Well, now I'm confused

Hi everyone!

So this would be my first year filing taxes as an expat here in the UK and I'm trying to figure out if I have to file?

Last year I earned $3,912.54, with the federal exchange rate for 2014. Which is $37.36 below the required filing threshold for married filing separately. Among our accounts, they haven't reached the filing threshold for the FBAR either.

I realise I've been putting off asking, I really thought I was okay and didn't need to file. Now I'm worried that I need to because I'm not understanding.

Hi everyone!

So this would be my first year filing taxes as an expat here in the UK and I'm trying to figure out if I have to file?

Last year I earned $3,912.54, with the federal exchange rate for 2014. Which is $37.36 below the required filing threshold for married filing separately. Among our accounts, they haven't reached the filing threshold for the FBAR either.

I realise I've been putting off asking, I really thought I was okay and didn't need to file. Now I'm worried that I need to because I'm not understanding.

If you are below the filing thresholds you don't need to file. However, you need to consider all your income and not just earned income.

Also make sure you understand the FBAR threshold. It's the aggregate value of all accounts, not individual AC values, and it's based on the maximum for each AC.

Just simplistically - say you had the equivalent of $5,001 in current AC #1 on February 1, and decided to do a 'switch' and opened current AC #2 on Feb 15 - moving $5K to AC #2 because you spent $1 in the interim. Well......the aggregate value of the accounts for that year is....not $5001, but $10,001. Seems like fuzzy math, but that's the way it works.

So look at each account, and note the highest amount in each account during the calendar year, at whatever point in time. Never mind how long the money was on deposit, or whether it went in and out in a matter of nanoseconds to another account. 

Personally, I would file anyway, just for the paper trail...AND you need to file the IRS form that shows you are exempt from the ACA charge (assuming you meet the bona fide residence or physical presence test).

Personally, I would file anyway, just for the paper trail...AND you need to file the IRS form that shows you are exempt from the ACA charge (assuming you meet the bona fide residence or physical presence test).

You're automatically exempt if your income is below the filing threshold without needing to file any forms (whether you live in or out of the U.S.).

Also make sure you understand the FBAR threshold. It's the aggregate value of all accounts, not individual AC values, and it's based on the maximum for each AC.

Just simplistically - say you had the equivalent of $5,001 in current AC #1 on February 1, and decided to do a 'switch' and opened current AC #2 on Feb 15 - moving $5K to AC #2 because you spent $1 in the interim. Well......the aggregate value of the accounts for that year is....not $5001, but $10,001. Seems like fuzzy math, but that's the way it works.

So look at each account, and note the highest amount in each account during the calendar year, at whatever point in time. Never mind how long the money was on deposit, or whether it went in and out in a matter of nanoseconds to another account. 

Personally, I would file anyway, just for the paper trail...AND you need to file the IRS form that shows you are exempt from the ACA charge (assuming you meet the bona fide residence or physical presence test).

I do understand that it's the total of every account when they had the most money in them. Luckily for me it's easy as we don't have many accounts at this point.

And I moved over 19th February last year, so I pass the physical presence test. I checked into that last year before I even moved over, so I'd know if I needed to file by the usual time or if I had the extension.

If you are below the filing thresholds you don't need to file. However, you need to consider all your income and not just earned income.

I looked at my payslips again and I didn't even earn $3000. I only had two paychecks in 2014 and one of those I only earned 1/4 of a normal paycheck.

Form 8965 - which you file to claim the exemption under the ACA - is new this year. It is filed with your tax return.

Normally if your exemption is due to low income (below the filing threshold) you don't need to file a tax return or Form 8965. But given that you will be claiming an exemption under the foreign residence provision, it's a gray area. The IRS doesn't like gray areas, and their opinion of what we mere mortals need to do trumps everything else in the universe.

Personally, given the small amount of time it will take to file a return (which you can possibly do on-line with a free provider), and to establish a paper trail that you may well need in the future, I would file a return. The peace of mind is well worth the effort.