Who files your taxes???

I've always done it myself but after reading the posts here and in the "American in Britain" magazine, I'm wondering if I've done it correctly. The cheapest company that advertises to do the tax returns is US$ 350, which seems a lot of money. I don't work so only have pension (UK) and Social Security (US) income. It's pretty straightforward, but once in awhile I get a dividend or maybe a little interest from a bank account.

So, is there a less expensive alternative to the $350? Has anyone asked for tax advice from the US Embassy tax people?

Has anyone asked for tax advice from the US Embassy tax people?

The IRS office at the U.S. Embassy London is now permanently closed. See http://london.usembassy.gov/irs/

A typical UK-based tax accountant who knows about both US and UK tax is likely to charge upwards of £250 per hour for their own time, and £150 per hour for junior staff time, all + VAT. I expect no accountant will do a US tax return for less than about £500, probably more. So the price of $350, quoted by US-based people is quite competitive, and there is no VAT to pay. However, it sounds like your affairs might be very simple. Why not pay the $350 once, in a year that you have the complication of a dividend, see how the professional accountant does it and then in future years do it yourself, substituting your new numbers in the right places? You could use software like TaxAct ($29.99) to help with filling in the forms.

Something to consider about dividends and interest is that from 6/4/16 there will be no UK tax charged on the first £5,000 of dividends or first £1,000 of bank interest (for basic rate taxpayers.) But such income may incur a US tax charge, unless you have paid UK tax on other income which can be credited in the same Form 1116 baskets. This mismatch between tax systems will add to the costs of being a US person living in the UK, additionally to the $350 cost of having a tax return prepared.

I've always done it myself but after reading the posts here and in the "American in Britain" magazine, I'm wondering if I've done it correctly. The cheapest company that advertises to do the tax returns is US$ 350, which seems a lot of money. I don't work so only have pension (UK) and Social Security (US) income. It's pretty straightforward, but once in awhile I get a dividend or maybe a little interest from a bank account.

So, is there a less expensive alternative to the $350? Has anyone asked for tax advice from the US Embassy tax people?

Your situation seems quite simple. The US SS will only taxable in the UK, your UK pension is UK taxable and any tax you pay can be used to offset US tax with a FTC.

What investments generate your dividends and interest and where do they arise?

Something to consider about dividends and interest is that from 6/4/16 there will be no UK tax charged on the first £5,000 of dividends or first £1,000 of bank interest (for basic rate taxpayers.) But such income may incur a US tax charge, unless you have paid UK tax on other income which can be credited in the same Form 1116 baskets. This mismatch between tax systems will add to the costs of being a US person living in the UK, additionally to the $350 cost of having a tax return prepared.

Also remember that your personal exemption and standard deduction give you a bit of a "cushion" on non-excludable income that you can have tax-free (it's just over $10,000 if you're single or MFS - more if you're filing jointly, qualify for head of household, and/or have other dependents) - thus if you have no more than that amount of passive (or U.S.-source) income you still shouldn't have any worries.

Thanks for the replies. I think, for peace of mind, it's probably worth it to go ahead this one time and have it professionally prepared. I find it difficult to keep up with the changes every year. Although I do know about the FBAR filing, I lay in bed wide awake (usually about 3am!) worrying that I've missed something every year about this time!

Thanks for the replies. I think, for peace of mind, it's probably worth it to go ahead this one time and have it professionally prepared. I find it difficult to keep up with the changes every year. Although I do know about the FBAR filing, I lay in bed wide awake (usually about 3am!) worrying that I've missed something every year about this time!

That sounds like a good approach if you are worrying. $350 for peace of mind is good value IMHO.

That sounds like a good approach if you are worrying. $350 for peace of mind is good value IMHO.

+1

As much as I've learned here I plan on doing the same thing for my first return after we have moved back this year. (I've done my own US taxes for 25 years while living here but still feel I'd like some professional hand holding to begin with)

I still haven't decided which way I'm going to do it this first time.

I've just completed my 2015 return, which I did via TaxAct. It used to be completely free to file all forms and schedules, although now you need to upgrade to file a 2555 and other forms that USC's overseas may require. Looking at other on-line providers, it looks like they too have gone away from free file; for all but the more straight forward return. However for $14.99 the TaxAct price is good by comparison to others.

For what sounds like an extremely simple and straightforward 1040 filing, not in this or any other lifetime would I pay $350. The $14.99 TaxAct fee is about as high as I would go, and even that seems unnecessary. The FBAR (now renamed FinCen 114, as I recall) filing is on-line, and so ridiculously simple for most of us, and that's not even due for a few months.

Your mileage may vary, but personally I can find lots of things on which to spend $350 that don't include tax prep fees.

I'm having second thoughts about paying £350 myself. I think what I want more than anything is some guidance on tax laws.... my amounts are very small, but they're spread between the UK and US, so I just need to figure out who to report what to.....and how much.....etc.

I just did the FBAR thing online and it was very easy. I use TurboTax for my US taxes and pay $79 for the software. This year I have to file a 3520 for an inheritance and it turns out Turbotax doesn't have that form so I have to file it manually. There's the cost of a stamp I'll never get back.

I'm having second thoughts about paying £350 myself. I think what I want more than anything is some guidance on tax laws.... my amounts are very small, but they're spread between the UK and US, so I just need to figure out who to report what to.....and how much.....etc.

Professional advice will be expensive and £350 seems quite reasonable. The people on here can have a go at answering your questions if you pose them clearly and completely, but most of us are not professionals and the beauty/horror of taxation is that it's a very individual thing dictated by an individuals circumstances. Your SS should be pretty easy to deal with and so might your dividends depending on your income level.

Do it yourself first - maybe even with one of the 'free' on-line programs, and see how confident you feel with the result. Professional advice/prep is probably a good thing if you aren't particularly savvy and your situation is complicated, but with a straightforward return, you may be surprised how easy it can be.

Years back in the US a tax accountant who was also a personal friend told me that his firm HAD to charge a minimum fee, and for most folks it wasn't necessary. He also said (after a quick look, and comparison with a prior year more complicated return that I did pay him to prepare)..."do it yourself....you don't need me".

As someone else on this forum has said, it's as much a tolerance for paperwork as anything. Again, your mileage/comfort level may vary.