Simple 1040 filing example?

Hi Everyone,

I am trying to catch up on filing for 2020 and 2021.

We are both US citizens, married, filing jointly.

Sorry if it's been covered (I did look) but can anyone point me towards a simple, idiot-proof example of how to complete the 1040?

I know that may not be as simple a question as it looks, but we will not be over the threshold to pay tax, and I'd just like to get it done and send it to the nice people in Austin.

I sent one in October but got mixed up with which year's 1040 to use, so am re-doing 2020 and 2021. At that time I must have done some research and decided I should put our total UK income, based on the exchange rate for that day, on Line 1, that same income with a negative sign on line 8 (e.g. "-123,000"), and "0" on line 9. The "0" for taxable income and repeated through page 2. Is that acceptable? If so I'll do it again.

Hope this all makes sense and thanks in advance for the help.

Craig

Line 1 is for income from salaries so your UK salary  goes on line 1, and it is negated on line 8 as you say, but that negative value is carried over from form 2555, Foreign Earned Income Exclusion, which is where your UK salary is reported.

Ok cheers DL - so I'm filling out the 1040 ok but I need to back that up with form 2555 - do I have that right?

Ok cheers DL - so I'm filling out the 1040 ok but I need to back that up with form 2555 - do I have that right?

Correct.

If you have any interest to report that should be on line 2 plus a Schedule B showing which bank paid the interest.

Interest? I wish! : )

Great - thanks for the help.

Interest? I wish! : )

Great - thanks for the help.

Our son files his taxes using my copy of TurboTax and uses form 2555 to exclude his wages but TT refuses to efile a return with zero income so to get his Covid stimulus payments he invents interest payments of $5. Taxes are still zero but he got his payments okay.

Thanks for the help anyway - taxes are an enigma for me.

Off topic but I have a good friend up near you who states that the Colpitts is the finest pub in Durham - she wants to know if you agree with her assertion?

Off topic but I have a good friend up near you who states that the Colpitts is the finest pub in Durham - she wants to know if you agree with her assertion?

I don’t recall ever going there. Although I am from County Durham I haven’t lived there since 1973.  Whenever we visit Durham City, 40 miles from where we live now, we always stick to pubs and restaurants in and around the city centre. (The Colpitts seems to be away from the centre)

That's fair enough - she has some strange tastes anyway!...

Thank you for much for  this post!  And thank you Craig for asking the questions.  I have not used UK-Yankee in years, but the letter I received from the IRS the other day has me completely perplexed! 

And, I believe it is because I have NEVER used Line 1 in the 18 years that I've lived in the UK since I don't have a W-2!  It took me a while to interpret what their letter meant, but it is quite simply that I can't 'zero out' the information from my 2555 without a something to subtract it from (gosh, I hope that makes sense).

In any event, this thread does make it sound like I need to use line 1, which is a relief.  No way could I owe a couple thousand dollars on a UK income of less than $30,000!

Now, to try to contact them.  I'm guessing I'll probably need to file an amended 2021 1040 and this will all go away...

Up to and including 2021, TaxAct reported my UK earned income on Line 1.  However for 2022, Line 1 appears to have been expanded, and TaxAct is reporting my UK income on Line 1h (Other earned income), with the same value appearing in Line 1z (the total of 1a to 1h).

Does that seem right, or should my UK earned income be in 1a?

Up to and including 2021, TaxAct reported my UK earned income on Line 1.  However for 2022, Line 1 appears to have been expanded, and TaxAct is reporting my UK income on Line 1h (Other earned income), with the same value appearing in Line 1z (the total of 1a to 1h).

Does that seem right, or should my UK earned income be in 1a?
That's really interesting to hear. We use professional tax software, CCH Axcess, which is reporting foreign employment income on Line 1a (not 1h).

HI Alan,

My own opinion is that if you have been using this software (?) for years, and that's how it's doing it, that's probably correct.  Try finding something in the instructions stating anything about this - I haven't found anything.  Perhaps someone who knows more about the situation will chime in.

However, yesterday after work, I did as instructed by the IRS letter I received and called the number in the letter.  Surprisingly (and happily) I got through to a real live human in just a few minutes.  The entire phone call took less than 30 minutes.

The upshot is that the woman I talked to confirmed that for 2021, I should have put my UK income on line 1, despite having no W-2.  Unfortunately, I forgot to ask about 2022, since I have had the form sitting here on my desk for several weeks!

So, an amended tax return for me to do.  She gave me lots of instructions on doing so, but I guess I'll also read the instructions that come with the form to make sure I've done it all correctly.  I'm also considering sending a letter along with it, explaining the situation. 

The big question for me now...just in case anyone has an opinion they can give me...

Should I take the bull by the horns, so to speak, and file amended returns for other years (since I've never filled in line 1 on any of my previous returnes), or should I let sleeping dogs lie, so to speak?  If the opinion is to file amended returns, how many years back do I need to go?  From what I've read, it seems like 4 years, but I'm very unsure as to whether I should do this.

Thanks.

That's really interesting to hear. We use professional tax software, CCH Axcess, which is reporting foreign employment income on Line 1a (not 1h).

Yes, interesting.

As an addendum, as I don't receive W-2s, TaxAct directs me to something called the worksheet FEC (Foreign Employer Compensation & Pensions).  Indeed, the TaxAct link below (apparently from 2018) says that FEC should be completed if you don't receive W-2s.  It says the income will appear on Line 1 of 1040, but bear in mind the URL has 2018 in it so it's likely a little dated; were it written today in respect to 2022, it would presumably say Line 1h (?).
https://www.taxact.com/support/840/2018/fec-worksheet-entering-foreign-earned-income-in-the-program


Given the above, I might reach-out to TaxAct and just ask them to confirm that my foreign earned income is supposed to appear in 1h instead of 1a.

Here's info from another source:
https://kb.drakesoftware.com/Site/Browse/11786/1040-Foreign-Employer-Compensation-FEC

It appears to be in respect to some tax software called "Drake", and it's saying that Drake22 (i.e. the version of Drake for 2022), foreign income gets reported in line 1h.  And for Drake21 and prior, foreign income appeared on the outside of Line 1 but was included in the sum for Line1.

That's not inconsistent with the way TaxAct has handled it, although TaxAct doesn't add 'FEC' outside of lines.