Confirmation of my tax residence (letter from bank)

Context: US citizen on spouse visa in UK. Arrived in the UK in December 2015 and haven't been in the US since then. I've been employed in the UK since May 2016. I haven't earned any US income since August 2015.

The bank said they can't advise on where I am resident.

The letter says that from the information they have, I am resident for tax purposes in both the US and the UK. They want me to complete a form and tell them where I am resident for tax purposes. They want this information before 18/4.

I can't figure it out based on the information online. It seems like I will always be considered resident for tax purposes in the US because the US always taxes US citizens on any foreign earned income above a certain point (and I must file every year to claim exemption from US income tax). Is that true? Could anyone please advise on where I'm considered resident for tax purposes?

As a US citizen you are always a resident of the United States until/ unless you renounce. The United States charges tax on worldwide income and worldwide gains of US citizens.

It is irrelevant if you reply to the FATCA letter from the bank. Under the laws of the United Kingdom the bank is required to report on you. They will do so if you reply. They will do so if you do not reply if they believe you are a US person.

Thanks for the info

Be careful about terminology. The US has citizen and resident based taxation. You are going to be taxed by the US because you are a US citizen where ever you are resident. Also being a US resident will also expose you to state taxation. It's probably best for you to establish US non-residency asap so you can avoid state taxation and take advantage of things like foreign earned income exclusion.

Hi, how do I establish UK residency so I can get the foreign income exclusion? And avoid having to pay state taxes?

I've been living in the UK for over a year.

Is there paperwork I need to fill out?

Thank you very much for your help.

The term "residency" has different meanings in different contexts. You have asked about residency for bank questionnaire purposes, for foreign earned income exclusion purposes, and for state income tax purposes.  Each has its own definition of residency.  Even the U.K.-US Income Tax Treaty has yet another definition of residency.

Unfortunately, I don't know anything about any of those definitions of residency and I have an interest in doing all of it correctly. Do you know of a resource that might give me this type of information? I'm honestly clueless about it all. I've googled it for my original question but didn't find a straight answer which is why I posted here.

If you are spending all of your time in the UK and you are only earning income in the UK, you are likely a UK resident for the bank questionnaire.  However, you are a U.S. citizen, so they will report your UK bank account to the U.S. IRS.  The bank may ask you to complete a W-9, or for your U.S. social security number.  This is so they can report to the IRS.

You probably don't need to worry about FEIE residency, as long as you spend at least 330 days outside the U.S. during the year (or any 12 month period).  You probably meet the requirements to exclude your earned income.  You should look at Form 2555 and IRS Publication 54.  You might be better off claiming foreign tax credits in the long run, but the exclusion is simpler.

State residency can be tricky.  It depends which state you are from and other factors.  You may still be resident in the state you left.  The state residency rules are usually included in the instructions to the state nonresident tax form.

I hope this helps.