Working in the UK, getting taxed on US capital gains / dividends

Hi guys,

Sorry if this has been asked but I've scoured the internet for answers and am coming up blank.

American citizen. I work in the UK, qualify for the FEIE, etc. I make about GBP 250k in the UK and pay far more taxes out here than I would in the US...

However, in 2014 I sold a bunch of my US stocks and have capital gains in the US. As well as dividend income in the US.

I just want to confirm: is it right that I owe a bunch to the IRS for my US capital gains? (Despite having a huge foreign tax burden / carryover?)  It is a rather depressing figure that TurboTax is showing me considering how much I pay on my wages to HMRC.

Thanks.

If you qualify for FEIE I assume you are a bona fide UK resident. I hope that you are claiming FTCs for your income over the FEIE limit or just using FTCs on your US taxes.

Unless you are claiming the remittance basis you'll have to pay tax on to the UK on your US capital gains and dividends. Yo need to look at the DTA to see how this works. Basically you must pay the UK tax on your capital gains and then resource it by treaty and claim a FTC against the US tax due. US sourced dividends are a bit different, you pay the US 15% first under the DTA and then pay the UK any difference between the US tax and what you would owe to the UK....ie you get a FTC in the UK for the US tax you paid.

FYI you can't use FTCs you have in the General basket ie income.....against taxes in the Passive basket...ie dividends, capital gains etc

Yes, I'm here at least 330 days.

Well, now I'm thoroughly confused. I'm a resident alien. I thought I didn't need to pay anything in the UK on my US dividends / income?

Basically what I was asking is if, for my US taxes, it made sense that I had to pay a boatload on cap gains and dividend income (because I'm paying well above my federal tax bracket here in the UK)...

You might well be a non-domiciled UK resident, Check here

https://www.gov.uk/tax-foreign-income/non-domiciled-residents

The UK is your primary taxing authority, you need to satisfy the UK as well as the US when it comes to taxes.