Back to basics-standard tax return

I've been searching the topics here and most are a bit different to our situation and I'm not sure just what I need to do exactly. 
  Our situation is that we both (UK husband, and me US citizen) have been married for 6 years, living in the US.  We moved to the UK in March 08 working up until the move.  My husband has been working here since we arrived and I only had a 6 week job that was part-time and temporary over Christmas.  We have our W-2's from the states, our info on our house taxes and interest from bank accounts (US), but don't know what to do next.  I have done our tax returns in previous years, but do not know how to include my husbands income here.  We also have a 3 year old that we have always claimed and need to know if we can still do that since we were only there for 3 months out of the year. 
  Not a real complicated issue, but it is our first time trying to combine the US income with the UK income.  Do we file our 1040 as usual and then is there another form for foreign income? 
Any advice/experience/help would be appreciated!!  Thanks!

Hi,

What you need to do, if you are earning income overseas, is file a 2555 (Foreign Earned Income) in addition to 1040.  The 2555 is available at

http://www.irs.gov/pub/irs-pdf/f2555.pdf

instructions at
http://www.irs.gov/pub/irs-pdf/i2555.pdf

It contains a "bona fide resident test" which, when  you fill it out, lets you know if you are required to file a 2555.  In any case, the bottom line of the 2555 gets included in the 1040.  You are allowed $87,600 in foreign earnings before paying US taxes on the excess.  However, if you have dependents, you will still be allowed to claim tax credits for them.

I'm by no means a tax expert-- i've lived in the UK now for 5 years, and all I do is file a 2555 and 1040 each year and haven't had a problem (i even got a stimulus payment this year!!).  If you need more advice, best bet is to get in touch with an accountant in UK that understands the US tax code.

Thanks for your reply!  I was just unsure when it says on the 2555 about the company's US address and only asks for one SS#, since we file jointly.  I didn't make hardly anything in the part-time seasonal job that I held and my husband has been the one making money, but definitely not as much as we made in the States.  Any more comments or if anyone thinks of anything useful that would be great as well!  Oh, and what about State taxes?  I'm guessing we still need to do that too? 

Do you have to file the 2555 if you had no income at all in the UK yourself in 2008? I will be filing US taxes, and have been here since May...haven't been lucky enough to find a job yet.

Thanks for your reply!  I was just unsure when it says on the 2555 about the company's US address and only asks for one SS#, since we file jointly.  I didn't make hardly anything in the part-time seasonal job that I held and my husband has been the one making money, but definitely not as much as we made in the States.  Any more comments or if anyone thinks of anything useful that would be great as well!  Oh, and what about State taxes?  I'm guessing we still need to do that too? 

Company's US address-- if it's a non US business, leave it blank and just ensure you fill in the UK address in the foreign field (ie I work in a hospital, so obviously the NHS doesn't have a US addtress)

You should declare your wages you made in the UK, including the company you worked for, as long as you meet the residence test, explained above.  It only asks for one SSN because the 2555 must be filed for each person, regardless if your 1040 is being filed jointly or separately.

Do you have to file the 2555 if you had no income at all in the UK yourself in 2008? I will be filing US taxes, and have been here since May...haven't been lucky enough to find a job yet.

No, if you haven't had any income in the UK in 2008, there's no need to file the 2555 because it will all be zeroes...and you won't have any employer info to fill in.

Keep in mind, US taxes are for calendar year 2008, as opposed to the UK's FY which runs Aprl 2008 - Mar 2009

You do not say if your husband is a resident alien (green card holder).

If he is not you could only file jointly if you jointly elect to do so.

Don't forget to report child benefit as income, and file form TD F90-22.1.

You do not say if your husband is a resident alien (green card holder).

If he is not you could only file jointly if you jointly elect to do so.

Don't forget to report child benefit as income, and file form TD F90-22.1.

Why report child benefit?  It isn't income, as much as it's a government payment and we're not taxed on it.

And why would I need to file TD F90-22.1?  What does the US govt care about my £400 overdraft??

UK child benefit is reportable as it not exempt under any section of the US tax code.  A US return is required to include all worldwide income unless specifically exempt.

I do not know if you, personally, need to file a TD F 90-22.1 as I don't and can't know if you had a UK debit card, Oyster card, bank account, pension plan etc etc etc.  It was merely a pointer so it was not overlooked if needed...

UK child benefit is reportable as it not exempt under any section of the US tax code.  A US return is required to include all worldwide income unless specifically exempt.

I do not know if you, personally, need to file a TD F 90-22.1 as I don't and can't know if you had a UK debit card, Oyster card, bank account, pension plan etc etc etc.  It was merely a pointer so it was not overlooked if needed...

Ah ok just confused then by what you said.  Personally, I think I've circumvented the CB as it's paid directly into britwife's account.  And after looking into the TDF-whatever, apparently you only need to fill one in if any of your accounts had a balance of $10,000 or more during the year, thankfully (or unfortunately?) mine haven't because after looking at that form I don't think I'd want to bother with it.

Do I need a copy of your P60 or other documents from my employer to send in with the 2555? Also, since I haven't earned enough money yet to be taxed (other than the national insurance payment that is taken out) will the US tax the income I earned here, or only if I earned more than $87,500 (I wish!) Thanks!

Do I need a copy of your P60 or other documents from my employer to send in with the 2555? Also, since I haven't earned enough money yet to be taxed (other than the national insurance payment that is taken out) will the US tax the income I earned here, or only if I earned more than $87,500 (I wish!) Thanks!

Well I should hope you wouldn't need a copy ofmy P60. :-p

I'm pretty sure on your 2555 all you need to do is declare your equivalent $$$ of wages from UK employment.  Regardless that you haven't yet met the UK basic rate, you won't get taxed by the US on foreign income until you at the very least meet the $87½k threshold, and even then I think you're only taxed on the excess.

Well I should hope you wouldn't need a copy ofmy P60. :-p

  You could send me a copy anyway (unless you earned more than the $87, then I don't want to use yours! 

Thanks for the input. So this year, since I worked in the US for part of last year, I fill in the 1040 and send in my W2 with that, then I also fill in the 2555 for the income I have earned here in the UK, right?  But next year, would I skip the 1040 and just file the 2555, or do you always file both, even if you only worked in UK? Also, I suspect I may have to pay in something because I was working for tips (as a waitress, just in case I had you wondering! ) so I would just fill in the 1040 as usual and pay whatever it comes out to and then treat the 2555 as a separate thing? Sorry to be a pain.... I suck at this stuff, and an accountant friend of mine always filled in my tax forms for me, so this is the first time I have had to do them on my own.
Thanks again!

  You could send me a copy anyway (unless you earned more than the $87, then I don't want to use yours! 

Thanks for the input. So this year, since I worked in the US for part of last year, I fill in the 1040 and send in my W2 with that, then I also fill in the 2555 for the income I have earned here in the UK, right?  But next year, would I skip the 1040 and just file the 2555, or do you always file both, even if you only worked in UK? Also, I suspect I may have to pay in something because I was working for tips (as a waitress, just in case I had you wondering! ) so I would just fill in the 1040 as usual and pay whatever it comes out to and then treat the 2555 as a separate thing? Sorry to be a pain.... I suck at this stuff, and an accountant friend of mine always filled in my tax forms for me, so this is the first time I have had to do them on my own.
Thanks again!

Heres what you would do...fill in the 2555 for your foreign income (you may even be able to use the 2555-EZ).  I wouldn't bother with including income earned from tips, just go by what is on your P60.  Take the bottom line of your 2555 and add that to what is on your W2.  That final number goes into line 7 on the 1040.  You then deduct the foreign amount on line 22 (as you arent eligible to be taxed on it).

That is what I did last year, and it seemed to work.

Heres what you would do...fill in the 2555 for your foreign income (you may even be able to use the 2555-EZ).  I wouldn't bother with including income earned from tips, just go by what is on your P60.  Take the bottom line of your 2555 and add that to what is on your W2.  That final number goes into line 7 on the 1040.  You then deduct the foreign amount on line 22 (as you arent eligible to be taxed on it).

That is what I did last year, and it seemed to work.

Hey Hey, that sounds easy enough! The tips I earned were from my American job, which my employer claimed them for me (they usually put in whatever tips are on your credit card totals) but the tiny paychecks you get (half minimum wage) usually don't cover the amount of taxes you must pay. But I will just fill it in like you said and figure it out from there. It shouldn't be too hard since I have only had two jobs. Thanks for the advice!

Don't forget in your first year abroad - only - you can't file the 2555 until you have qualified for the foreign earned income exclusion.  In most cases this happens when you get to your 330th day overseas. File any earlier and the claim will be bounced...