Reporting Worldwide Income

First, thanks to everyone who have helped me sort my taxes out more...I'm slowly feeling more confident about all things US and UK tax related. One area that continues to perplex me is the best way to handle reporting worldwide income. Most of my UK income is reported via PAYE, but then I do have some additional income related to my profession, mainly in the form of honorariums and research/travel fellowships. These could be in different currencies, and are sometimes paid in cash or, if not, always transferred directly to my US bank account. I have diligently been reporting all of this on my US taxes as "other income." However, on reflection I don't know if I should report this on my self assessment too. I've asked other colleagues in my profession and it seems nobody does this--am I overthinking things? I should be clear these are always small amounts (max was £400) and the fellowships have all been to essentially cover expenses for travel to conduct research related to my line of work in higher education. I always end up at a loss on those once I count the actual expenses incurred on travel, so it's not like I'm banking here. The only other income, which again I already declare on US taxes, is a royalty check from a US publisher--this one is so tiny as to be laughable and it goes into my US bank account where it stays put.

That said, I do want to stay straight with HMRC but also don't want to overcomplicate or overthink the process. At present, I use the self assessment forms to declare foreign dividend income from a US index fund I hold with Vanguard and have not claimed the other income as I'd been advised by colleagues that this was not necessary. I find HMRC not particularly helpful for specific questions that cross US/UK tax rules and have read various opinions online that range from "leave it off" to a series of complicated steps.

On the flip side of this, I have read on the forum that I should be reporting interest from UK accounts. I don't receive much but it is higher than the normal $10 threshold applied to US bank account interest. I report the accounts on FBAR but did not realize I needed to report the account interest on my federal return and don't think Turbotax, which is the software I use, ever prompted me to do so.  Do I need to go back and amend my previous tax returns? If so, is it for three years only? I use FEIE but reading old threads interest is not excludable under FEIE so don't know if that would mean I'd owe the IRS. I'd like to understand this rule in particular as looking into getting cash ISAs or a LISA so will start building up more foreign account interest to report in upcoming years.

Thanks for any and all advice! Every bit helps.

My 2 cents.

Worldwide income should be reported to HMRC including honorarium and royalty payments made in the USA.

UK interest should be reported to the IRS as normal on a schedule B. My son lives and works in the UK and on his IRS return excludes all his UK earned income and reports his UK interest. This does not result in any tax due as the interest is low and his deductible easily covers it because the FEIE reduces his income to zero leaving the interest as his only taxable income.

Well that's good to know regarding the interest. I believe that would happen for me as well, in which case I'm not sure if it makes sense to go back and amend the US federal returns, though I guess I could do this if it might be a problem.

For the other sources of income on the UK self assessment, if I do indeed report them, I am guessing I'd claim deductions since, as I said, most of those scenarios I end up out of pocket with money. The only exception would be the royalties. I don't know if there are any exceptions for some of these sources of income for those working in higher education though, so if anyone knows more that'd be helpful.

Well that's good to know regarding the interest. I believe that would happen for me as well, in which case I'm not sure if it makes sense to go back and amend the US federal returns, though I guess I could do this if it might be a problem.

For the other sources of income on the UK self assessment, if I do indeed report them, I am guessing I'd claim deductions since, as I said, most of those scenarios I end up out of pocket with money. The only exception would be the royalties. I don't know if there are any exceptions for some of these sources of income for those working in higher education though, so if anyone knows more that'd be helpful.

I definitely wouldn’t file amended returns for the UK interest. In fact the IRS advice is that if there is no change in tax  then do not file an extension as it costs them money for no gain.

Thanks, durhamlad! Yes, I had read that somewhere too. I am still pondering if amended returns might be worthwhile as I learn more about the US/UK tax rules. I wish I'd done more research when I was younger, but alas I was just happy with 0 to pay on my return. I will need to sort things with HMRC too, though hoping this won't hurt too much. I've made mistakes in the past and they are usually pretty helpful when it comes to sorting things--and why not, you are asking them to let you pay tax!

Rather than start another thread (I am sorting many different issues now to get my finances in order), I am wondering if anyone knows if filing amended US returns is worthwhile if you have dependents to claim? I have lived overseas for 9 years and claimed FEIE for all 9. I have at least 4 years with one dependent I claimed on previous returns and a new dependent now (thought need to get their SS number first). Am I right in thinking the refund that you can get with FTC is worth the effort in refiling to claim the child tax credit? From what I read that would be $3000 per tax year ($1500 per child). Part of the reason I want to switch, too, is to be able to contribute to a Roth IRA going forward, but the tax refund would be a huge incentive--I had no idea this was possible!

Thanks, durhamlad! Yes, I had read that somewhere too. I am still pondering if amended returns might be worthwhile as I learn more about the US/UK tax rules. I wish I'd done more research when I was younger, but alas I was just happy with 0 to pay on my return. I will need to sort things with HMRC too, though hoping this won't hurt too much. I've made mistakes in the past and they are usually pretty helpful when it comes to sorting things--and why not, you are asking them to let you pay tax!

Rather than start another thread (I am sorting many different issues now to get my finances in order), I am wondering if anyone knows if filing amended US returns is worthwhile if you have dependents to claim? I have lived overseas for 9 years and claimed FEIE for all 9. I have at least 4 years with one dependent I claimed on previous returns and a new dependent now (thought need to get their SS number first). Am I right in thinking the refund that you can get with FTC is worth the effort in refiling to claim the child tax credit? From what I read that would be $3000 per tax year ($1500 per child). Part of the reason I want to switch, too, is to be able to contribute to a Roth IRA going forward, but the tax refund would be a huge incentive--I had no idea this was possible!

I’m afraid this detail is way above my pay grade  . I only stuff about my own or similar situations.

What I said about not needing to file an amended return if the resulting tax is the same came from the IRS website when I looked a few years ago.

Rather than start another thread (I am sorting many different issues now to get my finances in order), I am wondering if anyone knows if filing amended US returns is worthwhile if you have dependents to claim? I have lived overseas for 9 years and claimed FEIE for all 9. I have at least 4 years with one dependent I claimed on previous returns and a new dependent now (thought need to get their SS number first). Am I right in thinking the refund that you can get with FTC is worth the effort in refiling to claim the child tax credit? From what I read that would be $3000 per tax year ($1500 per child). Part of the reason I want to switch, too, is to be able to contribute to a Roth IRA going forward, but the tax refund would be a huge incentive--I had no idea this was possible!

I realize I'm a bit late to this thread, but I did this in about 2012 because I had been doing just as you were, just excluding everything because it seemed easy, but I then realized I was missing out on the free cash! So, I refiled for the previous three years as my first child was born in 2009. To be honest, it's one of the biggest reason I don't give up my US citizenship! Once I can no longer claim this money, I'll renounce (unless something truly unexpected happnes).

I realize I'm a bit late to this thread, but I did this in about 2012 because I had been doing just as you were, just excluding everything because it seemed easy, but I then realized I was missing out on the free cash! So, I refiled for the previous three years as my first child was born in 2009. To be honest, it's one of the biggest reason I don't give up my US citizenship! Once I can no longer claim this money, I'll renounce (unless something truly unexpected happnes).

Given the UK's tax structure, for the majority of US expats the only benefit of taking the FEIE in the UK (as opposed to taking FTCs for UK income tax paid) is a simpler tax return. (Because of that, and since once you "revoke" the FEIE you can't go back for five years except under certain circumstances, I often recommend new USC-in-UK expats try both ways.)