US tax filing on entirely UK income

Hello all,

I am looking for some advice. Last year was my first time doing taxes from the UK. I had income in both the US and the UK for 2017. It was really daunting for me and I paid for my taxes to be filed by an accountant in my former home state of New York. Looking back, I really think it could have been done for less of a fee than $200 as my situation at that time was fairly simple. In the end, my return was a good chunk of cash, but it was hassle.

I have now been living in the UK for a little more than 1.5 years. My income for 2018 is entirely from UK employers (3 to be exact). I understand I have an automatic extension until 15 June since I have resided here for more than 330 days (please, correct me if I'm wrong). I was just wondering... is there any way I can do this without hiring a service (online or in person)? I did find a Brooklyn-based service that charges $165 and that seems to be the cheapest so far. I'd like to avoid taking this road if I can -- though I am prepared to suck it up if it's the smartest way to go. I've detailed my financial situation below:

• Employer 1: January 2018 - March 2018 (salary £18,000 per annum)

• Employer 2: May 2018 - November 2018 (salary £21,350 per annum)

• Employer 3: December 2018 (salary £24,100 per annum)

• Current Account (individual):  £6,000

• Savings Account (joint with UK spouse): £5,300

• No assets, etc.

I plan to file as "married filing separately" which is what I did last year. Is there any way I can do this on my own after I receive my P60s? Or, in your experiences, is it worth it to just hire a service to avoid messing up?

My other question is whether I have to file FBAR? I have more money in the bank than I did last year, so I'm not sure if I'm meant to combine all my accounts to calculate my overall savings. Also, how does FBAR affect this process? Does it mean I will end up owing money to the US government?

Sorry for this. I'm a total noob and taxes make me so unnecessarily stressed! Thank you very much for the assistance.

From the information you have given, it should not be difficult to file the US return yourself. There are several choices as to how you do this.

First, a UK P60 will not be of help. The UK tax year is 6 Apr. to 5 Apr. of the following year. A P60 will only give you the total taxable income during that period. The first 4 months required for the US return will not be included on the P60, but you would have an additional 4 months from 2019 which are not in the US 2018 tax year. The US tax year is 1 Jan. to 31 Dec. of the same year (2018 in this case). For the US return, you'll need to review your records to determine the exact gross amounts you received for each month of 2018. You would need to do this regardless of whether you prepare the return yourself or use professional assistance.

As for choices, you may use commercial tax preparation software such as TurboTax or TaxAct. You may also qualify to use one of the IRS FreeFile  options.
https://www.irs.gov/filing/free-file-do-your-federal-taxes-for-free
You may have professional assistance, and any cost below $200 is cheap! The majority using a pro pay over $500 for professional assistance. Lastly, you could download the appropriate forms from the IRS site, and complete them yourself, and mail them to the IRS.

For help as to how to prepare your tax return if doing it yourself, the first port of call is IRS Publication 54. 54 gives information for filing from abroad.
https://www.irs.gov/pub/irs-pdf/p54.pdf
Additionally, the ACA have prepared a primer of what is involved and explains the different ways of reporting for a US tax return.
https://www.americansabroad.org/us-taxes-abroad-for-dummies-update/

You do have an automatic extension to file which is 15 June. If additional time is required, you may file for an extension to 15 October, but you must file for the extension before 15 June.

Since you have been in the UK for 1.5 years, you should qualify for, and at least meet, the requirements for physical presence on form 2555. The fact you have had 3 different employers will make no difference.

As for FBAR (FinCEN 114), yes, from the figures above you would have to file an FBAR since the aggregate is over $10,000 (and don't forget Part III of Schedule B). Although the joint account is in two names, you have the ability to determine dispersal of all the funds in that account. FinCEN 114 is an informational report only, and is sent to the Treasury. It has nothing to do with your tax return, or tax due.

For a USC with an NRA spouse, filing 'married separate' is generally preferable, but in a few cases, MFJ gives better results (for example, both are USCs). Given the above figures and the fact you indicate a preference for 2555 (FEIE), filing MFS would seem the route to go.

In addition to the amounts mentioned; you may have been auto-enrolled into one or more UK pension plan. If so, you also will have income from employer's contributions to any such plans.

Many thanks, @theOAP and @guya

Regarding the extension until June -- am I right that it is "automatic" and that I don't need to apply for an extension with a form?

I guess I'm getting paranoid because I can't figure out how the IRS would know that I've lived abroad for 330+ days without me notifying them.

Regarding the extension until June -- am I right that it is "automatic" and that I don't need to apply for an extension with a form?

I guess I'm getting paranoid because I can't figure out how the IRS would know that I've lived abroad for 330+ days without me notifying them.

If you are outside the US on tax day (15 [or 17?] April), you automatically have an extension for filing to June 15 {17?]. When you file your return, you should include a simple statement giving that information. It's explained on the IRS site, but that's the basics. No other form is needed.

The 330 days pertains to something entirely different, the FEIE qualifying period. Yes, the IRS has to take your word for it, BUT, they may challenge your statement if they believe it is incorrect (due to the link of SSN on a passport and its use, or other indicators). The GAO issued a report stating it felt the FEIE was being abused and the IRS should make increased effort to verify FEIE claims. If they do question a claim, the taxpayer simply needs to provide proof of the residence abroad. End of.