Please Help, More Questions

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.

Thank you and I sure hope the first year is indeed the hardest.  I guess since this is the first year abroad and first married it all seems overwhelming.  I have read so many nightmare stories online about huge tax debts that just keep growing with penalties and interest...having to go from always single and standard deduction on tax returns to this is just a bit scary.

I think I am going to try and do them with turbotax this year and I hope I don’t screw up.  I still don’t get the whle foreign tax credit or foreign income exemption but I am hoping the software walks me through it.  If I still can’t get it with turbo tax, I guess I will pay the £400 for someone to help me, which I really would like to avoid bc that’s quite a chunk of money.

The plan is for me to stay with him until we can get my citizenship here so we have a “safe” place where we both can live without immigration renewals etc.  I think if inheritance is at potential risk of being taxed and even if not, I think like you pointed out married filing separate is probably best in most scenarios for us.

Not sure which turbotax software I should get though, I guess I need the expensive one for self employed @-@

Fair Warning - If you're going to do a treaty resource (doc 8833?) you won't be able to file online with TurboTax - they don't support that document. You can do the taxes and then print and mail them, though.

Fair Warning - If you're going to do a treaty resource (doc 8833?) you won't be able to file online with TurboTax - they don't support that document. You can do the taxes and then print and mail them, though.

I don’t think you always need that document. TurboTax does support foreign tax credit form 1116 which is where you can resource income by treaty. e.g.  my US pensions are reported on form 1116 as resourced by treaty and I did successfully file electronically last year from the UK. When I did my Louisiana return which is dead simple they would not accept overseas filing electronically and I had to mail it in. Even though I provided my US bank details for the Louisiana refund they ignored it and sent me a paper check in $’s

Don't you hate that! Paper that has to come all the way here, and then go all the way back to the USA to go into a US bank account in dollars unless you want to let your UK bank deal with changing the currency....

Don't you hate that! Paper that has to come all the way here, and then go all the way back to the USA to go into a US bank account in dollars unless you want to let your UK bank deal with changing the currency....

I think the Louisiana IRS does this in the hope the taxpayer gives up in despair but it is a $387 refund each year that I have to file to get refunded. Even so they get to hang onto my money for several weeks longer. I retired and left the State in 2010 and never set foot in it since but I get a pension paid by my old employer who is a Louisiana company and even though I have complained and filed the State W-4 for them to withhold the minimum I still end up paying almost double what I should and have to file to get the refund

Fortunately my US bank does mobile check deposit so once I have the check in my hands I can use the banking app to deposit it.

Is this the UK tax form for self employed? 

https://www.gov.uk/government/publications/self-assessment-tax-return-sa100

Is this the UK tax form for self employed? 

https://www.gov.uk/government/publications/self-assessment-tax-return-sa100

That's the basic paper tax return (last years) which you have to supplement with additional pages according to your situation. So you would have to add the self employment pages and any others which are relevant.

https://www.gov.uk/self-assessment-forms-and-helpsheets

They are trying to encourage people to file online now, I'm sticking to paper though!  https://www.gov.uk/log-in-file-self-assessment-tax-return

Can you actually do an online self-assessment if you have foreign income? I thought I read somewhere that you have to do a paper copy because it won't accept the foreign pages? Am I mis-remembering that?

If you have to provide a copy of your IRS return, can you upload it? Or would that mean the paper form is necessary?

Can you actually do an online self-assessment if you have foreign income? I thought I read somewhere that you have to do a paper copy because it won't accept the foreign pages? Am I mis-remembering that?

If you have to provide a copy of your IRS return, can you upload it? Or would that mean the paper form is necessary?

I have foreign pensions and plus dividends and capital gains from foreign funds but file online.  A copy of our US tax return is not required to file. I do keep the foreign pension statements and brokerage statements in case I’m audited, otherwise HMRC does not require copies.

This is spoken with the experience of one filing done online by a tax pro  (we completed and signed an HMRC form authorizing the tax preparer to file online on our behalf)

Cool, thanks.   

I'm still on the fence about reporting the vacation pay and claiming a HMRC tax credit. I've got the letter from them saying that the amount IS taxable, but a brief webchat saying it is not.

If I want to claim the credit, I believe I have to provide a copy of my IRS tax return.  If I go that route (out of paranoia, since I cannot find any statute that says that action is incorrect), is there a way to upload the IRS forms?

I see now why you would need to upload your return. I’m afraid I don’t know if documents can be up loaded. Sorry.

Just a recap, I'm an independent contractor for US company and get paid to US account.  I've been trying to read up on the treatment of independent contractors in the UK, and when I do the online test on the HMRC the results are "inconclusive" and it notes they need more information to determine if I qualify.  I believe I meet most of the criteria.

I've talked to one accountant that does UK and US down in the London area, and the price for the two returns was going to be almost £2400, this was US federal and state, and the UK.  Does this sound reasonable?  My husband is a carer and I'm mainly the sole provider and with the immigration requirements I'm trying very hard to save where I can so that I can have savings for the next immigration renewal in 2020.  I reached out to another local attorney and the fee to do UK only ranges from £250-500 so lower end for filing I believe it's a sole trader, then higher if I decide to form a UK entity. 

I want to avoid forming a UK entity just b/c it seems to add another complexity and I'm already struggling with understanding all this as it is.  If I understood the local accountant correctly, if I form a company, that is taxed lower than I would as self-employed/sole-trader so it would be beneficial to me in the UK tax wise.  I would form a company and pay myself from the entity, then my entity would be the one that works with the US company.  The potential issues with this would be that my husband is a carer and therefore I think there is a cap on how much he can earn, the accountant mentioned that in a partnership my husband wouldn't have to do anything but if he does have a limit on how much he can earn as a carer, it could become an issue as he could lose that benefit.  And now looking back, immigration wise I believe his carer benefit eligibility helps us so I do not want to jeopardize that.

The accountant also mentioned personal allowance, where the UK doesn't tax you on £11,850.  Because he doesn't do US taxes, he didn't know if this offered me any benefit on the US side.  Can someone explain to me how this works with US?  If he claims that, assuming I am eligible for it, I understand it reduces my UK tax liability since I would be taxed on the income that exceeds that amount.  However, how does that affect my US tax liability?  Does US tax me on the whole income earned, therefore reducing it in the UK just means I have to pay more on the US?  How is it determined if I am eligible for this allowance?

After the call with the accountant I'm just feeling exhausted and not feeling any relief.  I work on complex issues at work, but never has anything felt so daunting and I don't know why.  I hesitate to pay the London accountant that much without doing due diligence on price comparisons, but I just want it to be handled, done correctly...I guess I'm feeling vulnerable to the point that I will jeopardize the budget to just have the weight lifted.

I'm looking through the self assessment forms for the UK.  Can I send in the UK returns without a UTR?  I saw an old thread on here that said that if you sent the UK returns without, one would be assigned upon the return being processed.  Is this still the case?

Also, I recall the accountant that I spoke with mentioned that for self assessment, there is a form that she would file that I think makes the declaration that you are filing as self-employed.  I'm not sure what form this is.  Does anyone know?  I'm currently looking at the following forms:

SA100 & SA103S - I think those are the ones that apply to me.

Also, it seems like I have to pay tax and also National Insurance is that correct?

Also looking to file for an extension, I believe I file IRS form 4868.  How do I determine the tax liability and tax payment, lines 4 & 5?  Is it based on the income from my W2 while I was in US from January 1, 2017 to the point I moved to UK May 3, 2017?  I can’t find how to file the form online with IRS, seems it’s all done through third party websites, so I will mail the form in..but the address section on that firm is for US.  Can I still use that and just write UK address in there? Do I have to send a payment when I file the form? I saw the box to state outside of country (line 8 ), if I click that do I still need to write in lines 4,5, & 6? Also not sure about line 9, in past I filed 1040EZ.

Thanks.