How do you handle dis-synchronization of tax years ends?

An accountant once taught me to complete my UK self-assessment by reporting in my return for the year to April 5th, 2014 all US source income that arose in the calendar year to December 31 2013.

What about the reverse, completing a 1040? How can I know which UK source income and tax to report on my 1040  for the calendar year 2013? Do I have to take my salaries month by month and try to figure out for a Form 1116 what tax they each one attracted? Even if my salary is constant, the tax in January 2013 will differ from December 2013 because of allowances changes in April. The tax that is shown deducted from my pay is not really the tax I pay ultimately, since HMRC are quite happy for me to pay either too much or too little, and then make balancing adjustments. It is next to impossible to account for whether a tax is "paid" or "accrued" since HMRC tax three ways: by PAYE, by balancing charges in January for a past year, and by payments on account for future liabilities they estimate you will have next year.

I think one could go mad trying to account for the time-stamping of each bit of money and its associated tax. Is there a rough and ready simple way to do it, as in the first paragraph above?  For example, in a similar way, it would simplify things greatly if I could restrict my 2013 1040 to reporting UK income and taxes paid on it in the UK tax year to April 5, 2013. I look forward to some pointers from the community on this.

Form 1116 asks whether you are using the Paid or Accrued basis for calculating your foreign tax during the US tax year. I personally use the Paid basis as this is much simpler. I just put the tax down to the day I pay it, and the income down to the day I receive it. This may mean that the income sits in a different tax year to the tax paid on the income - but with the ability to carry excess FTC forward/backward it should balance out.

politicfool's method is in line with the vast majority of Americans in the UK and is the recommended approach as this is in line with US law.

Is it so simple as that?

Since I must complete 3 different Forms 1116 for baskets of 3 different types of income, what I am I to do with a payment of tax to HMRC occurring this July? This will be for estimated tax for the year to April 15, 2015, and that tax is for income items as yet unknown which might be in general, passive or re-sourced by treaty baskets! Because of the way one is made to use Forms 1116 to segregate income streams, and one is not allowed to carry-back and forward across them, it is important to make sure that tax is allocated into the right basket.

To complete a UK self-assessment return is child's play by comparison.

Payments in July 2014 get entered on the 2014 US return that is not due until 15 June 2015.

IRS Publications describe resourcing rules in great detail.

You can't carry foreign tax between the baskets, but you CAN file an amended return if this is what it takes to get the tax allocated to the correct basket.

You may also wish to explore using the accrual method of calculating foreign taxes, since then you could calculate the UK tax due on income you received during 2014 and not worry about when the tax payments were made.

Thank you all for the above replies. The accrual method may be simpler, as I know that interest, CG, etc received in a US account in 2013 will be taxed once it is reported in my 2013-14 HMRC self-assessment, and can I predict the tax rate that will apply.

Is it allowable to use both "accrual" and "paid" methods in the same tax US tax return, using them differently on different 1116s? For example, could I use "accrued" for US source income in 2013 that I know will eventually be taxed in the UK once I declare it on my 2013-14 self-assessment, but use "paid" for UK income that has already been received and taxed in the UK during 2013?

Problematically, some income is taxed in more than one year. If I am paid £100 bank interest, I receive £80 (20% tax withheld at source). Up to a year later, I pay an additional 20% on this after it is recorded in my subsequent year self-assessment. But if I have had the account for some time, maybe I have already paid that 20% in the previous year, since it was figured into my "payment on account". So the £100 payment has £20 tax paid at the date of payment, and £20 tax either accrued for future payment, or maybe previously paid.

For what it's worth - after all is said and done, I have found this tax year problem to be the most difficult one in doing my US/UK taxes, ie, figuring the foreign tax paid for different baskets. I have UK estimated tax on my US social security and private pension, a UK state pension, witholding on seasonal income, interest, etc. I never owe any US tax. Last summer, I called the IRS in London with all the details to sort out once and for all how to properly figure the foreign tax. Three times I was asked if I owed any US tax. Three times I said 'never'. Three times I was told 'then don't worry about it'.