Confused on the how and where of filing - help appreciated

Hello everyone. I was hoping that someone may be able to assist me in a question regarding tax filing from the UK to the US.

My wife moved to England 2 years ago (currently on an FLR (m), and prior to that her parents would file her tax returns. This is the first year that she has needed to do them herself, and something I (as a UK resident) have no experience with. I realise also that we are now late on filing as well, it literally had been an overlooked thing.

We have been quoted $400 or so to have someone file them on her behalf, however it appears this is going to be needed each year, so we may as well try to learn this ourselves.

My wife works in the UK, so has a P60 for the previous tax year. She would be filing as ‘married separately’ I believe it is?

Her job is a touch above minimum wage here, so it doesn’t hit higher than the $64’000 point. So, at this point, I am thinking this shouldn’t be too difficult.
 
However, I am entirely unsure of the correct forms, or process to follow. Outside of my wage, we have no additional income or interest accruing savings accounts.

I found this on the IRS site; newcomer link: https://www.irs.gov/uac/free-file-do-your-federal-taxes-for-free [nonactive] and wondered if it should be as simple as using that page to fill out whatever forms it throws at us, and that would cover it?

I guess the questions I have are,

• which forms specifically should I be looking for? Can we file online or do we need to mail forms?
• If we can file online, is there one specific site that’s best for US residents now living in the UK?
• Is it worth paying a company to do this in people’s opinion or is it quite a straight forward process?
• At what amount do savings need to be declared (which I assume includes our joint account)?
• As she now lives in the UK, is there a need to file State tax? Or just Federal?

   

It seems easy to find mail addresses on online guides of where to send a tax return, but harder to find what form it is. Ideally E-filing is the preferred route.

Any help, pointers, guides are fully appreciated and apologies if I have missed an obvious post or guide already placed on this forum. We are both very naïve and unsure of all of this, and do not want to place ourselves in a bad situation by burying our heads in the sand.

Hi Deakin, I have to say, $400 seems reasonable. Is this from a US accountant? I have only ever used a UK accountant for US tax filing, and have heard that US based accountants do not have a good grasp of the complex cross border issues. (Not to mention, as a UK citizen & resident I find it distasteful to send my money to the US, lol. I prefer to keep it in the UK where it belongs.) 

Yes, I believe most people in her situation would file separately. (Any joint accounts you have will need to be reported on the FBAR though.)

If you have a lot of free time and a strong stomach, perhaps you might give it a go to file yourself, but personally I think it would be easier to use an accountant. It is worth noting that the USA's laws for extraterritorial taxation and 'foreign' bank account reporting were designed for criminals, draft dodgers, money launderers and tax evaders, so they are laden with stiff penalties and a lot of it is pretty terrifying if you ask me.

Some others here are knowledgeable about the specific forms etc. I think the question about whether you file state tax depends on the state she last lived in, as some require it and others don't, but I'm not totally sure.

Check out the Issac Brock Society and/or American Expatriates on Facebook if you or your wife want more info on the fight against FATCA & CBT.

Married filing seperately

1040EZ and 2555EZ.  Done.  $400 saved.

Married filing seperately

1040EZ and 2555EZ.  Done.  $400 saved.

The OP's US citizen spouse probably also needs to file Schedule B, 8965 and should review whether electing to claim the foreign earned income exclusion will produce the optimum result. She may also have income that does not qualify for the foreign earned income exclusion if she is a member of a UK pension plan.

And don't forget FBAR. And remember to do the proper currency conversions and recalculate everything Jan-Dec instead of April-April.

Some of the 'UK Yankees' on this board do not seem to have ever lived in the UK lol.

Thank you everyone for the responses. My hope of this being a simple 'do X then Y' was probably too optimistic!

She is a part of the UK pension plan, so seemingly that will complicate matters. Other than that, all the income is from work, and we have a joint account that we both add funds too as savings (less than $10,000 currently).

The $400 quoted was an American based accountant.

On the IRS website, it lists a bunch of places that offer E-filing, I had hoped it would be as simple as using one of those and they would list the needed forms.

We aren't worried at all about rebates in any shape or form, really it's just looking to understand how to know what needs to be filed, and where/how to get them done. I can already see that this is going to be so much fun on a yearly basis!

Hugely appreciate all the information given, at the very least we can question the accountant to see if they flag the same forms, as I would hate to pay for a service that doesn't file the necessaries!

Hypothetically, if we filed the basic forms via one of these E-filing sites, and it didn't cover the additional forms you guys have listed - what's the worst case scenario that comes of it?

Does she have UK accounts in her own name too? The FBAR threshold is not 10k in one account, but 10k in aggregate. So you have to add up all the accounts that are in her name and joint, and if it's 10k or over, file the FBAR.

You're right to be wary about accountants getting it wrong. The rules for an overseas resident are so complex that honestly, if you ask 10 different accountants how to file you will get 10 different answers. I filed streamlined in early 2016 and the IRS got in touch to say I missed out a form just this week! News to me. This was a form that my accountant and I HAD filed, so I'm not sure what happened but he was able to sort it for me. Maybe in the 15 sodding months it took the IRS to process my huge pile of forms, it got lost lol. Huge pile showing no tax due because I pay full UK tax. What a stupid waste of time for everybody.

You're right, it's a massive hassle and really quite nasty that a government expects people to do this who don't live there and don't cost them a penny. No other country does this.

I think if you miss a tax form they will just tell you that you forgot it, and ask you to submit it, but the FBAR penalties are extremely draconian even for 'non-wilful' mistakes. It is really a hornet's nest designed to entrap people, which is why the number of American citizens renouncing citizenship has broken a new record every year for the past several years.

Sorry, I should have clarified, the FBAR asks for the highest balance for the year, so must be filed if at any time in 2016 the total aggregate balance of her accounts was $10k or more.

Sorry, I should have clarified, the FBAR asks for the highest balance for the year, so must be filed if at any time in 2016 the total aggregate balance of her accounts was $10k or more.

ACK!  I just remembered that a portion of our house deposit (a gift from my mother) went through my accounts last year, and I didn't do the FBAR!  What's the deadline on that?  Is there a penalty if it's late?  Also, I need to amend my tax return... I might actually owe tax, and there could be a penalty on that.  Crap crap crap!  How in the heck did I forget this?!

I think there is an automatic extended deadline until 16 October so you should be okay.

I think there is an automatic extended deadline until 16 October so you should be okay.

For filing/amending the tax return, submitting the FBAR, or both?  Also, I didn't have to do FBAR before (this is the only time I've had any sort of money to speak of, and naturally I spent it all instantly )... am I right in thinking this is e-filing only?  And is this the right link?
https://bsaefiling.fincen.treas.gov/main.html

Thanks for your help.  I can't believe I'm so disorganized on this.  I'm usually right on top of things.  I just completely forgot about the money because I only had it for a couple of weeks.

The 16 Oct deadline is for FBAR. It's on https://www.irs.gov/uac/newsroom/taxpayers-abroad-must-file-by-june-15-extensions-available-new-filing-deadline-now-applies-to-foreign-account-reports

The filing deadline was 15 June but I'm not sure about amendments.

That looks like the right page for filing FBAR; maybe others could confirm. Being forced to submit my private financial data to the Financial CRIMES Enforcement Network turns my stomach every time.

The 16 Oct deadline is for FBAR. It's on https://www.irs.gov/uac/newsroom/taxpayers-abroad-must-file-by-june-15-extensions-available-new-filing-deadline-now-applies-to-foreign-account-reports

The filing deadline was 15 June but I'm not sure about amendments.

That looks like the right page for filing FBAR; maybe others could confirm. Being forced to submit my private financial data to the Financial CRIMES Enforcement Network turns my stomach every time.

Thanks, LionHeart!

It's my first, and hopefully only, time.

For filing/amending the tax return, submitting the FBAR, or both?  Also, I didn't have to do FBAR before (this is the only time I've had any sort of money to speak of, and naturally I spent it all instantly )... am I right in thinking this is e-filing only?  And is this the right link?
https://bsaefiling.fincen.treas.gov/main.html

Thanks for your help.  I can't believe I'm so disorganized on this.  I'm usually right on top of things.  I just completely forgot about the money because I only had it for a couple of weeks.

This is only done with e-filing and that does look like the correct website for FBAR filing. I don't know for sure about the October 16 deadline. Personally I would go ahead and file, maybe add an explanation for missing the June 16 date along the lines you mention.

Thanks, Durhamlad.

Quick question... I've reviewed my account history to get the maximum balance, but it's in GBP as of 29 July 2016.  How do I report it?  Prior to that date and after that date, my net worth was well under the threshold for reporting, so I just need to know how much the balance was on that date... in USD?

EDITED TO ADD:  Nevermind!  I found in the line-item instructions how to convert it to USD.