When to file IRS

I have my US taxes done and sitting on my desk. I arrived in the UK in April 2017. Is there any reason I should wait until I have been here 12 full months to file my USA taxes, if our intention on arrival was to remain permanently? (I expect a substantial refund, so it's not a matter of having to get them in on time or file for an extension because I owe the IRS.)

The reason I ask is that I am pretty sure the UK considers me resident for tax purposes, but there is language in the IRS forms about having to have lived somewhere for a complete calendar year for the IRS to consider someone resident elsewhere for the IRS's purposes.

(I need to get my California tax forms sent in by the usual deadline, so I'll just go ahead and send those on.)

If I remember correctly, you have a unique situation. You have US health coverage, you are claiming a treaty position on a California (government) pension, you are not a UKC, you have no foreign earned income are not filing a form 2555, and on the remainder of your income you fall below the UK Personal Allowance (no 1116)? And, the magic number is 330 days outside the US, not 12 full months. You will not qualify for the Bona Fide residence test (2555) this year.

You'll need to investigate all aspects, but why rush? You have until 18 (?) June this year to file, but if you will owe tax to the IRS, you need to make that payment by 15 (18?) April.

If I remember correctly, you have a unique situation. You have US health coverage, you are claiming a treaty position on a California (government) pension, you are not a UKC, you have no foreign earned income are not filing a form 2555, and on the remainder of your income you fall below the UK Personal Allowance (no 1116)? And, the magic number is 330 days outside the US, not 12 full months. You will not qualify for the Bona Fide residence test (2555) this year.

You'll need to investigate all aspects, but why rush? You have until 18 (?) June this year to file, but if you will owe tax to the IRS, you need to make that payment by 15 (18?) April.

Actually, I am not doing the govmt. pension exclusion because the HMRC say they want a statement from the IRS that says it's a government pension (and that they would then consider it as such), and I've been told that the IRS doesn't provide that sort of statement unless you go through a lengthy (and very costly) process. Besides, given how things are going right now, I'd rather have my taxes paying for things in the UK rather than in the USA's purse.

I do have USA healthcare. I have no foreign earned income (unfortunately). I am not a UK citizen.  I'm basically sitting here on my non-SS retirement income, at present.

For HMRC, I have some foreign earned income, some pension withdrawls, and my monthly pension payment, which together will be higher than the personal exemption for HMRC, so I'll be paying taxes on it all this summer. If I've done my math right, as long as I pay HMRC before the end of 2018, I can take those taxes off my USA taxes for Jan-Dec 2018, and will have a bit of credit left over that I hope to retroactively apply to my Jan-Dec 2017 taxes by filing an amended return. (I think I can do that.)

But, primarily, what I do have is a wonking big pot of refund money sitting there with the IRS that I'd rather have in my hands to transfer over here into pounds before sterling goes a lot higher. I'll be paying for a large percent of my HMRC taxes for the year ending April 2018 with the refund.

Actually, I am not doing the govmt. pension exclusion because the HMRC say they want a statement from the IRS that says it's a government pension (and that they would then consider it as such), and I've been told that the IRS doesn't provide that sort of statement unless you go through a lengthy (and very costly) process. Besides, given how things are going right now, I'd rather have my taxes paying for things in the UK rather than in the USA's purse.

I'm basically sitting here on my non-SS retirement income, at present.

For HMRC, I have some foreign earned income, some pension withdrawls, and my monthly pension payment, which together will be higher than the personal exemption for HMRC, so I'll be paying taxes on it all this summer. If I've done my math right, as long as I pay HMRC before the end of 2018, I can take those taxes off my USA taxes for Jan-Dec 2018...

So,....you are ignoring the tax you will pay to HMRC for April 2017 to Dec. 2017 on your 2017 US return (part US year with earned income in the US prior to April 2017?)? Will you be filing 1116 on the cash basis? Have a good look as to what that means for UK taxes paid in 2017 on 2017 income on a 2018 US return. What you are indicating is that you may be filing 1116 on an accrued basis? You can do what you are proposing but understand what that means.

But, primarily, what I do have is a wonking big pot of refund money sitting there with the IRS that I'd rather have in my hands to transfer over here into pounds before sterling goes a lot higher.

But, what if Sterling goes lower? You'd have even more money. Eventually, folks learn long term exchange rates are always a gamble and they can only beat the exchange rate conundrum by pure, blind luck.   

As you chose to pay zero UK tax to HMRC by 31 December 2017, you have no foreign tax credit to claim currently for 2017. The IRS have not yet finished publishing all of the forms for 2017 as the President did not sign all of the tax laws for 2017 until 9 February 2018. Nonetheless, if you are certain you have completed the paperwork ad the IRS have indeed published all of the forms you need, you can mail the 2017 return to the IRS now. You'd want to include within the return treaty resourced Form 1116s; so you know now how much excess FTC you can carry back next year from the 2018 US return.

You'd want to include within the return treaty resourced Form 1116s; so you know now how much excess FTC you can carry back next year from the 2018 US return.

Will that require re-filing 2017 at a later date to include the revised amounts from carry back on the 2018 form 1116?

Will that require re-filing 2017 at a later date to include the revised amounts from carry back on the 2018 form 1116?

Yes. The OP is planning on filing Form 1040X during 2019.

As you chose to pay zero UK tax to HMRC by 31 December 2017, you have no foreign tax credit to claim currently for 2017. The IRS have not yet finished publishing all of the forms for 2017 as the President did not sign all of the tax laws for 2017 until 9 February 2018. Nonetheless, if you are certain you have completed the paperwork ad the IRS have indeed published all of the forms you need, you can mail the 2017 return to the IRS now. You'd want to include within the return treaty resourced Form 1116s; so you know now how much excess FTC you can carry back next year from the 2018 US return.

Do I need to put the 1116s in with IRS 2017 taxes? That would need to go in with the amended tax return I file in 2019, wouldn't it? Or should I be sure to put it in with 2017's taxes?

At present, the only forms I believe I need to file are 1040A and schedule B (which is where I have to tick the box that says I have a foreign bank account). Since the bank account has never gone over $10K, no FBAR is required. My income is was pretty basic - my paychecks for Jan - April 2018, a month's vacation pay for May, two disbursements from a 403B, and then my pension checks that started Aug 1.

When I file my IRS taxes in 2019 I am assuming that I will have had only my pension payments and will have lived in the UK for a full calendar year of 2018. In SP2019 I would file for IRS 2018, and include the schedule B and also the 1116 form where I would resource the income for Jan-Dec 2018 to the UK per the treaty. I would claim credit for taxes paid to HMRC during calendar year 2018.

I would also file a 1040X for IRS year 2017, a schedule B, and the 1116 form and claim credit for tax paid in summer of 2018 to HMRC that is more than my IRS bill for 2018.

Have I got that correct?
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Do I need to put the 1116s in with IRS 2017 taxes? That would need to go in with the amended tax return I file in 2019, wouldn't it? Or should I be sure to put it in with 2017's taxes?

It makes life easier if you have a 1116 with the proper resourced by treaty basket for various incomes for both years. The excess credits from 2018 must go to a "like/same type" 1116 basket on the 2017 return. If you declare the income as just normal income on the 2017 return, there will be no 1116 "resourced basket" to receive and utilise the excess credits with everything having been properly apportioned. I'm uncertain as to the ability to change these income types solely on a 1040X (when not including a 1116 for 2017 - a question for Guya).

Well done. A healthy refund this year and hopefully, a bit more in 2019. Make sure you can use a 1040A with the additional forms.

oh, pooh.
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Having reread OAPs post, I am now confused again. I just re-ran the numbers and my carryback for 2018 won't nearly cover the period May-Dec 2017, so I would be paying taxes to both countries for those months. I will need, in order to get relief from double-taxation for May - Dec 2017, to indicate I am using the accrual method on form 1116.

That is, I will be claiming income and taxes as I "earn" them, rather than by pay-date.  (d'OH) Given that my income is pretty stable/predictable, I don't see any problem with doing that. Is there something I should be aware of about using the accrual method?

As I won't know for sure my exact UK income tax due for 2017/18 for quite some time, it would seem (to use the accrual method) best to hold off filing with the IRS and then re-do the forms to claim the accrued tax credits for April-Dec 2017. 

I do need to get my California taxes filed, or try to get some sort of extension I guess, if I am not going to file with IRS right away.

Drat, it was going too smoothly there.

oh, pooh.
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Having reread OAPs post, I am now confused again. I just re-ran the numbers and my carryback for 2018 won't nearly cover the period May-Dec 2017, so I would be paying taxes to both countries for those months. I will need, in order to get relief from double-taxation for May - Dec 2017, to indicate I am using the accrual method on form 1116.

That is, I will be claiming income and taxes as I "earn" them, rather than by pay-date.  (d'OH) Given that my income is pretty stable/predictable, I don't see any problem with doing that. Is there something I should be aware of about using the accrual method?

As I won't know for sure my exact UK income tax due for 2017/18 for quite some time, it would seem (to use the accrual method) best to hold off filing with the IRS and then re-do the forms to claim the accrued tax credits for April-Dec 2017. 

I do need to get my California taxes filed, or try to get some sort of extension I guess, if I am not going to file with IRS right away.

Drat, it was going too smoothly there.

The UK tax liability for 2017-18 can only be accrued on the 2018 US return. Electing to claim the accrued method is unconventional for any UK resident. Paying HMRC by 31 December each year is, conversely, standard US planning.

Sooo.... that means I pay double for April - Dec 2017, but then since my UK tax for 2017/18 will be much more than my USA tax for 2018, I can shift some of the excess UK tax credit backwards onto USA 2017, correct? (I should not have been thinking about this at 3:00am!)

Does "unconventional" equate to "can't be done"? 

Wish I would have realized this all more than a few days before Dec 31 of last year. Doesn't really matter much, though, as I wouldn't have been able to come up with the liquid assets to pay it by that time.

So, when I file the 1116, I need to use one form to resource and claim the earned income for May and one 1116 form to resource and claim the passive (retirement) income? Or do I need to break the retirement income down and file one 1116 form for each 1099R I have received?

The IRS discuss treaty resourcing in detail in Publication 514: https://www.irs.gov/forms-pubs/about-publication-514

Yes, I've read it repeatedly and am not precisely sure I understand it. 

I moved to the UK in April 2017.

So, hypothetically, say I owe (and pay) $6,000 for 2017 to the IRS.
Nothing due to HMRC as it hasn't accrued yet.

I will owe approx $2,900 for 2018 to the IRS.
I will owe/pay approx  $5,500 for 2017/18 to HMRC. I pay this by the end of 2018.

The HMRC tax paid would wipe my IRS 2018 tax liability out when I file my IRS forms in SP2019. And, subtracting, that would leave me with a potential carry-back of $2,600 that I could apply via 1040X to my 2017 IRS taxes.

I will owe approx $2,900 for 2019 to the IRS.
I will owe/pay approx $3,157 to HMRC for 2018/19 by the end of 2019.

The HMRC tax paid would wipe my IRS 2019 tax liability out. I would have a residual amount of credit of $257. I cannot carry that backwards, as you can only carry-back one year. So I would carry it forward.

Have I got that straight, at least?

For the 1116 I file with the tax forms sitting on my desk now, I put in two 1116s - one for the resourced earned income for May and one for the resourced retirement (passive) income for the rest of the year onward to Dec 31. On them I list nothing for foreign taxes accrued or due.  I'm doing this to have a "basket" for when I file the 1040X and the revised 1116 in 2019 to do the carryback of unused 2017/18 credits from HMRC?