2012 US Taxes Filing from UK (with UK Income)

Hello,

I've recently filed my 2012 US taxes from the UK. I'm only 24, and don't have massive amounts of time to read through the publications on everything as my wife and I have a 21 month old, and I work full time in the UK where we live.

Basically, I thought I had everything right, but it turns out I didn't and apparently I owe the IRS almost $3,000 (which there's no way I should). The government shutdown kind of messed up my whole filing. The way I did it I equaled so I didn't owe anything, but I guess I somehow messed everything up. I have US student loans as well, so I am trying to make my income look as low as possible so I can do a IBR (income based repayments) on those, which obviously my dependents would of taken care of that.

I don't earn anywhere near the $95k mark so, I should be able to claim that all back through Foreign Tax Exclusion or whatever (Form 1116 I used, probably incorrectly filed as well), which again I must be missing something on here because I didn't do anything near that.

I put Head of Household because my wife was pregnant during that year, and didn't work much, but I've been told I should of filed married filing separately apparently? The IRS "corrected" my application to "single." I filed a W-7 for her, but didn't put her name on the application anywhere (because there was no where to put it?) so it was denied. My W-7 forms for my step-children and they were denied because of the shut down as they asked for more information, I gave it, the shut down happened and the information didn't get to them in time because of this.

Also with our son having a claim to citizenship he can't get a ITIN number, but he doesn't have citizenship yet, so he can't have a SS number? I put him on the application, because he was only a few month old (born in April 2012), but I don't think I can because he doesn't have any tax ID number.

I think I need to file a 1040X but I'm not sure? I'm really confused about the whole thing and if someone could help me amend/take a look to show me where I've gone wrong it'd be greatly appreciated. I'm willing to pay for help, but I'm fairly limited on funds as it is, and can't afford some of the prices I've been quoted (over £300) to have someone (get everything correct) file for me.

I'll also probably need some help with the 2013 tax year as well.

I think that's everything, and if anyone needs more information or would have a look at what I did file, and could help me with the 1040X it'd be greatly appreciated.

Thanks,

Steve

P.s there was something else I meant to write down, but I can't remember it for the life of me.

I'm afraid can't help with the tax stuff, but I just wanted to comment on this:

Also with our son having a claim to citizenship he can't get a ITIN number, but he doesn't have citizenship yet, so he can't have a SS number?

Yes, he does have US citizenship.

He has been a US citizen since the day he was born (because you are a US citizen, he automatically became a US citizen at birth).

You just need to register his birth at the US Embassy in London, apply for his SS number and get him a US passport.

See here: http://london.usembassy.gov/cons_new/faqs/faq_children.html
and here: http://london.usembassy.gov/cons_new/acs/passports/robirth4.html
and here: http://london.usembassy.gov/cons_new/acs/passports/robirth.html

I think you have made some pretty basic errors. For example Form 1116 is for foreign tax credits not the foreign earned income exclusion. If you don't have the time to devote to doing your taxes you might think about using one of the US expat tax services. They will do simple filings for a few hundred dollars.

Getting someone else to deal with it is sure to be expensive. Some cheaper options:

1. Use tax software such as Tax-Act or Turbo Tax. These are available for previous years and are adequate for uncomplicated filings.

2. Talk to the IRS office in the London Embassy.

Unfortunately, it's going to cost you time and/or money - there's no way round it.

I'm afraid can't help with the tax stuff, but I just wanted to comment on this:

Yes, he does have US citizenship.

He has been a US citizen since the day he was born (because you are a US citizen, he automatically became a US citizen at birth).

You just need to register his birth at the US Embassy in London, apply for his SS number and get him a US passport.

See here: http://london.usembassy.gov/cons_new/faqs/faq_children.html
and here: http://london.usembassy.gov/cons_new/acs/passports/robirth4.html
and here: http://london.usembassy.gov/cons_new/acs/passports/robirth.html

Yes I figured. I already knew that, it costs $200 to get his passport and SS number, plus it's a trip to London (live in Newcastle) on top of that and my holidays at work are basically set so it's trying to get everything in line with that as well.

Getting someone else to deal with it is sure to be expensive. Some cheaper options:

1. Use tax software such as Tax-Act or Turbo Tax. These are available for previous years and are adequate for uncomplicated filings.

2. Talk to the IRS office in the London Embassy.

Unfortunately, it's going to cost you time and/or money - there's no way round it.

Only just seen that Turbo Tax can do international stuff and is free. The IRS in London didn't help me at all when I spoke with them. Might give Turbo Tax a go this tax year and see what happens. I think I need some professional help unfortunately for 2012 as it looks like I've definitely made some mistakes.

If you're in Newcastle it may be easier for you to go register your son's birth in Edinburgh.

If you're in Newcastle it may be easier for you to go register your son's birth in Edinburgh.

I wasn't sure if this could be done because we live in England, so we're supposed to go to London. Scottish residents to Edinburgh. I've seen some people have done it though. It's a nightmare trying to ring Edinburgh embassy to ask if it'd be ok.

Anyone help on the tax side?

Anyone help on the tax side?

I've used TurboTax for years after beginning to receive my UK pension. (I live in the USA).

My experience with it is that yes, the international forms are available, but it doesn't walk you through it like it does with no foreign income.

We are planning on returning to the UK and I've tried using TT on a dummy return as if I was a resident in the UK and filing the US return.  My personal conclusion is that I am going to use a tax pro, at least for the first year or 2.

I've used TurboTax for years after beginning to receive my UK pension. (I live in the USA).

My experience with it is that yes, the international forms are available, but it doesn't walk you through it like it does with no foreign income.

We are planning on returning to the UK and I've tried using TT on a dummy return as if I was a resident in the UK and filing the US return.  My personal conclusion is that I am going to use a tax pro, at least for the first year or 2.

That's a shame was hoping for something just to walk through like a breeze. Think it's ridiculous that the US can tax you when you've already been taxed in a foreign country and aren't even living in the US.

 What's tax pro like? Free or cost?

What's tax pro like? Free or cost?

I don't know yet, I won't need to file as a UK Resident until the 2016 tax year.

I don't know yet, I won't need to file as a UK Resident until the 2016 tax year.

Ah right. This whole thing is a bit ridiculous. Still can't get over having to file taxes in the US even though I don't live or work in the US.

Anyways, went for a bit of professional help, but am gawking at the fee a bit. This is what I've wrote to them, hopefully it'll help clear things up a bit more on my situation as I wrote the initial post from my iPad:

My US declared earnings were $34,608 (line 37) which should of been tax free under the foreign exclusion as it was under the $95,000 threshold. The IRS agreed on this with their notice back to myself. I filed a Form 1040 with a Form 1116, which I now know is the wrong form for the foreign tax exclusion as that form is for foreign tax credit. I declared myself as Head of Household as my wife didn't earn that year as she was on maternity leave with our baby boy, who I also claimed as a dependant. With claiming her, I understood that I needed a Form W-7 for her and applied for that, which was declined based on her name not being anywhere on the application as I didn't see or know where to put it. The IRS corrected this to me being single instead of Head of Household. Unfortunately I didn't put a Social Security (SS) or Individual Taxpayer Identification Number (ITIN) down for my son as he has a claim to US citizenship which would allow him a SS number, therefore making him not eligible for a ITIN, but he doesn't have his citizenship yet or a SS as you need to apply for that which costs a fee and a trip to London. I also claimed my two stepchildren and applied for ITIN's for them. Unfortunately they were denied because my paperwork didn't show up in time (it did, the government shut down made it late, so thy denied them ITIN's). Upon filing all this with the IRS I had a total taxable income of $6,908 (line 43) and With the IRS "corrections", losing all my dependents, etc they adjusted it so I had a total taxable income of $24,858 thus making me owe $2,603 on line 61.

I kind of need my dependents to be on there as well as my income be as low as possible as I have quite a bit of student loan debt with the federal government that I would like to do a income based repayment on, which hopefully with my dependents would be $0-$50 per month instead of the $800 or so.

I think you have made some pretty basic errors. For example Form 1116 is for foreign tax credits not the foreign earned income exclusion. If you don't have the time to devote to doing your taxes you might think about using one of the US expat tax services. They will do simple filings for a few hundred dollars.

Might try and fix this myself first.

What's the form for foreign income exclusion? EDIT: Form 2555…but I can't find it for 2012? EDIT: Found.

Ok, so next step. 1040X? (is this for 2012?)

Sounds like you are due a good size refund if you get SSNs for US citizen dependents, claim foreign tax credits and then get refundable child credits each year from the IRS.  This is good money and to my mind worth the effort.

Sounds like you are due a good size refund if you get SSNs for US citizen dependents, claim foreign tax credits and then get refundable child credits each year from the IRS.  This is good money and to my mind worth the effort.

How do you figure? My step children have no claim to US citizenship, nor does my wife. They can get ITINs however.

Where do I write my final number from form 2555ez on the 1040x?