Yep...completely lost!

OK, so I'm confused as to what I should do. Taxes always confuse and scare me. I'm always afraid I'll make a mistake! So here's the deal. Hubby, HAD a 10 year green card up until last year when he gave up his residency and moved back to the UK (he actually moved back in Sept 2011). He obviously had a Social Security number...which is his for life. Last year, when we filed taxes, I was still in the US and just left it as us both living there as he had an income up until Sept of 2011. Easy peasy! Now this year with both of us living here and him not being a resident alien anymore...I have no idea how to file. I'm assuming married filing jointly  . I haven't got a clue which forms I need though. I don't work and collect SSDI because of my RA...but of course hubby works, so I assume I need to include his income if I file MFJ with his SS number?
Can someone PLEASE tell me which form 1040 we need and anything else...because I think I just spent an hour going around in circles on the IRS website.

Well, I THINK I finally found my answer. I can file whichever 1040 suits our situation, file MFJ with him as an NRA being taxed as a RA, including a statement that includes this wish along with our return...and form 8233. We don't have any assets or money in the bank over 10,000.00.
Does that sound right??


Or maybe its form 8555 not 8233     

Gaaaah!  I know what you mean.

I'll assume that your husband has filed 8854 and the IRS officially considers him as a NRA.

You have two options. You can file MFJ or MFS. If you file jointly the NRA will be considered as a US resident for tax purposes so you'll have to deal with all their non-US income and investments. If you file separately you obviously just need to deal with your income etc on your 1040 and your NRA husband would only need to file a 1040NR if he had US source income.

I'm unsure of the tax status of your SSDI. I don't think that is covered under the SS/pensions Article of the Treaty as it's not a SS retirement benefit so it will be taxable in the UK and the US and you'll just have to apply the treaty and UK and US rules to avoid double taxation, but check on that.

Why do you have to file 8233?

I'll assume that your husband has filed 8854 and the IRS officially considers him as a NRA.
hmmm, nope...didn't know anything about it.
You have two options. You can file MFJ or MFS. If you file jointly the NRA will be considered as a US resident for tax purposes so you'll have to deal with all their non-US income and investments. If you file separately you obviously just need to deal with your income etc on your 1040 and your NRA husband would only need to file a 1040NR if he had US source income.

I'm unsure of the tax status of your SSDI. I don't think that is covered under the SS/pensions Article of the Treaty as it's not a SS retirement benefit so it will be taxable in the UK and the US and you'll just have to apply the treaty and UK and US rules to avoid double taxation, but check on that.
As far as I can tell, SSDI is covered under the tax treaty (I was reading publication 915)Social security benefits include monthly retirement, survivor, and disability benefits. They do not include supplemental security income (SSI) payments, which are not taxable.
I am really confused as to who I'm supposed to pay the tax to on that one. IRS says if I'm living in the UK, my benefits are tax exempt. How do I pay tax to HMRC on them?


Why do you have to file 8233?
I don't...I got the form wrong, but if we file as hubby being a Resident, we have to file 2555 to to exclude hubby's foreign income...right?? Ugh, too many letters and numbers in my head!!!

On top of all this...we got a check from HMRC today for an over payment of taxes for hubby that we need to double check and make sure its correct as God only knows if HMRC have gotten it right!

When you give up long term US residency you should file an 8854 with the IRS and an I-407 with the INS. Until those are done the IRS will still consider your husband as a US tax resident.

Be careful, I'm not sure the treaty SS benefits include SSDI. If the IRS says that your SSDI is tax exempt under the Treaty as you are a UK resident get something in writing from them.

Anyway the question now becomes how SSDI is taxed by HMRC. Look here

http://www.hmrc.gov.uk/manuals/eimanual/EIM76009.htm

and here

http://www.hmrc.gov.uk/manuals/eimanual/EIM76100.htm

If you can convince HMRC that SSDI is similar enough to one of it's own tax exempt SS benefits it might well be free in UK tax.

If your husband has foreign income you can use 2555 to exclude foreign earned income and/or 1116 to take foreign tax credits.

OK...I'll take a look at those publications. One more question... if I can't convince HMRC they're(SSDI) a similar benefit that isn't taxed, do I have a personal allowance  here in the UK?

OK...I'll take a look at those publications. One more question... if I can't convince HMRC they're(SSDI) a similar benefit that isn't taxed, do I have a personal allowance  here in the UK?

Yes here are the personal allowances and if you have foreign income you file a self assessment form.

http://www.hmrc.gov.uk/rates/it.htm

Thanks so much! You've helped immensely! My head doesn't feel like its spinning now!!