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Topic: Tax Return Help - W2???  (Read 2898 times)

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Tax Return Help - W2???
« on: May 11, 2008, 11:51:46 AM »
So, I'm trying to file my tax return for last year. I thought it was going to be late but apparently there is a 2 month automatic extension for those overseas, not that it matters as I shouldn't have to pay any tax anyway.

So I went to H&R Block and started filling out the info and I'm a bit confused to say the least.

I have worked in the UK all year, I'm a dual national and have only ever lived in the US for a year.

Anyway, I have a few questions. What excahnge rate should I be using? The last official treasury rate was £1 = $1.98 is that what you guys have been using?

Secondly there is a section for W2 income and a section for foreign income. All my income is foreign so I have used my P60s for the info. Do I need to enter W2 info and foreign income when they are the same thing? I obviously don't get a W2.

I thought I was done with my return ignoring the W2 section, but H&R Block won't allow e-filing without the W2 section filled in. It's such an annoyance given I earn way less than the $87k tax allowance and probably wont qualify for the stimulous payment.

I notice that most of you are using Turbo Tax is that better?


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Re: Tax Return Help - W2???
« Reply #1 on: May 11, 2008, 01:23:21 PM »
First off, I really would consider saving yourself money and not bothering with H&R Block. It seems like you have a pretty straightforward situation.

Unless you have any investments in the US or any other complicated tax situations, it sounds like you will simply need to fill out a 1040, and a 2555-EZ (foreign income exclusion). You can find both of these forms on the IRS website. You don't need to include anything in place of a W-2. I just used my payslips to figure out my earnings, and used the exchange rate on the embassy website to convert to UDS http://www.usembassy.org.uk/irs/irsfaq.htm. I have held on to my payslips in case I do ever get audited, but when I went to the embassy to turn in my taxes, they said they didn't need to be included.

I know a lot of people use TurboTax, which sounds like a good option. I just fill mine out with pen and paper, since I can't e-file (it won't let you get around not having a social security number or ITIN for your non-resident, foreign spouse.) You can then either send your taxes to the Austin service center, or the US embassy. With regards to the 2 month extension, the woman at the embassy just wrote 'tax payer abroad' on the top of my 1040. Easy-peasy.

Don't forget, that depending on what your bank balance is here, you also may need to file a TD F 90-22.1 to the treasury (report of foreign bank and financial accounts). I think this is due in June.

The embassy website is pretty informative. Between that and the IRS website (in the forms library, there are instructions with every form), you should be able to figure everything out. Fill out the 2555-EZ first, and then you will have all the info for the 1040. You enter your foreign earned income where you would normally enter the info from your W-2, and then if it's under the threshold, you exclude the entire amound further down on line 21.

« Last Edit: May 11, 2008, 01:35:14 PM by kate_mate »


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Re: Tax Return Help - W2???
« Reply #2 on: May 11, 2008, 01:30:15 PM »
I used Turbo Tax, it was a bit confusing on their too, you have to put your income as a W2 but when I didn't fill in all the fields it starting asking questions on whether this was earned overseas etc..  Then on Turbo tax there is a part for foreign income, but this is where they deduct the wages I have already paid taxes on over here, so you fill in both sections.  I think Turbo Tax actually converted it from £ to $ automatically.
« Last Edit: May 11, 2008, 06:02:55 PM by scbrit »


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Re: Tax Return Help - W2???
« Reply #3 on: May 11, 2008, 04:16:49 PM »
There should be a section for wages, salaries and tips which should include all income whether it is from the US (and would be reported on a W2) or whether it is from a foreing employer (in which case there would be no W2).  I file with pen and paper but apparently there are issues with the wording on electronic programs so this is not clear.

There should be another space where you enter the amount of foreign income you are allowed to exclude as a negative number, so if your only income was £10k from a job in the UK, for example, you would get £10k - £10k = £0.

FYI, the US and the UK use different tax years, so you won't  be able to take the number from your P60 directly. US uses Jan - Dec, UK uses Apri - April. You will have to calculate how much you earned from Jan - Dec.



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Re: Tax Return Help - W2???
« Reply #4 on: May 11, 2008, 10:28:30 PM »
There should be a section for wages, salaries and tips which should include all income whether it is from the US (and would be reported on a W2) or whether it is from a foreing employer (in which case there would be no W2).  I file with pen and paper but apparently there are issues with the wording on electronic programs so this is not clear.

There should be another space where you enter the amount of foreign income you are allowed to exclude as a negative number, so if your only income was £10k from a job in the UK, for example, you would get £10k - £10k = £0.

FYI, the US and the UK use different tax years, so you won't  be able to take the number from your P60 directly. US uses Jan - Dec, UK uses Apri - April. You will have to calculate how much you earned from Jan - Dec.



Thanks for everyone's help. I always find the internet is amazing because it's so unusual to get pretty detailed help from total strangers anywhere else.

I did realise the P60 Jan-Dec & April - April thing, but 12 months salary from April to April will have been the same as 12 months from Jan - Dec as the salary didn't change any. Could get tricky next year though as pay structures are changing.

I switched to Turbo Tax and found that much easier than H&R Block they explained the whole thing step by step. Now that I have a good idea what I'm doing I'll probably just do it on paper next year and save the £15 odd fee.

Thanks again to everyone that helped.

Joe


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