From time to time, I've thought about returning to the UK, but this thread has put a stop to that idea!
Hello Peter.
I'm in the UK, and I do my tax returns for both the US and UK on my own. Do I do the US return absolutely 100% correctly? Well...that's doubtful. I think they're correct, but who knows. In regards to foreign pensions, even the IRS has a great deal of problems deciding what is right and what is wrong (and tax treaties aren't always clear). I've been filing from abroad for over 30 years and only once has the IRS questioned a return. That was to do with an AMT debacle, and the US Code was changed for the following tax year and the problem went away. I've been quoted $4,000 by a highly qualified firm in the UK (not one of the Big 4) to do the work. Would they do them correctly? Well....that's also questionable.
I'm in the worst position. 90%+ of my income is sourced from the UK and Europe. That makes the US return a challenge. If the majority of your income is sourced from the US, things become easier.
Remember, the rest of the world (and I don't count Eritrea) has resident based taxation, not citizenship based taxation. The US is alone in that respect. When you're resident in a foreign country, you normally have to consider US source income that is remitted to that country. Some do have a tax on worldwide income for residents. A challenge?....yes. But most other countries' tax laws are much simpler than those of the US. I'll spend weeks on my US return, but only a few hours on my UK return.
Take heart from the fact that 'Americans and their tax problems' provide constant entertainment for the foreigners on expat sites. There are 6 million US expats in the world, and not all of us are tax evaders. There's a lot of folk out there who manage to file those US returns (albeit with a bit of confusion and frustration) and still live a happy life abroad.
We need to get over the current FATCA nonsense, and the resulting problem in some areas of the availability of bank/investment accounts for 'US Persons', but once that's settled, hopefully, things will ease up a bit. As nun says, once you've done it for several years, the logic (or illogic) behind completing a US return becomes clearer, and the task becomes somewhat easier. It's a matter of enlarging your tax knowledge base (essential), and then staying on top of a constantly changing tax code.
I don't intend to start a discussion on this, but the sentiment expressed in your comment (the reason I'm replying) and the current impact of US legislation on Americans looking to live abroad is causing concern on the expat sites. Sadly, it's a situation that is very much ignored within the US.
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