I wish there was a sticky topic on where to get started with the taxes, for those of us who are doing them the first time, but I understand everyone's situation would be different. Nonetheless, here is what I have done, and someone can correct me if I have misunderstood something, I hope.
I printed out the Tax Guide for Americans and Resident Aliens Abroad and read through that pretty carefully (a very exciting read, let me tell you!) Here is what I understand: As I have lived here for just over 330 consecutive days, I pass the physical presence test, and my tax home is in the UK, since this is where I live and work. So I checked off everything on the list and I am eligible to use the 2555-EZ to report my foreign earnings. I filled this in correctly according to the instructions and came up with a total in US dollars of the foreign earned income exclusion and have put that in the correct area on the 1040, to be acknowledged, but disregarded from my total earnings. The 1040 is then filled in as usual, with the W-2 information from the job I had in the US last year. So I am getting somewhere, finally! (As you can tell, I am very proud of myself!) I am also filing single, as DH is not an American citizen or resident alien, and has no social security number. I earned less than $12,000 at my American job last year, so I assume this means I am eligible for the Earned Income Credit, although I have no children, the amount of which to be determined by the chart in the instruction book. I think so far, things are going pretty well.
What I am still unsure of is the Foreign Tax Credit. I have paid taxes here, and I am not sure if I am to take the credit, or does the exclusion rule out the need to fill in the foreign tax credit?
As far as the TD F 90-22.1 is concerned, I just read this: "You must report accounts you hold in foreign banks and other financial institutions if your total balance is $10,000 or greater. The $10,000 threshold is for your aggregate account balances. In other words, your total across all your foreign accounts." So I assume since our total combine accounts do not equal this amount (yeah, we're broke) that I don't need to bother filling in this form.
Am I right so far? Can anyone tell me more about the foreign tax credit? Or is this just for those who don't qualify for the exclusion?
Thanks so much!!!!