First time filing taxes

Hey everyone! I've been trying to read up on filing taxes and it's making me go cross eyed!  I moved to the UK in August 2018 on a spouse visa. I work for a UK LLC. To date I've made less than £6000 which hasn't been taxed as I am under the earnings threshold.

So...how in the world do I file my taxes?!! Do I need to do a self assessment? What forms do I use to file in the USA? I've always filed as single with no assets, took the standard deductions etc so I'm finding it all very confusing

I also need to renew my income based student loan repayment plan so I need the info from filing taxes for that.

Thanks in advance:)

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Assuming you are a US person and had no other income you are not required to file a US income tax return for 2018 because your income was below the filing threshold. You may still need to file an FBAR.

If this is your only income in 2018-19 you are also not required to register for self-assessment in the UK.

Thanks so much Gaya! Yes I'm a US citizen, this is my first time filing since I got married last year, does that make any difference to tax returns? I know I will have to make changes to my income based repayment reapplication...

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Re: the student loans. You would declare your income, etc., on a 1040 form and the IRS will then have a record of this. When you file your student loan repayment recertification, you have the option to have them get access to your IRS record online. If you don't have an IRS tax return on file, you'll have to provide alternative proof of income. You'll need to check with your loan servicer to see what they want from you if that is the case. 

Depending on your repayment plan, some plans will consider your spouse's income as accessable to you and your payments may increase. You'll want to read up as to what plan you are on and what other plans might be available to you. Some of the plans will not count your spouse's income if you file "married filing separately". Some will. https://studentaid.ed.gov/sa/repay-loans/understand/plans

Your IRS taxes will cover Jan 1 - Dec 31 of 2018. That will include any income you made in the UK during that period as you are taxed on your world-wide income as a US citizen. The tax reporting process has changed this year, but I believe there is still a Foreign Earned Income exclusion https://www.irs.gov/forms-pubs/about-publication-54   (Someone chime in here?).  Anything you earned in the UK after Jan 1 2019 until 31 Dec 2019 will be reported on next year's IRS tax return.

Your UK taxes will be from April 2018-April 2019. If you make enough to be required to file, you'd file a self-assessment form/use the online HMRC self-assessment service.   https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return     For your first year here I believe you would claim "split-year" treatment, and your income from before the date you arrived in the UK would be disregarded from UK taxes.

If you earn enough to owe UK taxes for April-April '19, you could take them off your  IRS taxes for 2019 (since I assume you haven't paid anything to the HMRC prior to Dec 21 2018) if you claim the Foreign Tax Credit (which I assume still exists) as long as you actually pay the taxes before 31 December 2019. (At least, that's how I understand it. Again, someone else chime in?)

I moved to the UK in August 2018 on a spouse visa.
To date I've made less than £6000 which hasn't been taxed as I am under the earnings threshold.
.....I got married last year,
Do I need to do a self assessment? What forms do I use to file in the USA?

Start with the UK and HMRC.

The UK tax year is from 6 April to 5 April of the following year. You have UK earned income in 2018 and will earn more in 2019. Your first tax year will be 2018/19.

First, you have 2 options as to how you file your UK tax - the Arising basis and the Remittance basis. Since you have indicated no other income from outside the UK after arriving in the UK, you will most likely select the Arising basis. If you continue to have no income from outside the UK, you will be solely under PAYE (Pay As You Earn) and not self assessment. The threshold for tax liability for 2018/19 is £11,850. The £11,850 is your Personal Allowance. If you surpass the Personal Allowance, HMRC will automatically withhold (through your employer) tax which will be due for 2018/19. As a result, you would not have to file any tax return for the UK for 2018/19. A majority of UK employees do not file a tax return.

For the US and the IRS.

Your first tax year residing abroad will be 2018. Since you were married on 31 December, you will file as married.

Several decisions must be established first. The first decision is do you file MFJ (married filing jointly) or MFS (married filing separate). For MFJ, do you want your spouse to become subject to all IRS reporting requirements and informational obligations? That would mean declaring all their income, both earned and unearned, for 2018, worldwide, plus an informational obligation for any investments. They would also have to secure a TIN (Tax Identification Number) with the IRS which may require special use of a qualified individual. For these reasons, most file MFS which avoids your spouse becoming subject to the IRS and would include only your income and investments for 2018.

At this point the standard basic kit for filing, in your case using MFS, would be:
1040
Schedule B
Schedule 6
Since you were resident in the US for part of 2018, you may also have form 8965.

The second decision:
Will you take the FTC option (Foreign Tax Credits form 1116) or FEIE (Foreign Earned Income Exclusion form 2555)?
Since you will likely have no UK tax paid in the 2018 US tax year, or possibly for the UK tax year 2018/19 if you remain under the Personal Allowance, FTC may not be a consideration for 2018. So, on to FEIE. To file 2555, you will need, at minimum, a requirement to be tax resident in the UK for 330 days. If you do not wish to pay tax on your 2018 UK earnings to the IRS by April17(?), 2019, you will need to file for an extension to use 2555, in your case to 15 October 2019, for your 2018 US reporting. Once you have 330 days in the UK, you may file.

If you select the FEIE method, you will have 2 additional forms required:
Form 2555 or 2555EZ
Schedule 1

In all cases, it is likely you will continue to use the standard deduction.

And, if required, don't forget to file an FBAR by 15 October 2019.

Additional decisions:
Will you use tax software, IRS FreeFile, IRS fillable forms downloaded, or a tax preparer to complete the forms for you. If on your own, will you file electronically or by mail or courier.



 

Start with the UK and HMRC.

The UK tax year is from 6 April to 5 April of the following year. You have UK earned income in 2018 and will earn more in 2019. Your first tax year will be 2018/19.

First, you have 2 options as to how you file your UK tax - the Arising basis and the Remittance basis. Since you have indicated no other income from outside the UK after arriving in the UK, you will most likely select the Arising basis. If you continue to have no income from outside the UK, you will be solely under PAYE (Pay As You Earn) and not self assessment. The threshold for tax liability for 2018/19 is £11,850. The £11,850 is your Personal Allowance. If you surpass the Personal Allowance, HMRC will automatically withhold (through your employer) tax which will be due for 2018/19. As a result, you would not have to file any tax return for the UK for 2018/19. A majority of UK employees do not file a tax return.

I was instructed, on my first filing, by HMRC that I had to report all income from April onwards, even though I was not in the UK for part of the tax year.  I was instructed to select split-year treatment so that my income prior to arriving in the UK was not taxed by HMRC. But I did have to report that earlier income as I'd been here long enough to fall under the rule about HMRC considering me a resident for tax purposes.  Had I had earned income in the UK after arrival, that would have taxed (as appropriate) by PAYE.   https://www.gov.uk/tax-foreign-income/residence

So I'm thinking that the OP, if she had income from April to August 2018 outside of the UK, still has to report it although it's not taxable, and the way to do that is a self-assessment form/online? Or did HMRC steer me wrong?

I was instructed, on my first filing, by HMRC that I had to report all income from April onwards, even though I was not in the UK for part of the tax year.  I was instructed to select split-year treatment so that my income prior to arriving in the UK was not taxed by HMRC. But I did have to report that earlier income as I'd been here long enough to fall under the rule about HMRC considering me a resident for tax purposes.  Had I had earned income in the UK after arrival, that would have taxed (as appropriate) by PAYE.   https://www.gov.uk/tax-foreign-income/residence

So I'm thinking that the OP, if she had income from April to August 2018 outside of the UK, still has to report it although it's not taxable, and the way to do that is a self-assessment form/online? Or did HMRC steer me wrong?

This info is so helpful, thanks guys XX

Just to say, I haven't had any income for the past 2 years at all, until August 2018 when I came to the UK.

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Well that makes it hella simple then!

Welcome home!

Well that makes it hella simple then!

Welcome home!

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I was instructed, on my first filing, by HMRC that I had to report all income from April onwards, even though I was not in the UK for part of the tax year.  I was instructed to select split-year treatment so that my income prior to arriving in the UK was not taxed by HMRC. But I did have to report that earlier income as I'd been here long enough to fall under the rule about HMRC considering me a resident for tax purposes.  Had I had earned income in the UK after arrival, that would have taxed (as appropriate) by PAYE.   https://www.gov.uk/tax-foreign-income/residence

So I'm thinking that the OP, if she had income from April to August 2018 outside of the UK, still has to report it although it's not taxable, and the way to do that is a self-assessment form/online? Or did HMRC steer me wrong?

If I remember correctly, you had sources of foreign income after arriving in the UK. That would have required the self assessment form. Also, IIRC, there was a payment made to you after arriving in the UK which related to income from foreign sources prior to your arrival in the UK which caused some discussion. That may have also required additional information (in the white space?) about that prior income.

Or, maybe HMRC just enjoy communicating with you.   

FWIW when my son moved back to the UK in October 2017 he had already moved all his after tax savings to the UK so from that day onwards he has had zero income from the USA. My advice to him was that he did not need to file a self assessment with HMRC since he has no foreign income to report. I am not a tax pro but that seemed an acceptable way to proceed as it would cost him effort and HMRC money to process a SA return to pay zero extra taxes. He got a job in the UK and started with PAYE but after a couple of months all that was refunded as he ended up earning below the HMRC tax free threshold for the year ending April 5th 2018.

He has kept his Roth IRA in the USA but again, no income to report.

Just to clarify, it's not just US income that should be reported on a UK self assessment return. Even if on PAYE, if there is any other UK income or gains, then filing with HMRC may be required.


https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

Just to clarify, it's not just US income that should be reported on a UK self assessment return. Even if on PAYE, if there is any other UK income or gains, then filing with HMRC may be required.


https://www.gov.uk/self-assessment-tax-returns/who-must-send-a-tax-return

Absolutely, I didn’t mean to imply otherwise, thanks for the clarification.

If I remember correctly, you had sources of foreign income after arriving in the UK. That would have required the self assessment form. Also, IIRC, there was a payment made to you after arriving in the UK which related to income from foreign sources prior to your arrival in the UK which caused some discussion. That may have also required additional information (in the white space?) about that prior income.

Or, maybe HMRC just enjoy communicating with you.   

Yeah, I bet they do! 

But what I was told was that regardless of where I was in the world, I had to explain ALL my income from April to April. The pre-arrival portion (what I earned while working in the USA) would be disregarded, but had to be listed. This was a separate entry from the income that I got from additional work before arrival that didn't hit my bank until I was already over here.

Lotta hassle, it wasn't taxed anyway. But it was listed.