Tax Help: Worked in US AND UK within the year

I have searched and searched and searched, and cannot seem to find the answers I need.  So here's the situation:

I moved to the UK July 6, 2015.  From Jan 1-July 1 I have worked in the US.  I didn't land a job in the UK until October 5, and continued working that job through the year.  I want to know how I can avoid being double taxed.  I know there is a law that prevents double taxation, but EVERYTHING I have found basically says you have to be a bona fide resident in order to do this.  That requires me to have lived in the UK for 330 days of the year, but I only lived in the UK for 178 days.  I know I still have to report my UK earnings on my US taxes, but if I already have taxes coming out of those earnings, I don't want the US to tax them as well.  Is there still a way or a form I can fill out to avoid the double taxation? I've sifted through some of the IRS docs, and still everything I come across says I can't do any sort of exclusion unless I've been here for 330 days 

Also--when filing my taxes, do I add my UK earnings onto my US earnings as part of my 1040?  Or do I do my US earnings on 1040 and do my UK earnings on a different form?

Any assistance would be wonderful. Thanks!

The wages you report on 1040 line 7 should be the sum of your US and UK wages. You can avoid double tax on the UK wages by taking a tax credit for the UK tax you paid on them. You do this using Form 1116, which does not require you to have lived in the UK for any minimum number of days. TurboTax or TaxAct will complete Form 1116 "general" for you. The tax credit will be put on 1040 line 48.

The exclusion of UK income using Form 2555 does have a residence test, e.g. 330 days. However, even if you continue work in the UK all of 2016 it may still be better to use 1116 for your 2016 tax return, rather than 2555. The reason is that since UK tax rates are greater than US ones, you can build up a carry-forward record of UK taxes paid in excess of the US liability, which might be useful some day in the future.

The reason is that since UK tax rates are greater than US ones, you can build up a carry-forward record of UK taxes paid in excess of the US liability, which might be useful some day in the future.

The UK starts taxing income at 20%, but it has a personal tax free allowance of £10,600 (about $16k)....so you only pay UK income tax on amounts over that. If you are on a low income you might pay less tax in the UK than the US.

But if you try to file before you have met the 330 day residence test you would not be exempt from the healthcare penalty, so you probably should extend the filing.

But if you try to file before you have met the 330 day residence test you would not be exempt from the healthcare penalty, so you probably should extend the filing.

Thanks for all the help everyone.  Quick question regarding this...I was covered for the first half of the year, and when I moved here and got my National Insurance Number, at that point I was covered by health insurance. If I am able to prove that I was covered by some sort of health insurance, would I be okay in terms of the healthcare penalty?

......and when I moved here and got my National Insurance Number, at that point I was covered by health insurance.

NHS coverage is not qualified health insurance for the purposes of ACA. The exemption when not having qualified ACA coverage for those abroad is allowed with the filing of Form 8965.

https://www.irs.gov/pub/irs-pdf/f8965.pdf

In the instructions, you will find "Types of Coverage Exemptions", and 'C' is for "Citizens living abroad". This details the physical presence test and the bona fide resident test.

https://www.irs.gov/instructions/i8965/ch01.html

Arriving on 06 July means you are very close to the standard extension for filing abroad of 15 June 2016 (for filing 2015 tax return). You may have the required 330 days at that point, but it's cutting it close. Alternatively, you may file Form 2350 for an extension of time beyond 15 June 2016.

https://www.irs.gov/pub/irs-pdf/f2350.pdf

"Use Form 2350 to ask for an extension of time to file your tax return only if you expect to file Form 2555 or 2555-EZ and you need the time to meet either the bona fide residence test or the physical presence test to qualify for the foreign earned income exclusion and/or the foreign housing exclusion or deduction."


Note, if you have any tax due for 2015, you must pay it before 15 April to avoid interest charges.

Thanks for all the help everyone.  Quick question regarding this...I was covered for the first half of the year, and when I moved here and got my National Insurance Number, at that point I was covered by health insurance. If I am able to prove that I was covered by some sort of health insurance, would I be okay in terms of the healthcare penalty?

I may be wrong; but I do not think that having a UK National Insurance Number has much to do with entitlement to NHS services.

You're right, guya.

This is the definition of a National Insurance Number: The National Insurance number is a number used in the United Kingdom in the administration of the National Insurance or social security system. It is also used for some purposes in the UK tax system. The number is described by the United Kingdom government as a "personal account number". (Bolded by me)

Essentially your NINo is your UK Social Security number and has nothing to do with whether or nor you are eligible for NHS services.

Arriving on 06 July means you are very close to the standard extension for filing abroad of 15 June 2016 (for filing 2015 tax return). You may have the required 330 days at that point, but it's cutting it close. Alternatively, you may file Form 2350 for an extension of time beyond 15 June 2016.

newcomer link: https://www.irs.gov/pub/irs-pdf/f2350.pdf [nonactive]

"Use Form 2350 to ask for an extension of time to file your tax return only if you expect to file Form 2555 or 2555-EZ and you need the time to meet either the bona fide residence test or the physical presence test to qualify for the foreign earned income exclusion and/or the foreign housing exclusion or deduction."


Note, if you have any tax due for 2015, you must pay it before 15 April to avoid interest charges.

Doesn't the 330 days have to be within the tax year?  Or is the extension because of the UK tax year going until April, and then I can use the UK tax year?  I have a feeling, since I wasn't covered by appropriate insurance for half the year (and even with an extension, it's a close call as to whether or not I'd be a bona fide resident), that I will end up paying the fee, and in that case, in case that fee doesn't balance with any potential refund, I don't want to deal with any interest charges.

I did a quick search about health insurance in the UK and how exactly I am covered--I'm on a spouse visa, and in applying for the spouse visa, I have already paid a fee that allows me to utilize healthcare while I'm here.  Would that count as being covered by healthcare? Or does that still not count with the ACA?

Doesn't the 330 days have to be within the tax year?

No. From the IRS, first is bona fide residence:
"You meet the bona fide residence test if you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year."
This would require a presence in the UK for all of 2015.
https://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Bona-Fide-Residence-Test

Next is the Physical Presence Test:
"You meet the physical presence test if you are physically present in a foreign country or countries 330 full days during a period of 12 consecutive months."
Note this says only 330 days within a 12 month period. It does NOT say the 330 days must all fall in a tax year (2015), so it may overlap part of 2015 and part of 2016.

Working back from 06 July 2016, your 330 days will be achieved around the 1st of June 2016. If you filed your 2015 return on 06 June 2016, you're good (provided you've been in the UK continuously since 06 July 2015).
https://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Physical-Presence-Test

Or is the extension because of the UK tax year going until April, and then I can use the UK tax year?

The good news you may not be aware of; as a US citizen living abroad, you automatically have until 15 June 2016 to file your 2015 US tax return. You don't have to do anything other than attach a statement to your return saying you were outside the US on April 15. It is automatic. Or, if you chose, you may file the 2350 if you need time beyond 15 June to complete your tax return, allowing you to have 12 consecutive months in case that may worry you, but you would already have the needed 330 days.

Would that count as being covered by healthcare? Or does that still not count with the ACA?

No. NHS coverage is not recognised as ACA acceptable health care.