Foreign Earned Income

I file my US taxes jointly and I know you're allowed up to $80000 of Foreign Earned Income, but does anyone know what happens if you earn MORE than that?

It's not as if hubby and I will make more than this any time soon! At present, we jointly earn approx $62,377.

Thanks,
 Mel

Is your hubby american or uk?

Mine is UK and I filed married but filing single...you don't have to show his income it is only yours if you are the only american.....and it is you that is allowed up to the $80,000.00 mark.

He's British. I was advised ages ago to file jointly, which confused me, since I'm the one who's American and not hubby.

Now that you've clarified the matter, it does make sense to file separately. So what happens then if I earn more than the $80k?

Thanks!

You can take the Foreign Earned Income exclusion that MeShell mentioned and a foreign tax credit for any amount over $80,000. The form to claim this is 1116.

I think I understand...

So there's no way I'd ever be penalised for earning more than $80k? Granted, I'm a long way off from that!

it's a good question as i'll fall into that category........

Don't you have to keep track of how many days you are in the country?  I need to go through my calendar and figure out when i've spent time in the UK, as I can remember there being a number of days you have to be in the UK over a year, and i travel for work and have spent a lot of time outside of the uk.

hmmm i looked at that form and see that it doesn't ask me for dates.....

tax gurus, do any of you guys know why another expat told me to track my days in the UK?

A few bits & pieces:

Aiyana was wrong to file jointly unless she elected to do so.  Once an election to file jointly is made it can only be revoked once and then never made again.

In terms of travel days:

1) These are needed to prove UK residency on the UK tax return.
2) If not ordinarily resident in the UK these are needed for non-UK workday relief.
3) These are required if claiming the $80,000 exclusion on form 2555 under the physical presence test or the bona fide residence test.  If there are US workdays then the income relating to these needs to be resourced as foreign under the tax treaty but only on form 1116, not form 2555.
4) If there are State filing requirements (eg on income relating to State workdays).
5) Sometimes for other treaty filings, filing taxes in third countries or for employers expense reimbursment departments.

Guya,

I was advised to file jointly by someone in the US Embassy, so I am not pleased to say the least to find out they were wrong! That seems a bit unfair to revoke once and not be able to switch back. Not that we plan to ever move to the US any time in the future.

I'm glad I don't have to keep track of travel days, etc. since my job is admin and doesn't entitle me to travel outside the UK. Phew!

Mel 

As I don't do a separate tax return, since i am a PAYE person, i'm assuming I don't have to have it?

I know it's handy as i think i can remember having to say when i've left the country when i try to move back to the states.......

but i guess i don't need to calculate those days normally.

I only spent a few days in the US on business, and it was all through my UK company.  So i'm not worried about there.

It's when i've been all over europe that i was curious i needed to track.  guess not!!!!!!

If one can afford to have a tax accountant who is qualified in the UK and US to do your taxes at least once, so you get an idea of what forms are needed, I would recommend it.

I got nice refunds from the US and UK governments and now know how to file going forward by having an accountant do my taxes this year and it was money well spent.

I'm going to bvamin.  i can't figure this shat out on my own.  i'm totally useless!!!!!! 

A few bits & pieces:

Aiyana was wrong to file jointly unless she elected to do so. Once an election to file jointly is made it can only be revoked once and then never made again.

??  I don't understand this, are you saying that if next year I have enough independent (by which I mean self-employed, thus qualifying for extra tax) income to file separately from my husband I can't?

An election to file a joint US tax return with a non-resident alien spouse continues for ever (so long as you are married) unless revoked.  If revoked you can never elect to file jointly again, even if it saves you taxes.

If you live in the US your spouse is no longer a non-resident alien (because s/he is now a resident alien) so no election is required.

Since Amiloo does have US business days the income relating to these days must be sourced US on the 2555 but the treaty resources these as foreign for form 1116 purposes.  State returns will be required if the State(s) where these workdays were performed have an income tax and there is tax due in those State(s).

This State tax is then claimable as a credit on the UK tax return.

I agree to go to a dual qualified US and UK adviser.  You MUST make certain that the person you choose has BOTH UK qualifications (such as Chartered Accountant, Chartered Certified Accountant or Chartered Tax Adviser) AND US qualifications (such as Certified Public Accountant or Enrolled Agent).  There are several folks who advertise that they give tax advice but do not possess both sets of qualifications.  You need to be certain thast they have adequate training, undertake mandatory continuing education and carry professional indemnity insurance...

I agree to go to a dual qualified US and UK adviser.  You MUST make certain that the person you choose has BOTH UK qualifications (such as Chartered Accountant, Chartered Certified Accountant or Chartered Tax Adviser) AND US qualifications (such as Certified Public Accountant or Enrolled Agent).  There are several folks who advertise that they give tax advice but do not possess both sets of qualifications.  You need to be certain thast they have adequate training, undertake mandatory continuing education and carry professional indemnity insurance...

OK, anyone know who is dual qualified?  We are going to need professional help to sort our taxes out this year-and for quite a while I imagine.