Planning ahead

I am looking for some advice about the coming year.. We are both US citizens and we are moving to the UK in April.  I have just filed our taxes for 2014 and that got me thinking about next year.  I have read some of the posts here and I have some question I am hoping you all can help with.

We file MFJ and will continue to do so from UK.  Can we use turbo tax to efile from the UK? All our income will be from the US, both of us get social security disability and I get long term disability payments from my last employer that will continue to be paid until we have been out of the US for more than 12 months.

We will be moving about $60,000 to our UK savings account so I am thinking we will need to do the FBAR, when will we need to file that?  I am hoping that I can get some info so I will know what we need to do and when.

I would like to think I can use TT to file MFJ when we move to the UK, but I don't know the answer.

If you move money to the UK this year as you suggest then you will need to file in 2016 for the highest amount your UK accounts got to in 2015, and that FBAR filing will be due before June 2016.

Just a quick question. Are you UK citizens too, if not what visa will you be on?

Just a quick question. Are you UK citizens too, if not what visa will you be on?

I am a UK/US citizen and my spouse is a US citizen and we have a Spouse Visa that we will be using to enter together on April 20th.

I was unsure if we would need to file the FBAR in June this year good to know we have until 2016 before we need to file it.  As we only have our SSDI and a disability pension we are hoping to be able to file using TT or another software as we dont want to have to pay out $$$ to have it done for us unless it is very complicated.

I am a UK/US citizen and my spouse is a US citizen and we have a Spouse Visa that we will be using to enter together on April 20th.

I was unsure if we would need to file the FBAR in June this year good to know we have until 2016 before we need to file it.  As we only have our SSDI and a disability pension we are hoping to be able to file using TT or another software as we dont want to have to pay out $$$ to have it done for us unless it is very complicated.

If you are intending to reside in the UK you should be thinking about your UK tax. Your SSDI will only be taxable in the UK and you will have to pay tax on the private disability pension to HMRC and then get a US tax credit for that. Depending on the level of the disability pension you might not even have to file US taxes.

If you are intending to reside in the UK you should be thinking about your UK tax. Your SSDI will only be taxable in the UK and you will have to pay tax on the private disability pension to HMRC and then get a US tax credit for that. Depending on the level of the disability pension you might not even have to file US taxes.

I will be going to talk to the local HMRC office once we are back in UK as I have no idea about doing self assessment my tax was always done by my employers. I dont know if I will have to pay tax to HMRC, I know the SSDI is taxable in UK I think I read that is only 90% that is counted but I may be wrong.. I am thinking that next years US and UK taxes will be complicated as we will have part year in both countries.

Oh.. the head hurts just thinking about it all. At lease we wont need to file anything as soon as we get there.  I will have plenty of time to read, read and read some more.

Do you have money that will be left in the US like IRAs, 401ks or just regular mutual fund accounts? Those might need a bit of organization before you leave the US.

You're right that the UK will tax 90% of your SSDI and also 90% of your employer disability pension. That pension will also be taxable in the US and most other US source income will be taxable in the US and the UK. If your income is above the tax threshold or you have to file to claim back US withholding tax you will have to be come familiar with foreign tax credits and resourcing of US income or pay a company to do it for you.

Do you have money that will be left in the US like IRAs, 401ks or just regular mutual fund accounts? Those might need a bit of organization before you leave the US.

You're right that the UK will tax 90% of your SSDI and also 90% of your employer disability pension. That pension will also be taxable in the US and most other US source income will be taxable in the US and the UK. If your income is above the tax threshold or you have to file to claim back US withholding tax you will have to be come familiar with foreign tax credits and resourcing of US income or pay a company to do it for you.

Thank you for this information, I can see I have some learning to do. We had to cash out our 401k to pay off medical bills after retiring on disability and the only other thing we will still hold in the US is some shares in Bank of New York so there will be a small dividend paid each year.  I am going to do a dummy tax return using TT using this years data but as if we were already in UK and see what it does.  If anyone knows of another tax software that would be better than TT please let me know.

Thanks 

TT won't be able to deal with your situation, even though it is quite simple.
There is no problem with you holding the Bank of New York shares, the issues are with mutual funds. But the taxation of the dividends is not straight forward as it involves the tax treaty.

The UK will want to tax you on the dividends because you're a resident and the US wants to tax you as a citizen and because the dividends originate in the US, but the treaty has a rule that says in your situation you pay 15% tax on dividends to the US and you take a foreign tax credit on any UK tax due. Now it might transpire that you owe no tax on dividends in either the UK or the US because of your low income, but you need to be aware of the rules so you know you are doing things right.

TT won't be able to deal with your situation, even though it is quite simple.
There is no problem with you holding the Bank of New York shares, the issues are with mutual funds. But the taxation of the dividends is not straight forward as it involves the tax treaty.

The UK will want to tax you on the dividends because you're a resident and the US wants to tax you as a citizen and because the dividends originate in the US, but the treaty has a rule that says in your situation you pay 15% tax on dividends to the US and you take a foreign tax credit on any UK tax due. Now it might transpire that you owe no tax on dividends in either the UK or the US because of your low income, but you need to be aware of the rules so you know you are doing things right.

Thank you for this insight.  Is there a publication that I can access to read about the dividends and tax also can you confirm that we dont have to do the FBAR until June 2016..

Juts google "US UK tax treaty" and of course you can ask questions here, but if in doubt a professional is the way to go and don't take anything said on public forums as gospel.

As far as FBAR is concerned if you have over $10k aggregate in a foreign account during any time in a year you will have to file FBAR.....so if you have $10k in a UK bank in 2015 you would file FBAR for 2015 in 2016.

Thank you for your help..

You're right that the UK will tax 90% of your SSDI and also 90% of your employer disability pension.

Sorry for resurrecting an old thread, but this is exactly the issue I am interested in. I've gotten conflicting advice on US SSDI taxability in the UK. Some have said it was equivalent to Disability Living Allowance, which is non-taxable in the UK and therefor not taxable, but others indicate it is taxable. And this is the first time I've seen the 90% figure.

Can anyone indicate what rules apply and where the 90% comes from?

Sorry for resurrecting an old thread, but this is exactly the issue I am interested in. I've gotten conflicting advice on US SSDI taxability in the UK. Some have said it was equivalent to Disability Living Allowance, which is non-taxable in the UK and therefor not taxable, but others indicate it is taxable. And this is the first time I've seen the 90% figure.

Can anyone indicate what rules apply and where the 90% comes from?

SSDI might serve a similar function as DLA, but it is NOT the same as it is foreign and therefore it is taxed under completely different rules.

IMHO US SSDI comes under the treaty article governing social security payments and is therefore taxable in the UK.....and not taxable in the US. If HMRC sees it as a foreign pension then only 90% will be taxed in the UK.

SSDI might serve a similar function as DLA, but it is NOT the same as it is foreign and therefore it is taxed under completely different rules.

IMHO US SSDI comes under the treaty article governing social security payments and is therefore taxable in the UK.....and not taxable in the US. If HMRC sees it as a foreign pension then only 90% will be taxed in the UK.

Thanks for your quick reply. What you write makes sense to me for Social Security retirement, but the similarity of SSDI to Disability Living Allowance makes me wonder if it can be classed differently.

I actually contacted HMRC about this and they gave me two different answers and basically said they couldn't tell me for sure and seemed to say it was up to me to decide which advice to follow.

Here's the logic I'm hoping they would accept. On this page:
newcomer link: http://www.hmrc.gov.uk/manuals/eimanual/eim76100.htm [nonactive]
It has a list of nontaxable income, which includes Disability Living Allowance, and at the bottom it says "Certain foreign social security payments are exempt from UK tax (see EIM76009)."

That is linked to:
newcomer link: http://www.hmrc.gov.uk/manuals/eimanual/EIM76009.htm [nonactive]
which includes this text: "There is no liability to income tax in respect of the full amount of any other foreign benefit that is not a taxable foreign benefit if it is substantially similar in character to a UK social security benefit listed in Section 677 Table B ITEPA 2003 (see EIM76100)."

Which is linked back to the first page.