Aaahgh!!!!!!!!!!!!!!!!!

 
Ten hours doing my taxes using tax software and I do not even earn a property or have dependents. This should be simple, but all the tax questions are a load of mumble jumble.

Its great the software guides you and asks you questions, but they dont make any sense to the average person.

Anyway, my 1040 and 2555 seems to have come out ok. But 1116 I think, has come out wrong. That is I think the some figures are not right.

ie:
* There is no entry on line 12, on 1116 (reduction in foreign taxes)
* The gross income may be wrong on the 1116 as it didnt include the expenses I received from my employer.
* 3d -has a ridiculously large amount - heaven knows where that came from!

* and finally, on part 11 of 1116 it did not list the taxes paid in the foreign currency - so thats wrong as the left column is in us dollar! Am allowed to correct this figure by crossing it out, or whiting it out?

Seeing that my form 1116 is completely messed up now. Can I just file the 1040 and 2555? What happens if I do not file the 1116.

Sorry for the tax breakdown that I am having!!

by the way - all the income i recieved in the UK is through employment (taxed under the paye system)

So do I still need to file Form 1116 if I have completed 2555 and 1040?


Thanks!!

I never have.  I think it all depends on your circumstances. 

Try doing you taxes just using the FTC
This might help

http://www.aca.ch/ftc.htm

Use form 2555(EZ) to exclude up to the foreign earned income exclusion amount, (about $92,000). Any earning above that will then go onto 1116. If you earn up to the exclusion amount, there is no need to file a 1116 in addition to the 2555, this might have been your initial problem.

If you have any unearned, passive income from bank accounts etc, you can utilize the 1116 to take a credit for the tax paid to HMRC. Don't forget the FBAR if you have foreign bank accounts/pension plans etc in excess to $10,000, or 8938 if over $200,000,(depending on circumstances).

Barcrest! (and all) Thank you!

I used Taxact and it directed me to the 1116 form to complete.

I only earned about $30000 last year all through UK wages, so it looks like only 2555 and 1040 is required?

So to confirm:

I can just throw away the form 1116 that was generated on Tax act, and just send in the 2555 and 1040 to the IRS?

If that is the case, where would i report the foreign taxes paid - or do I even have to report foreign taxes paid on the 1040 & 2555?

You all may be saving me from a tax meltdown - thank you 

Honestly, in your case you probably would have saved a lot of time doing the form by hand. Tax Act doesn't let you do 2555EZ, which is a much simpler form, and I ran into a variety of complications when I tried to use e-file software of several types. In the end I did the forms by hand and it took me 10 minutes tops.

Frankly I would start again. If TaxAct wants to file the 1116, then it, the software believes that you need this form. Now, assuming you where a U.K  resident for 2011, meet the tax home test etc, you don't need the 1116 for EARNED income, as the 2555 will take care of the entire 30k easily. TaxAct is a great system, This is how to get to the form:

Click on the Federal Q&A tab
Click Other Income to expand the category and then click Foreign earned income exclusions
Click Add to create a new copy of the form or click Review to review a form already created 
The program will proceed with the interview questions for you to enter or review the appropriate information.
The exclusion amount will appear as a negative number on Form 1040, Line 21.

Thanks barcrest - I wonder why Taxact wants me to file a 1116 when all my income was from uk wages and expenses reimbursements through the same employer.

Not too keen on Taxact as I went back to answer all the questions relating to 1116 and it still doesnt give me an option to report the taxes paid in the FOREIGN currency. As a result on 1116 it lists taxes taken out in US dollars under the foreign currency column.

Based on the above - Can I just submit my 2555 and 1040 only? Bearing in mind that neither form will list amounts for foreign taxes paid?

Thanks!!!

Everything has to be reported in dollars, you can't put in foreign currency. This is one of the most obnoxious things about the system, because currency fluctuations can make it seem like you have more money than you do in real life when the dollar is weak.
If you are excluding your income you don't need to say anything about foreign tax paid, you just report your gross, pre-tax income on 2555 and 1040.

Hiya DrSuper

Then thats one major flaw with taxact (and maybe others) as that is then making your tax return incorrect. This is because on form 1116 you have to list the foreign taxes taken out in the local currency as well as US dollar currency.

I soo wish I would had done what you suggested, that is, do just a 2555ez and 1040. I looked up the form, and almost cried ( ) when I read it as its sooo easy - easier than using the (*($' ing software.!!!

Looks like I will just be sending in my 1040 and 2555 then - just listing my gross income, and expense reimbrusements (without listing foreign taxes paid) thanks soo much!

It's not too late- just because you've started on Tax Act doesn't mean you have to submit it. Go to the IRS website, download the forms, fill out the PDF, print, sign, post to the address for foreign residents.

Most software only list the 2555 and not the "EZ" form. The "EZ" is just a simpler form to the 2555, (no accommodation information). The software will ask questions and will not not complete the Fields deemed unnecessary. The physical 2555 looks somewhat complex, where the 2555EZ does not.

BTW the 1116 must be converted to USD, using the average exchange. (I use Oanda.com) The local currency section can be ignored. Anyway, you DON'T need the 1116, just 1040 and 2555.

For any paper form, use a filable .PDF, you can save to your computer and it looks neat too.

Good luck!

I tried using the free fileable forms and it didn't let me for some reason I can't remember now. I think it might have been the foreign address, it just wouldn't let me put it in.

It's weird, it won't allow freefile with a U.K address. I just go directly to the IRS web site