Tax Questions Are Melting My Brain

 

Okay, I've done my fair share of searches on here and the IRS site. I've still got a question though. I'll try to make them as plain as possible.

My situation as I can explain it....
1. I'm a citizen of the U.S.
2. My wife is an E.U. national.
3. My wife is currently pregnant and expecting to deliver October of this year.
4. We both live and work in Leeds.

Anyway, due to my earnings, and this works both for filing as single or married, I don't have to file taxes going by the IRS minimums.

I did pay my U.S. accountant to file for me last year.

The only reason I'm thinking I should file is due to possible U.S. tax credits for kids, but that won't be an issue until next year. So, do I have to file this year (being under the minimum) if I want U.S. tax credits for next year? It might well be I'm not getting the big picture.

Thanks for the help.

 

While you may not be required to file for 2010, I would just like to point out that you can probably get a Making Work Pay credit (equal to 6.2% of your earned income, max $400) if you do file. Not to mention other refundable credits you might qualify for. So it may be to your advantage to file a 2010 return anyway.

Your return should be extremely simple if you are under the minimum. Any tax software (free from the IRS website) should be able to generate a return for you, no need for an accountant, unless your financial picture is more complex than you're letting on.

Having said that, if you choose not to file for 2010, it shouldn't affect your status with respect to 2011 tax credits.

My tax situation isn't that simple. I did my math wrong.

My question now is....may I use the 1040EZ form when I had no U.S. earnings?

I've already started the normal 1040 form, but it just has a lot of zeroes.

Either way, I'm free from paying taxes, but I'll never argue an easier form.

Thanks for the help.

You cannot use the 1040EZ if you want to claim the foreign earned income exclusion or foreign tax credit.

That's the kind of answer I like. There's a bit too much 'maybe so' and 'well possibly' answers on here for my liking.

Thank you.

 

Hi,

Since you earn less than the minimum, you would not have to file for this year. However, you may be eligible for tax credits that could build up and save you money in the future, so it may be in your best interest to file.

Additionally, the IRS may think it odd if you filled for 2009, then in 2011, so they may ask you about your 2010. Not a big deal, but most people don't like hearing from the IRS!

The other thing to remember is even if you don't have to file your taxes, you may need to file your FBAR form - if you have over $10,000 in all of your foreign bank accounts (including ISA, SIPPs, etc).

The minimum penalty for not filing this form is $10,000 and can go up to 50% of the account value per year - so if you need to file it, make sure its done by June 30th.

I hope this helps. If you have further questions please let me know.

Sincerely,

David McKeegan
www.greenbacktaxservices.com