US Taxes- Owing Money?

Hello everyone,

This is my second year doing my US taxes while being a resident of the UK. Last year I worked with Greenbacks and they did my taxes for about £500. I thought that was a bit much so did some looking around this year and went with H&R Black Expat Services, as they were cheaper. They have just come back to me with my return and say that I owe $219 to the IRS. I am so Confused by this! I didn't owe any taxes last year and only made about $26,000 (similar amount to last year), so should be well below the limit of what is taxed for foreign income. I was thinking it's maybe from the stimulus checks? or possibly they have done my taxes wrong?? I just can't see how I would any money to the IRS when I made such a small amount. Any help or thoughts would be very appreciated!

Thank you!

Can you see the 1040 they have prepared for filing or some other summary that would show the sources of income? My wife and I unexpectedly received $2,800 as a stimulus tax credit. ($1,400 each)

Our son earns more than $26,000 and he excluded it with FEIE and owed zero taxes, but he had previously received his stimulus money directly into his bank account.

You just need to review line by line and the sources of income. If you file MFJ, then you would be paying less then $100, not taking into consideration any tax credits via 1116. The tax threshold is a few hundred below $26k for 2021, ($25,600 off the top of my head), so no more than a $40 hit on exactly $26k

Did you mean $500 for Greenback and not £500? What are H&R Block's fee if I may ask?

Thank you both, I have looked closer at the return and there is nothing about the stimilus checks within my sources of income, so I dont think it has anything to do with that.

@Barcrest It was £500 for Greenbacks and H&R Block with an advisor was £260. I guess you get what you pay for. The H&R Block people have not been helpful at all and its been very confusing.

I have tried looking at both returns to compare and honestly I just can't work it out. My best guess is it's something to do with the foreign tax credit? But I dont know how it was calculated and what it is based on.

The UK government did mess up my tax codes this year and I was being overtaxed at a new job and then somehow they overrefunded me on my December 2021 paycheck. However, I am slowly repaying that through each paycheck this year. I have a sinking feeling that maybe its connected to that. That they have calculated I should have paid more taxes to the UK government on my earnings but didn't, so now owe them taxes instead?

I'm not sure if this makes any sense to anyone else but I am just so frustrated and confused by this whole process. I don't think I have any choice but to pay the taxes and just move on.

Thank you both, I have looked closer at the return and there is nothing about the stimilus checks within my sources of income, so I dont think it has anything to do with that.

@Barcrest It was £500 for Greenbacks and H&R Block with an advisor was £260. I guess you get what you pay for. The H&R Block people have not been helpful at all and its been very confusing.

I have tried looking at both returns to compare and honestly I just can't work it out. My best guess is it's something to do with the foreign tax credit? But I dont know how it was calculated and what it is based on.

The UK government did mess up my tax codes this year and I was being overtaxed at a new job and then somehow they overrefunded me on my December 2021 paycheck. However, I am slowly repaying that through each paycheck this year. I have a sinking feeling that maybe its connected to that. That they have calculated I should have paid more taxes to the UK government on my earnings but didn't, so now owe them taxes instead?

I'm not sure if this makes any sense to anyone else but I am just so frustrated and confused by this whole process. I don't think I have any choice but to pay the taxes and just move on.

Just to be sure about the stimulus. It won’t appear as income, but way down the 1040 on line 30  labeled  as Recovery Rebate Credit.

I would think your HMRC taxes would effect your IRS taxes if you were filing foreign tax credits (form 1116) and the amounts were significantly different between the 2 tax years. Have a look at line 20 on the 1040 to see what, if any, foreign tax credits you have.

Thank you @durhamlad, I have rechecked the 1040 and nothing in line 30, so that’s good!

Although in looking more closely at all of this I have realized why I’m getting so confused! I thought the foreign tax credit (form 1116) was the FEIE, but didn’t realize they are different things! Feeling really silly now!   

I’ve contacted H&R Block hoping they can do the FEIE form for me, fingers crossed! I really need to learn to do this on my own, lol!

Thank you @durhamlad, I have rechecked the 1040 and nothing in line 30, so that’s good!

Although in looking more closely at all of this I have realized why I’m getting so confused! I thought the foreign tax credit (form 1116) was the FEIE, but didn’t realize they are different things! Feeling really silly now!   

I’ve contacted H&R Block hoping they can do the FEIE form for me, fingers crossed! I really need to learn to do this on my own, lol!

My son uses FEIE each year. It is really easy to use.

Pleased you’ve seen where the issue was. £500 does seem rather a lot for Greenback. They show $450, but then there’s the add on forms!