Overwhelmed...help!!

Hi there,

I am a complete amateur at the entire tax thing.  I recently graduated with my BA in America, and up until now, my parents were just having my taxes filed for me along with their personal taxes each year.  As a result-- I know nothing about the process, and now have to file them in the UK!  Talk about overwhelmed...

Anyway, here's my situation.  I'm hoping someone can give me step-by-step instructions so I don't do anything stupid.  I really just have no idea what I do and when, and am afraid of messing things up.

I am a US citizen living in the UK on spousal visa.  I'm married to a UK citizen.  Currently in the UK, I'm working freelance in PR, and being paid monthly via cheque but am not being taxed via PAYE or anything like that.  I'm not making very much money (less than £400 per month).  To complicate matters, I am also currently a full-time postgraduate student in the UK.

Can someone please just give me the basic instructions of what I am meant to do when it comes to filing taxes? The advice I've gotten from a majority of UK citizens is, "don't even bother filing" since I'm a full-time student and not making much money anyway, but something tells me that is not good advice to follow.  I'm still not sure if I plan to live in the UK permanently, but definitely don't want any issues when my ILR is in question in the future!

So my main questions are-- do I file taxes in the US AND the UK?  If so, can I do this online for both?  Most importantly-- WHEN do I need to do this?

Thanks for any help and apologies if you're having to answer questions that have been asked a million times-- I just don't even know what to search for at this point to find the questions asked previously!

For the US, you have to file a 1040 (and you may want to check with your last US State of Residence just in case you have to file there) IF you made over a certain threshold. The US Embassy in London has a IRS page and it explains when you need to file and when you don't. However, just doing some basic math if you make £400/mo for the past year then you've made about £4800 which using a basic exchange of $1.65 = £1 you've hit approx $7600 and will need to file at a minimum a 2011 1040 if you are 'married filing separately'.

For more information on how to file, you can check the IRS Page on the US Embassy in London website.

For the US, you have to file a 1040 (and you may want to check with your last US State of Residence just in case you have to file there) IF you made over a certain threshold. The US Embassy in London has a IRS page and it explains when you need to file and when you don't. However, just doing some basic math if you make £400/mo for the past year then you've made about £4800 which using a basic exchange of $1.65 = £1 you've hit approx $7600 and will need to file at a minimum a 2011 1040 if you are 'married filing separately'.

For more information on how to file, you can check the IRS Page on the US Embassy in London website.

First don't stress too much, your situation doesn't sound took complicated and it's good that you are thinking about it.

For the US you'll have to file a 1040 as a US citizen is taxed on their worldwide income. However, you'll be able to use the Foreign Earned Income Exclusion to exclude your UK wages from US taxation. If you have UK based accounts you have to include those on your US return too and if they go above $10k you have to tell the US Treasury about them by filing an FBAR form.

As far as the UK goes it looks like your income is below the personal allowance so there's no tax due. Do you get a pay check that shows the amount of tax and NI paid? Both amounts should be zero given your pay level.

Thanks for the advice!

As far as the UK goes it looks like your income is below the personal allowance so there's no tax due. Do you get a pay check that shows the amount of tax and NI paid? Both amounts should be zero given your pay level.

Yes, I'm fairly sure I won't have tax due since I've only been working since July and not making very much at all.  I am paid as a freelancer/outside vendor, so I don't receive a payroll cheque from my employer-- just a monthly cheque from a payment form I send in...

You are hopefully therefore registered with HMRC as self-employed and are either paying Class 2 NIC or have obtained a certificate of small earnings exception.