The legalities of being an American in Britain

http://www.usembassy.org.uk/irs/irswho.htm

Look at the chart.

If you file Married Filing Separately (as a few of us do here, I think) then you do not have to file unless your 2003 gross income was at least equal to $3,500.00.  If it was less than that (or nothing at all) you do not have to file.

I don't know if anyone has mentioned it yet, but the IRS web site newcomer link: http://www.IRS.gov [nonactive] has great information on US citizens ability to be excluded from paying income tax on foreign earned salaries. Topic 854- Foreign Earned Income Exclusion and also Publication 54- Tax guide for US citizens Abroad give all the details of how to have your foreign earned wages (if you are living and residing in the foreign country all year) to be excluded. This is an invaluable website if you plan on living and working in the UK. Hope this helps.

I'm amazed at how many move abroad without knowing the financial or tax implications.
It would seem common sense to do some research before moving countries. Bottomline
is that if you are a US citizen you MUST file a 1040 with the IRS. It doesn't matter where
you live because the US, unlike most contries, taxes on citizenship and not residency.
As a UK/US dual citizen living in the US I do not have to file with the UK. However,
when I return to the UK I will have to file with the UK and the US. The UK/US tax agreement
has allowances and credits that basically eliminate the potential for double taxation.
There is also a Reciprocal Social Security agreement that allows you use contributions
in one country to count in the other if you fall short. Software like turbotax can handle
most US filing situations, I'm not sure about the software available in the UK as most
people do PAYE (Pay As You Earn) and don't have to file any forms as its done by
your employer. If you need help here are a few websites of companies specializing
in US/UK taxation

http://www.littlejohnfraser.com/SERVICES/SERV06k.html
http://www.coppergateassociates.com/services.htm
http://www.asherfox.com/services_taxreturn.cfm
http://www.offshore.hsbc.com/hsbc/main/tax-information
http://www.taxmeless.com/
http://www.expatriatetaxsolutions.com/
http://www.wealth.barclays.com/BRC1/jsp/brccontrol?task=articleint&site=int&value=142&menu=47

Hi,
I haven't read this topic before, I should have because I too was told by my tax consultant in the states, that I did not have to pay income tax,  and never thought about it again.  (The ignorance thing), Now I am worried because I haven't filed in the 2 years since I have been here, What does one do to find out about how to straighten things out.  I have visions of the IRS waiting for me on my next visit in the states at the airport, with some sort of warrant.  Help!!!
Celia 

i had to laugh even thou its not funny i just feel the same way.. i havent ever filed...even when i had a job at 17 i never did a tax return..i am 22 and the past 2 years i havent filed either there is a company i work for online that is stateside that sends me what i made in a year and sends me that checks over here in the uk...but its WAY under what it says on there website to file..
i dont even know where to begin to file..i want to file next year cuz that is when i am going back and i have the papers my mom says that you can wait up to 3 years to file?? is that right?
its a bit trickey with me cuz the company i work for doesnt take taxes out...cuz i am self-empolyed..

do you think if i  went to H and R block they could sort it out? i am really clueless and just like Celia i dont want the IRS at the airport or knocking on my door when i am back lol

I've been filing, even though I'm not now earning any US funds, nor am I making over the foreign income allowance. As a result of this, I receive an annual reporting of Social Security benefits that I am, and my family are, entitled to. I did work in the US before I moved here, and much has accrued.

The amount is not insignifcant. At age 65, no matter if from this day on I don't earn any money whatsoever, I can claim $600+ a month. If I died right now, my husband can claim monthly benefits, as can my son. I have the actual numbers somewhere...filed away in the "OH MY GAWD" drawer, to be never lost sight of.

File to the IRS to just keep them informed of my status even though I don't earn any credited money now? YOU BETTCHA.

Happy Holidays to ya'll from America (at the moment) ~

Haven't been online in awhile, with holiday preparations here, but will return after the New Year.
A question popped up while on phone with my fiance the other night. He told me the retirement age in England is 60yrs of age for females, is this true? My question is, can I legally work beyond that age? I am 57 now. How will this affect my income in UK? I'm not wealthy by any means, and would like to work beyond that age, if at all feasible. What is in store for me as an American in UK after age 60 if I'm not allowed to work? What do other women do??

Gosh, so many questions so little time. I'll be selling my home/car/household items before move to UK mid 2005.

Hope ya'll can help ...am getting frantically depressed now.

Merry Christmas ya'll ~ Di

Go to FirstGov.gov this is us website run bye the government.  Find social security and taxes, etc.  It gives you tons of info on being nonresident us style. Also tax laws, first 15,000 dollars earn outside us is tax free, also need tax laws have 25,000 tax free. I have dealt with both sides of the pond.  I would definitely go married filing separate claims.  A solicitor and attorney over here told me exactly the same thing.  The Inland Revenue co.uk is a good site also. Quite a bit of info and phone numbers.  Inheritance tax is ineffect, just went through that with my Mum & Dad a few months ago, also they still have the Stamp Act going.  The inheritance tax does not kick in until about 125,000.pounds.  A website I use it www.upmystreet co. uk.  Has land registry, insurance, health, dental, mortgages etc.  Good site for information about everything at home.  Even schools etc.  My Mum and Dad recently died so I have been home four times in 13 months go through all this. Plus I rent a house out at home. I was paying council tax 4,500 miles away, figure that out. 

I mentioned in this thread earlier that I'd look up the benefit information I had from the Social Security Administration.

I'm quoting parts (my comments are in italics following the quoted part):

Qualifications
"To qualify for benefits, you earn 'credits' through your work -- up to four each year. This year, for example, you earn one credit for each $900 of wages or self-imployment income...Most people need 40 credits earned over their working lifetime to receive retirement benefits..."
In other words, if you have earned more than $36,000 in the US over your lifetime, and you had Social Security and Medicare taken from your wages, then you should consider filing taxes, even if you earn absolutely nothing, because you will get some income for your retirement. For example: If you are 30 and worked in the US for 10 years before you moved here and earned from $3,600 each year/$300 per month, then you qualify.

I will use me as an example, so these are MY OWN numbers.
I worked in the US for 25 years. My salary was average.
If I have NO MORE income as of this moment, these are my benefits:*
(*bear in mind it's only a guide; the governement allows for changing their mind)

Retirement (from the age I start taking it)
From age 62...$622/mo
From age 66...$834/mo
From age 70...$1090/mo
Disability
I would need 27 more credits, and 20 of these would have to be earned in the last 10 years...I do not qualify
Survivors (if I die this year)
Son receives...$836/mo
Spouse who reaches full retirement age...$1114/mo
(total cannot be more than $2078/mo)
Medicare
I am qualified and can claim as from age 65

I have to say, even $100 a month from Uncle Sam is worth the cost of an annual stamp to file a "I earned nothing" 1040 form to the IRS. The information off the 1040 is exactly where the Social Security Administration gets its numbers. They don't care if you work or not, but they do need to know a zero, just as much as they need to know a million.

Please do not dismiss filing your taxes even though your income falls under the earnings bar. You might be missing out on some money due you/your family.

I have a  few questons on this subject. I am 100% disabled, receiving a SS ck and a medical pension from previous employer. After my remarriage I will live in the UK..I have no other source of income from the US....Also has anyone found a good firm that can help us(all of us)retirees to figure t his out? My financee has only his pension, the 911 tragedy depleted his investments (as it did for many) With our combined incomes we thought we could live at least comfortably. All this tax stuff now has me worried.

OMG - this is all so mind scrambling!   

I guess my first question would be, if I have debt can I leave the country?  I will keep money in an American account to pay those bills off (and may just pay them off completely before I leave), but wondering if I can leave debt or can I pay it off from the UK?

Thanks!  This is a fantastic site!!

~Liza

OMG - this is all so mind scrambling!   

I guess my first question would be, if I have debt can I leave the country?  I will keep money in an American account to pay those bills off (and may just pay them off completely before I leave), but wondering if I can leave debt or can I pay it off from the UK?

Thanks!  This is a fantastic site!!

~Liza

You can most certainly leave the US with debt (I think most of us have, in one way or another!  ).  I won't start paying mine back until next year (scholarship linked to teaching for four years -- I taught for two, so I owe half of it), but I've kept my US account open in order to do so.  I'll just have a direct debit set up.  In the meantime, I'm starting to save specifically for that debt since the pound is so strong against the dollar -- practically cuts my debt in half, which is a good thing!   

Hope this helps,
We opened an off-shore account at NatWest: www.natwestinternational.com and have checking accounts in USD, GBP, and EUR. Since we both own lease houses in the states, it makes paying bills and moving funds between currencies very cost effective.

Suggestion:
Run a credit report in the states and check on it every six months. ID theft is horrible and never say never to returning there to live someday. Even if you don't pay off the old bills, challenge each and every once of them with the reporting agency. Someday you could return to the states and have great credit once again.

Take Care.

Ouch, this one hurts, but thanks for the heads up!  I have been living here in the UK for much of my adult life.  I have paid US taxes while living there too so have 2/3 of my quarters paid into.  But I rang the IRS at the American Embassy years ago and was told that I didn't need to file income tax reports for the USA as well!  This was because my income was below the taxable level for ex-pats.  I am going to have years to file for now at this rate!  Can anyone tell me where to start?

I know about the reciprocity deal between the US and the UK, and I did the same thing about my social security back in about 1998, but have never received a report since either. 

Who would I contact about filing IRS reports?  The Embassy, who obviously adised me wrong in the first place? 

Anyone who can give me some info it would be appreciated.  Thanks for the information.

Suzanne

Hi all. I just found this site and registered, principally to get some information on food and cooking but then started nosing around and found it thread. YIKES!! I have been living and working in England now for SEVEN years and have never filed a US tax return!!! When I first moved over (married an Englishman), we spoke with someone at the embassy who said I didn’t need to file, and never thought about it again! I have no home in the US and no property there, only two IRAs. I earn WAY over the filing exemption limit. If I call the IRS office in London now, what will happen to me? I’m scared and freaking out!

What if you work here, pay UK taxes, and refuse to pay US taxes on the grounds that you don't live there anymore?  I plan on getting UK citizenship and renouncing my US citizenship.  Also, my hubs is dual citizenship with US and UK, does he have to pay US taxes?  And my sis in law, who only lived in the US for a few years as a child, and lived here for 40, does she have to pay taxes to the US even though she has never lived there other than as a child?

As far as I'm aware, you don't have to pay taxes to both the UK and the US; however, you still have to file a US tax return. I haven't done this in a few years (I but keep meaning to. I think the last one I filed was for 2002. It's just a horrible chore I extremely dislike and the fact there there are usually more urgent things that need sorting out first!