisions that protect individuals from double taxation and discrimination based on nationality.

Overall, the US-UK Tax Treaty is an important agreement that clarifies how income and assets should be taxed in both countries. It is important for British expatriates to understand the implications of this treaty before they decide to move abroad. By understanding the rules and regulations concerning taxation, British expats can ensure that they are compliant with both US and UK tax laws when living and working abroad.


Can UK Expat Apply For Offer In Compromise With IRS?

Yes, UK expats can apply for an offer in compromise. With an offer in compromise (OIC), you can settle your outstanding tax debt with the Internal Revenue Service (IRS) for less money than what you actually owe. This type of agreement may be available to taxpayers who are unable to pay their full amount of taxes due and can provide much-needed relief from debt.

In order to qualify for an offer in compromise, UK expats must satisfy the IRS’s criteria and demonstrate that they are unable to pay their full tax debt. In order to qualify for this program, individuals must submit an application with documentation that proves their current financial situation including income, expenses, assets, and liabilities. After the application is reviewed, the IRS may accept or reject the offer in compromise.

If the offer is accepted, UK expats may be required to make a lump-sum payment or enter into a payment plan. It is important to note that offers in compromise may not be available for all types of tax debts and can take several months to process. Therefore, it is important for UK expats to carefully consider their options and ensure that they are able to adhere to the terms of any agreement before submitting an application.



UK expats who owe back taxes to the US must understand the rules and regulations concerning taxation. While there are a variety of options available for dealing with back taxes, including making payment arrangements or filing an Offer in Compromise, it is important to do so in a timely manner to avoid penalties and interest accruing on the unpaid balance.

In addition, expatriates should become familiar with the US-UK Tax Treaty and its implications before deciding to renounce their status. Understanding the rules concerning taxation can help individuals remain both compliant and financially secure when living abroad.


Written for Expat Network by Ideal Tax Solutions