Another US/UK Tax question from a new Expat, but hopefully pretty easy

Hello,

I have been reseaching this for sometime, including spending several hours on this forum looking for information, looking at the information on the embasy site and I did get some very valuable insight.  I have been able to piece together a few things, but I do still have some unanswered questions.  My situation is pretty straightforward.

I am a US citizen, I am married to a US citizen, we got married in the US before moving here to the UK.

My wife had income in the US in 2008 before we moved, but has no income in the UK for 2008.

Neither my wife nor I own any property in the US or the UK.  We rent a flat here in the UK.

I had income in the US for 2008, and we moved to the UK on Sep. 19.  I also have income from Oct. 1 onward in the UK.  The income is from the same company.  My UK income was not reported on my W-2.  I have paid taxes here in the UK for Oct., Nov. and Dec..

I know I have to file a US tax return.  My questions are these:

Should my wife and I be filing a joint return, or is there any advantage/disadvantage of filing as 'married filing separately'?

When should I file my return?  I have read that I must be outside the US for 330 days to qualify for the foreign income exclusion.  Should I file for an extension, and then file my return after I have met this test? 

Does the 330 days have to be in the UK, or just outside the US?  I travel a lot around Europe for my job. 

How much of a foreign income exclusion will I get for 2008 if I wait to file - the full amount, or something pro-rated?

How will I know if I owe anything, in order to pay it by April 15 to avoid penalties?  Should I calculate how much I owe based on being able to take the foreign income exclusion, or calculate based on not being able to take it since I don't qualify for it yet?  Between my US income and my UK income, I will have more that $85,000 in income in 2008.  However, on the first $82,000, I did pay income tax in the US, and this is reflected on my W2.  The remaining was less than $20K and earned in the UK, and I paid UK taxes for that.

I really appreciate any help you can give. Next year ought to be pretty straightforward, it's just this first year return thats a little confusing.

Can anyone help me with the above questions?  I have a handle on some of this, but I haven't been able to find answers to the questions in the above post.  Please help, if you can. 

sorry, i have no idea, but i am very curious about the answers to your questions, as well. 

You should probably file a joint U.S. tax return.  Filing separately is usually worse.  Your move to the U.K. likely would not change this.

If your annual income is below about US$91,000, the "simple" route is to elect the foreign earned income exclusion.  If you have not yet met the requirements for this, you can extend your U.S. tax return.  Form 2350 allows you to extend beyond the normal extended due date if necessary.

If you have income more than about US$91,000, then you need to decide whether you want to even elect the foreign earned income exclusion at all.  You likely can claim U.K. taxes paid as a foreign tax credit against your U.S. taxes so that you owe no U.S. tax on foreign earned income.  By not claiming the exclusion, you may have more "excess" foreign tax credits that can be used to reduce your U.S. tax in the future without causing an increase in U.S. or U.K. tax now.  This requires some planning.

If you do claim the exclusion for the end of 2008, you will only get a pro rated amount of the exclusion (3 months / 12 months X $85,000) and the exclusion only applies to your foreign source income.

There is no need to be present in the U.K. for 330 days, you need to be in a foreign country though (Antartica, international waters, etc. don't count).  You do need to have your tax home (generally your principal place of business) in the U.K.

You should prepare (or have a professional prepare) your tax return now based on the best information available to determine whether you will owe any tax in the U.S.  If due a refund, no worries.  If tax is due, pay in enough with the extension to make sure you have an overpayment when you actually file.

Unfortunately, the process may not be as straightforward next year as you would hope.  Don't forget to file Form TD F 90-22.1 for foreign bank and financial accounts.  Don't buy non-U.S. mutual funds (if you do, see Form 8621).  Be aware that there may be special rules if you contribute to a U.K. self-invested personal pension (with big penalties if not disclosed properly - see Form 3520).  Don't form a U.K. (or other non-U.S) company without understanding the implications (see Form 5471).  The list goes on.