Foreign Tax Credit vs. Earned Income Exclusion

I've been doing some research, but not having much of a brain for reading legal documents I wanted to check if my current understanding is correct or if I am confused and am going to have to pay the US government a lot of money on my UK income.

I moved to the UK on 25 August 2007 to be a teacher. I travelled home Dec 20-31 2007 for Christmas. I thought I was permanently moving back to the US at the end of the school year due to my school hiring a UK teacher and arrived back in the US July 24 2008. I however, was given another UK teaching job and after some complications arrived back in the UK to work at a second school on August 31 2008. I travelled home for Christmas on Dec 23 and was there through the New Year, so I do not meet the 330 days in a foreign country rule no matter when I start my dates for 2008.

I assume my foreign tax is the same or more than what I would pay in the UK and I believe I am eligible for the Foreign Tax Credit.

Does this sound right? Or am I very confused.

My teaching salary is well under the 87,600 maximum amount.

Thanks to anyone for any advice or help in making my little brain understand what to do.

i'm not sure about your question, but was wondering what did you do about filing for the year 2007, since you were in the us the first half but the uk the second? 

The answer is really complex too.

UK TAX
You would have expected zero tax initially under the Teacher Article of the UK/US tax treaty because you expected to be here for less than 2 years.

This expectation changed so you owe UK tax back to Day 1 in the UK (you may have already had this withheld under PAYE in any case).

US TAX
You have a foreign tax home to my mind back to Day 1 in the UK.  I would claim the section 911 exclusion for both 2007 and 2008 under BFR given these circumstances.  The bad news is that you are still left with donating money for tax somewhere - in this case the UK government as against the US.

Right, I must admit I don't understand any of that, and may very well have to face paying someone else to do the taxes.

I didn't not expect to be here less than two years, though I don't know how to show I had no expectation to go back home, it just turns out I'm not good at being away from my family.

I do already have taxes taken out of my paycheck each month, 309.20 to be exact, plus NI and a teacher's pension or something.

So if I can attempt to summarise what you think based on my information is that I am still going to owe someone taxes beyond what I've already paid somewhere and based on the way I fill out forms depends on if it's the UK or the uS?

Okay, so I just did a tax form through olt.com and it's told me I have no taxable income and therefore I can't file online, I'm very confused

You have income from employment plus an employer contribution to a non-US qualified pension plan.  You report the lot on your US return.

The earnings - but not the pension - are excludable.

You can do the return by hand.

Many thanks