Suggestion about how to do your taxes and learn

I've  asked a few questions on this forum and Lizzit has given some very useful answers, thanks Lizzit.
As the field of US/UK taxation is pretty complicated I'll probably seek professional advice, but its
always good to educate yourself so here's what I'm doing.

It will be a couple of years before I have to file in both the UK and US, right not I just have to do it in the
US, so I'm doing practice tax returns using TurboTax and the HMRC's self assessment forms. I've set up
the senario that I think I'll have is a few years; Ill be domiciled in the UK with after tax investments in the UK,
and pensions 401ks etc in the US.  I'm going to do my taxes and see how they look. 

Doing this you can see how changing a few things affects your tax and you learn a lot too that will be
helpful if you do end up going to a professional.

1. Turbo-tax may not cope with dual status returns?
2. You seem to have a common misconception about domicile.  One cannot be domiciled in the UK (although one can be domiciled WITHIN one of the legal jurisdictions that make up the Union).  Where are you domiciled today?

1. Turbo-tax may not cope with dual status returns?
2. You seem to have a common misconception about domicile.  One cannot be domiciled in the UK (although one can be domiciled WITHIN one of the legal jurisdictions that make up the Union).  Where are you domiciled today?

1)True TurboTax doesn't specifically deal with dual status, but it does everything for foreign income and foreign tax credits. In conjuction with the HMRC self assesment
forms I think I'll be able to do do everything I need.

2) I'm not sure what you mean that you about being domiciled in England, Wales, Scotland, NI etc rather than the UK. The HMRC uses presence in the UK to define residence and domicile.  I'm currently domiciled in the US as this is where my home has been for the last 20 years. There might be some hair spliting arguments that I'm actually domiciled in the particular US state where I have my home, but for US federal tax and  UK tax I think presence within the USA and UK are what matters. The whole issue with US state tax will be a real pain so I'll be very careful to inform my state that I'm leaving when this happens. When I left the UK, 20 years ago, I wrote to the Inland Revenue and told then that I was leaving the country on a 3 year appointment. As I had just graduated from college I had almost no tax liability in the UK anyway.
One thing I have done is to keep up my NI contributuions though. If you want a real headache when I retire (if the laws don't change) I'll have UK state pension,
US social security, a small US company pension, a US state pension and also income from 403b, 401k, ROTH and regular IRAs........I'm not sure I'm looking forward to this.

nun -

1. As you are a dual status taxpayer, you'll have to file dual status tax returns.  You are doubtless correct that there is no tax software on the market that handles these returns correctly!

2. I am afraid I am not hair-splitting.  HMRC follow the rules on domicile which have developed through case law from the 14th century onwards.  For UK purposes one is domiciled in England AND Wales, Scotland or Northern Ireland.  When you left 20 years ago it fairly clear that you did not abandon your domicile at that point.  If you later abandoned this for domicile within a particular US State then of course on return you might well be returning to your domicile of origin or acquiring a new domicile of choice.  Bearing in mind that (rightly in  my view) you kept up your UK State pension and actually moved back here it would be difficult to argue that you were ever domiciled outside of the UK.

The positive advantage of remaining domiciled here is of course that you'll only ever pay UK tax on 90% of your various US pension incomes.  The downside is that the lot will be included in your assets for UK IHT purposes so you'll want to deal with your Wills and IHT planning on that basis.

I suspect you need professional advice from a dual qualified specialist...

Sadly, thinking so deeply about US and UK taxes will leave us all with few hairs capable of splitting!

So are there any tax differences in being domiciled in England and Wales, Scotland or NI?

I just ran TurboTax assuming that I was living and working in the UK. The
senario is that I've moved after tax accounts to the UK and left
US tax deferred retirement accounts in the US and I have no
W2 wages.

I put in the following boilerplate numbers in for UK income and
investments gains, the retirement funds don't come into it yet as I'm a
few years younger than 59.5.

Wages $30k
Ordinary Dividends 10k
Qualified Dividends 10k
UK interest 2k
Gain from sale of Mutual funds 2k

TurboTax handled this quite simple senario easily and gave all the right foreign tax
credits,  allowances and had fields for foreign taxes paid. The result was zero
federal tax due.

The state return was a bit more complicated until I realized that as in my senario
I have no state source income I don't have to file a state return.

Tomorrow I'll run the same numbers through the UK system and see what happens,
but so far so good.

Then I'll try to navigate the pension and social security issues which will be a bit more
complicated.