FINALLY got a Job - Not filed US taxes in 11 years!! Now What!!

Hi everyone,

I do not post here often but decided to come to you knowledgeable folks for help. I am a US Citizen married to a UK Citizen with ILR visa. I have lived here in the UK since Mar 2002. During this time I have not worked, apart from volunteer work since last December. Therefore I have not filed any taxes since 2003. Now I am about to start a new job.

A bit more information here that may or may not be helpful. I am a Getty Images contributor have been since 2011 they license my photos where I get some royalties. this has not amounted to much. 2013 total payout in US dollars was $251.65. Although some of this was earned in 2012 but not paid until 2013. Since this did not meet the threshold to file taxes I did not bother. I did get in the post a 8099? can't recall the tax statement I received at the moment but do have it filed away. 

So now I have this new job and need to know what I need to do to ensure I am towing the line with the US taxes. What forms do I need? When do I file? and most importantly what about those W2's, since there is no such thing in the UK at the tax year ends are different.

If anyone can help or point me to a website that will explain without making my head spin from tax mumbo jumbo I would greatly appreciate any help provided.

Thanks!!
Sharon

A correction .. I got a 1099-Misc, Miscellaneous Income. Total Royalties $269.49.

Hello

You are correct that you did not need to file a US tax return in the past. Even as a self employed individual, the threshold for having to file is $400. As your royalties did not pass that threshold, it did not trigger a US liability.

However, now that you are working, you will have to report your worldwide income to the US. Often, in place of typical W-2's, you will use your P60 and report that income on your US 1040.

If you would like some more advice, feel free to check out our website (www.greenbacktaxservices.com) for a ton of free resources and guides to filing taxes while abroad.

I think this video will also be very helpful: http://www.greenbacktaxservices.com/blog/us-expat-taxes-living-in-the-uk/

Good luck!

Often, in place of typical W-2's, you will use your P60 and report that income on your US 1040.

The UK tax year is different to the US tax year.  So you don't use your P60, but just the sum of your pay for the calendar year.  You need to keep documentation of your pay, as you technically don't need to "prove" it each year.

You didn't need to file when you didn't earn but be sure to keep records of when you did earn.  Some people get audited if they return to the US and haven't been filing.

KFDancer is correct - for your US tax return you will calculate your income based on the calender year, not the UK tax year.

Just keep records and save paperwork - it's not all that onerous if you record as you go, and don't wait until it's time to file and then have to sort through a pile of paper.

Thanks for the replies. So if I calculate the sum of my pay I take it that will be after deductions? Also do I need to convert to dollars or wait until I file to convert? I plan on keeping a spreadsheet as I go along just to simplify matters and keep things straight. Might have more questions when it is time to file.

Sharon

So if I calculate the sum of my pay I take it that will be after deductions? Also do I need to convert to dollars or wait until I file to convert? I plan on keeping a spreadsheet as I go along just to simplify matters and keep things straight. Might have more questions when it is time to file.

Sharon

No - just as in the USA, your income is your GROSS pay, not your net pay. You do need to convert to US$. You have some choices w/r/t how you do this - see http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Currency-and-Currency-Exchange-Rates.

I use the Treasury Department end of year rate, as it's simpler. I've played around with different rates on a spreadsheet, and found for me it makes no difference what I use.

Aside from keeping records of income and any pension contributions, you'll also want to keep records of bank balances so you can file your annual FBAR.

Aside from keeping records of income and any pension contributions, you'll also want to keep records of bank balances so you can file your annual FBAR.

From what I understand that unless you have bank account(s) that exceed $10000 at any point in the year you do NOT need to file an FBAR. Am I correct on this? My new job is only part time and I am not going to be earning that kind of money.

You are correct; a FBAR is only required if the AGGREGATE value of all accounts in which you have a 'financial interest' or 'signature authority' exceeds $10K. Just be aware that it only has to exceed $10K for a nanosecond for the requirement to kick in.

The FBAR threshold is computed using the sum of the maximum values for each account. Unfortunately, this means that if you move $5000 from one account to another account during the year, you've crossed the $10,000 threshold. Sad but true.

Weller's comment is also a perfect example of an instance of exceeding the $10K threshold by a nanosecond. Because each account would indicate a value of $5K on the same day, the aggregate value of both accounts will be $10K - even though it's the same $5K theoretically in two places at the same time.