US Citizen but Non-Resident

[RSC2024]

I have a new client that called me the other day for some advice.  She left the US 25 years ago to live in France.  She got married to a French resident and they had a child.  For the last 23 years she didn't work so there was no income to claim.  So she didn't know that the IRS still wants you to file a tax return.  Well, she started an online business in 2022 and they are withholding backup taxes (20%).  She would like to receive those withholdings, but feels that if she files a US 1040-NR tax return now, that it will open a can of worms.  I researched and she should be able to qualify for the stimulus payments back in 2020 & 2021.  She reassures me that she and her husband have paid the proper French taxes and have followed all the countries rules.  

Does anyone have any recommendations?  Because I have tried to call the IRS for some advice and NO ONE answers the phone.  If the phone is answered the automated service tries to answer my questions, with no success.  So, they say that they can call me back when my spot opens up in the que.  They call me back and they don't know S&%T.  They always send me back to the automated system.  It's a big circle.  UGH!!

[sjrcpa]

She has to file 1040, not 1040NR.

If she had no income in prior years she had no 1040 filing requirement. Filing for stimulus money is another matter.

But, did she have foreign bank accounts- in her own name or joint- requiring the FBARs for all those years?

She probably wants to file MFS to avoid including spouse's income on her 1040.

[RSC2024]

Dear sjrcpa,

Thank you for replying.  My questions are:

- Why 1040 and not 1040NR, since she is a non-resident?

- She has joint foreign bank accounts joint with her foreign spouse.  Would she have to file FBAR's for all the 20 or so years?  

- How could she file MFS?  Her spouse is a French resident and doesn't have a SSN or ITIN.

[sjrcpa]

Why 1040 and not 1040NR, since she is a non-resident? Because she is a US citizen not residing in the US. 1040-NR is for nonresident aliens.

Would she have to file FBAR's for all the 20 or so years?  Technically yes. There are some provisions for late filing of these where they accept 6 years. Penalties are huge so research and legal advice are in order,

How could she file MFS?  Her spouse is a French resident and doesn't have a SSN or ITIN. Some software allows "NRA" in the spouse SSN field for this situation.