Please Help, More Questions

UGH why can't I get this stuff?  Okay I have questions, I just don't get it.  Please bear in mind that my taxes were very simple prior to the move so I've never had any complex scenarios.  I was single, no assets and just always took the standard deduction b/c I had no expenses.  I'm now married, but intend to file separately anyhow to keep our finances separate.  I know that if I filed jointly it would benefit me as my husband is a carer and makes no substantial income, but I want to avoid having to obtain an ITIN for him.

I moved to England 5/3/2017.  January through 4/30/2018 I worked as W-2 employee, as of May 2018 I was 1099.  I invoice the US company that I work with, I'm under a contract with my previous employer that states I am an independent contractor.  I talked to an accountant in the village and she said I need to do a Self Assessment in UK, not a problem.  I know I have to file taxes each year for IRS.  Here is what I do not get.

I read online that sometimes those that are self employed need to file quarterly taxes, this was for US/IRS.  Was I supposed to be paying quarterly taxes to the IRS?  I thought I just filed returns and paid the taxes at the time I filed returns.

IRS Taxes are due April 15, 2018.  Okay.  I read that I get an automatic extension so they are not due until June.  If I owe taxes, which I believe I do, I read you still have to pay as of April b/c otherwise you get assessed late payment penalties and interest on the amount owed.   Right?  I'm not sure when the UK tax returns are due, I believe at the end of this year.  Is that right? I know I have to register for self assessment by 5 October 2018 based on the above dates of when I moved to the UK.  When do I actually file the return, end of 2018, start of 2019?

If my England taxes are due after IRS taxes.  How do I get credit for the UK taxes I will have to pay for 2017 income?  I just don't understand this part.

I know I have to file Virginia tax returns, which really sucks.  Apparently VA makes it really hard for you to not have to pay taxes to them even if you live outside of the country.  Is there a way to get credit for taxes paid to another country when it comes to state taxes?

On top of this, it seems like my work has my W-2 wrong b/c it doesn't match the YTD figure on my last pay stub.  I've never noticed a discrepancy in the past.  I'm letting them know and I assume they will have to give me an amended W-2.  Right? Never had to deal with this before.  My 1099 is fine.  They still owe me my Christmas bonus, which I guess at this point will be 2018 taxes.

Also, b/c I'm too dense to understand this even after reading online, I have been looking at accountants.  I've exhausted all options of trying to find an accountant that someone I know can recommend, b/c it appears those in similar situations as me file their own taxes (b/c apparently it is soooo easy).  I've reached out to Bambridge Accountants, I've seen people suggest Greenback, Bright Tax.  What agencies should I check to see if these people have the right certifications/qualifications and know what they are doing? Ideally I want a company that does both, a friend recommended an accountant in Virginia and their site says international tax, but they do not file outside of the US they said they were part of Nexia International and could refer me to a one their Partners in England but they never sent me their info.

Thank you in advance for anyone that takes the time to help me with this.  I really appreciate the responses to my posts as I feel so lost on this issue.  I think my brain just sees TAX and just starts to shutdown.

I really, REALLY know the feeling. 

As I understand it, and really, one of the tax wonks on this board will be of more use to you, you can't get anything for UK taxes for 2017 when you file your tax returns to the IRS for 2017 unless you happen to have known well in advance of 12/31/2017 to pre-pay some of them to HMRC. And had the means available to do so. (They stopped taking credit cards.)

IRS Pub 514 says (and the wonks seem to agree) that your UK taxes formally accrue on April 5, 2018. So you can get credit for them when you file your 2018 IRS tax return.  It's my understanding that if you pay more in UK taxes based on the April 5 2018 bill before 12/31/2018, you can take the excess as credit retroactively towards your 2017 IRS taxes by filing an amended return (1040X).

If you don't have a high enough UK tax bill (April 2018) to leave enough credits towards your IRS 2017 taxes, you take a bath on them.     I guess you could try to ask HMRC for a credit, but the answer I got for that scenario on chat the other day was "sorry, the treaty says we have primary taxing rights".

I wish I could offer more help, but I'm pretty useless on it all. Hopefully one of the more knowledgeable people here will chime up and help you sort it. Good Luck with it!

I moved to England 5/3/2017.  January through 4/30/2018 I worked as W-2 employee,

For clarity, may I check these dates. Are you using US dating standards? Moved May 3rd, and through April 30th?

as of May 2018 I was 1099.  I invoice the US company that I work with, I'm under a contract with my previous employer that states I am an independent contractor.

Is the US employer, wrongfully, withholding any US tax on your contracting work from May to December? You are UK resident, a UK taxpayer as of 3 May, and any income earned after 3 May is subject to UK taxation (your primary taxing authority, arising basis) and is foreign source earned income for US purposes.

IRS Taxes are due April 15, 2018.  Okay.  I read that I get an automatic extension so they are not due until June.  If I owe taxes, which I believe I do, I read you still have to pay as of April b/c otherwise you get assessed late payment penalties and interest on the amount owed.   Right?

Correct. If you owe any additional tax for 2017 beyond what was withheld for 1 Jan to 3 May, it should be paid by 17 April 2018 to avoid penalties and interest.
 

I'm not sure when the UK tax returns are due, I believe at the end of this year.  Is that right? I know I have to register for self assessment by 5 October 2018 based on the above dates of when I moved to the UK.  When do I actually file the return, end of 2018, start of 2019?

You will want to pay any UK tax due by 31 December 2018. You may file for UK 2017/18 any time after 6 April 2018. The actual due date is 31 January 2019, but to aid US tax reporting, pay by 31 December 2018.

If my England taxes are due after IRS taxes.  How do I get credit for the UK taxes I will have to pay for 2017 income?  I just don't understand this part.

ALL IMO.

I would suggest you wait to file your 2017 1040 return until you qualify for FEIE (Foreign Earned Income Exclusion), which should occur, in your case, before 17 June 2018, providing you have spent that number of days outside the US. You need 330 days in the UK to qualify (but pay any tax due by 17 April). Once you have qualified, file a 1040 as normal for 1 Jan. 2017 to 3 May 2017 US earned income, then use the FEIE to exclude your foreign earned income (3 May to 31 Dec.).

You must make clear to your US employer that the fee he pays you for your contract work is subject first to UK taxation, and no US tax should be withheld.

I've exhausted all options of trying to find an accountant that someone I know can recommend, b/c it appears those in similar situations as me file their own taxes (b/c apparently it is soooo easy).

It is easy for many as they arrive in the UK, start work, and are taxed in the UK on the PAYE system, thereby having a record of (provisional partial UK tax year) tax paid in the UK by 31 December which they offset against the US tax return for that year (if using 1116) or qualify for 2225 if they qualify or filing for an extension if they don't.

For clarity, may I check these dates. Are you using US dating standards? Moved May 3rd, and through April 30th?

Yes sorry, May 03, 2017 I started living in England.  My last pay stub as an employee was April 30, 2017.

Is the US employer, wrongfully, withholding any US tax on your contracting work from May to December? You are UK resident, a UK taxpayer as of 3 May, and any income earned after 3 May is subject to UK taxation (your primary taxing authority, arising basis) and is foreign source earned income for US purposes.

They stopped withholding everything starting my May 2017 pay, no medicare, etc.  So I'm not sure if I'm supposed to be paying something quarterly like I saw online or if I just pay it at the end of the year.

Correct. If you owe any additional tax for 2017 beyond what was withheld for 1 Jan to 3 May, it should be paid by 17 April 2018 to avoid penalties and interest.
  You will want to pay any UK tax due by 31 December 2018. You may file for UK 2017/18 any time after 6 April 2018. The actual due date is 31 January 2019, but to aid US tax reporting, pay by 31 December 2018.

So I can actually file my UK returns after April 6, 2018?  UK would be for all income earned starting May 3, 2017.  Right?  I'm only paying the UK tax for the income earned when I started living in the UK.  But I'm paying IRS tax for income earned all of 2017.  Right? 

When I'm trying to determine if I owe the IRS, I take all my income from 2017 determine my tax bracket to see how much tax was due.  Then I need to look at what was already deducted and essentially the difference should be what I owe.  Right?  Is there a way to pay the IRS tax owed without filing a return with the payment?

Also I'm now confused as to IRS/State/Medicare SS.  Do I need to pay Medicare of Social Security taxes while outside of the US?

ALL IMO.

I would suggest you wait to file your 2017 1040 return until you qualify for FEIE (Foreign Earned Income Exclusion), which should occur, in your case, before 17 June 2018, providing you have spent that number of days outside the US. You need 330 days in the UK to qualify (but pay any tax due by 17 April). Once you have qualified, file a 1040 as normal for 1 Jan. 2017 to 3 May 2017 US earned income, then use the FEIE to exclude your foreign earned income (3 May to 31 Dec.).

This part I have to look into.

You must make clear to your US employer that the fee he pays you for your contract work is subject first to UK taxation, and no US tax should be withheld.
It is easy for many as they arrive in the UK, start work, and are taxed in the UK on the PAYE system, thereby having a record of (provisional partial UK tax year) tax paid in the UK by 31 December which they offset against the US tax return for that year (if using 1116) or qualify for 2225 if they qualify or filing for an extension if they don't.

Yes they are not withholding anything and leaving that responsibility up to me.

Thank you to you and Nan for your responses and opinions.

So I can actually file my UK returns after April 6, 2018?  UK would be for all income earned starting May 3, 2017.  Right?

For you, right. It's your UK income (from your consultancy work) from 3 May 2017 to 5 April 2018, plus any other income received from that period. 

  I'm only paying the UK tax for the income earned when I started living in the UK (UK tax year 2017/18).  But I'm paying IRS tax for income earned all of 2017.  Right?

Right. 

When I'm trying to determine if I owe the IRS, I take all my income from 2017 determine my tax bracket to see how much tax was due.  Then I need to look at what was already deducted and essentially the difference should be what I owe.  Right?

Hmmmm. Take all income earned (and unearned - like interest, etc.) in the US and add it to all income earned in the UK (including interest, etc.) during all of 2017. Then (via form 2555 - once you qualify) you will likely then subtract all UK earned income. Then take away the standard deduction and your personal exemption amount. Provided there is no other income or deductions, this will be the amount of income you owe tax on. Look it up in the tables under "Married Separate" for the tax amount to pay. From the amount to pay, subtract any federal income tax withheld in the US from 1 Jan to 30 April. If you have already paid more than you owe, you owe no additional tax. If the amount withheld is less than your tax from the tables, then you will owe some additional tax.

CAUTION ! This is a very simplistic example. Only you know what the types and amounts of income, deductions, or credits are for your own personal circumstances.

  Is there a way to pay the IRS tax owed without filing a return with the payment?

I believe there is, yes. Check out the IRS site.

Also I'm now confused as to IRS/State/Medicare SS.  Do I need to pay Medicare of Social Security taxes while outside of the US?

In most circumstances, if you are in the UK, no. There are exceptions relating to intended length of stay and your employer.

For you, right. It's your UK income (from your consultancy work) from 3 May 2017 to 5 April 2018, plus any other income received from that period. 
Right. 

Is there a way I can do tax period only until Dec 2017 in the UK instead of having it go to April 2018?  Or is that not possible the first time?  I thought I read from a post that you can select to end in Dec for UK tax so it matches US and makes it is easier when filing.

Is there a way I can do tax period only until Dec 2017 in the UK instead of having it go to April 2018?  Or is that not possible the first time?  I thought I read from a post that you can select to end in Dec for UK tax so it matches US and makes it is easier when filing.

This is what we did, and plan on doing so each year.

Is there a way I can do tax period only until Dec 2017 in the UK instead of having it go to April 2018?  Or is that not possible the first time?  I thought I read from a post that you can select to end in Dec for UK tax so it matches US and makes it is easier when filing.

The UK lets a business choose any accounting year end it chooses. Whether your contract with the engager of your services is a business or simply a nickname for being an employee of a US based organisation is a question of your status. Hopefully you have investigated this, to ascertain if you might be entitled to any of the rights available to employed workers here in the UK.

The UK lets a business choose any accounting year end it chooses. Whether your contract with the engager of your services is a business or simply a nickname for being an employee of a US based organisation is a question of your status. Hopefully you have investigated this, to ascertain if you might be entitled to any of the rights available to employed workers here in the UK.

Does that mean I can only choose if I am providing services as an entity?  I do not have an LLC or other corporate entity under which I offer services.

https://www.gov.uk/government/publications/how-to-calculate-your-taxable-profits-hs222-self-assessment-helpsheet/hs222-how-to-calculate-your-taxable-profits-2017-5

I want to file married filing separate to keep my husband out if IRS system.  I guess if we filed jointly, bc he makes very little it would probably benefit is tax wise with IRS.  However if we filed jointly and he inherits property would having filed jointly potentially mean we would need to pay IRS for some reason?  Is inheritance of real estate taxable by IRS?  Does filing separate offer protection if so?

I guess if we filed jointly, bc he makes very little it would probably benefit is tax wise with IRS.

Given the information from your posts above, why on earth would you think there is a benefit, in your particular case, to filing jointly with the IRS?

You're a US citizen living abroad now. Unless your spouse is also a USC, most of the standard US tax jingoisms (maximum thresholds and deductions, filing joint is better) no longer apply.

There are many advantages to having a UKC spouse who is not a 'US Person'.

Given the information from your posts above, why on earth would you think there is a benefit, in your particular case, to filing jointly with the IRS?

You're a US citizen living abroad now. Unless your spouse is also a USC, most of the standard US tax jingoisms (maximum thresholds and deductions, filing joint is better) no longer apply.

There are many advantages to having a UKC spouse who is not a 'US Person'.

I assumed that normally when married and if joint income is low for two the lower the tax bracket...is that incorrect? As a carer he makes minimal income so my income for two vs one I thought made if more favorable if filing jointly...no? @_@?

I assumed that normally when married and if joint income is low for two the lower the tax bracket...is that incorrect? As a carer he makes minimal income so my income for two vs one I thought made if more favorable if filing jointly...no? @_@?

After 2017, and depending on your income (under $116,000 per year?), you likely won't owe US tax even if filing married separate. After 2017, will you be earning, for example, $150,000 per year? If so, then you'll want to run sample calculations all ways to determine if filing jointly has any advantages (FEIE vs. FTC vs. Joint vs. separate).

Once your UK spouse is down for joint US filing (which means all their worldwide income is included on the joint return) you'll have to file that way in future years. You do get to change that status back to separate, but you can only do it once (as long as you're married to the same person), with IRS approval,  and never again. Today, your spouse is free to invest in any UK offering, receive UK benefits, have a substantial pay rise, have a bonus, or win the lottery. If they are filing jointly on your US return, all of the above create US taxable/reportable income on the joint US return which is still unlikely to make a difference to your (already $0) US tax liability.

After 2017, and depending on your income (under $116,000 per year?), you likely won't owe US tax even if filing married separate.

For clarity:

The first year abroad is often the most difficult tax wise. For 2017, and thanks to something called the stacking rule, you may owe a small amount of US tax. Then again, you've possibly had withholdings at a rate for the entire year but only had 4 months of income in the US, so you may very well not owe any US tax for 2017. IMO, it would be silly to sacrifice your spouse to continual yearly reporting to the IRS for the small amount of tax due for this particular year. Starting in 2018, you will likely owe no US tax even if filing Married Separately. You have an optimal position if earning less than the FEIE allowance. You've indicated you have no or little investments and only earned income. You may decide differently. It's your choice.

IF you and your spouse intend to permanently relocate to the US within the next year or two, then you might consider including them on your 1040 since at that time they would have to file a US return as resident in the US anyway.