Double Taxation by the US on UK earned income?

Hello,
I have a CPA in the US preparing my US taxes for me for 2007 and just received my tax liability.  I am disgusted to learn that after I have paid 40% tax in the UK, council tax, stamp duty, NI, etc that now I have to pay an additional $5k to the US.  Aren't there laws against double taxation on earned income and insn't there a tax treaty between the UK and US to prevent double taxation of their citizens?  Help!
Slb

Yes, typically there are sufficient credits between the foreign earned income and other taxes paid abroad that if your income is from earnings and not investments that you should have little to no US liability.  Are your sure your CPA knows that they are doing?

What percentage of your income was from investment?  How far above were your in foreign earned income.  What part of the year were you not resident in the US?

Hello,
I worked the entire year 2007 in the UK and the majority of income has come from UK salary taxed by the UK at source.  My CPA states that I had $50k income after the exclusion and deductions which he says I owe approx $14k in regular tax and $5k in AMT.  He says my foreign tax credit covers my "regular" tax but that I have to pay the AMT.  Shouldn't my AMT be covered as well by my foreign tax credit?  No, I am not sure he knows what he is doing....
Slb

I don't claim to be an expert on this aspect of tax but this webpage includes, as regards the way AMT works :-

Disallows the foreign tax credit, creating unavoidable double taxation for the more than 8 million American citizens living abroad. Some modest income families owe AMT solely because of currency fluctuations.

Or is that too simplistic?

Ooops... It looks like you fell into AMT... Sorry, didn't realise that.  I guess I need to figure that out myself too because I might be getting nailed with it...  AMT does not allow for foreign tax exclusions and is truly a double taxation situation...  The Wikipedia article JohnL quoted explains AMT fairly well...

You should still be able to claim primary home mortgage interest even if your residence is abroad, or at least I think you can, but I am afraid your CPA isn't totally off their rocker...    Welcome to the privilage of being born an American...

Based on your previous posts you have been here since 2004.

The AMT is extremely unlikely - unless you have lots of deductions such as state taxes and are married filing separately.

Because you have been here a while my guess is that you don't have those kinds of deductions - the foreign tax credit used to give rise to an AMT charge but the law changed on that in 2005 so this can't be the reason either.

There are only a tiny minority of US based CPAs who "get" the foreign bits of US returns and how best to minimise both UK and US taxes.

Your first job is not to pay the CPA because he seems to have got it wrong.  Your second task is to get the return reviewed over here by a dual US/UK qualified tax adviser.   

Hello,
My situation has changed since 2004...now divorced and filing single.  I don't have state income taxes...came from a state without state taxes.  I have property in both the US and UK...shouldn't the interest on these properties count as deductions against the AMT?

Can you recommend where to find a dual certified accountant that can provide advice on both US and UK taxes?  I think I might have to send into the IRS what the tax guy has done for the Oct 15th deadline to then get the $600 refund (which will only cover getting my taxes done).  Then I guess I can file an amendment if the advisor here changes my tax liability.

And, yes, if I am going to be double taxed by the US it does make me rethink my citizenship!
Thanks.

You can apply for an extension through December 15 if you need.

Guya,
How would I apply for this extension?  And if I do extend, does that mean I can't get my $600 check?  I thought I needed to file by 15th Oct to get that check....and I am going to need it given my huge US tax bill and the fees for my CPA.
Thanks.

Oh, also...someone mentioned to me that maybe I can claim my US taxes as a deduction against my UK taxes...is that true?  Thanks.

related to this, what *exactly* counts towards the foreign tax credit (in filing my US taxes)?

PAYE? NI? both? i'm concerned my tax 'professional' hasn't accounted for this properly.

my taxes just got filed back in the states and i was shocked by the amount of tax i supposedly owe.

i made more than the FEIE, but pay UK taxes (highest tier) and live in london, so i should be able to deduct my housing costs, no? i cannot afford to get walloped like this every year...

(thanks in advance for your help)

related to this, what *exactly* counts towards the foreign tax credit (in filing my US taxes)?

PAYE? NI? both? i'm concerned my tax 'professional' hasn't accounted for this properly.

my taxes just got filed back in the states and i was shocked by the amount of tax i supposedly owe.

i made more than the FEIE, but pay UK taxes (highest tier) and live in london, so i should be able to deduct my housing costs, no? i cannot afford to get walloped like this every year...

(thanks in advance for your help)

It is very unusual in these circumstances to owe much US tax because UK tax - broadly speaking - is greater than US tax.

You might owe US tax at the State level or on non-UK income - I would always suggest a UK based & qualified dual ualified US/UK tax professional as many US based advisers don't "get" the foreign bits right.

thanks, guya. looks like there were a couple of things they nearly left out (previous tax payments made, foreign housing exclusion, etc.) i think next year i would like to get this sorted out in the UK, instead of the States.

any recommendations for US/UK tax preparers in London? if so, please private message me.

best regards,
elise