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Topic: Tax Help  (Read 999 times)

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Tax Help
« on: March 16, 2019, 12:20:32 PM »
Hi guys just wanted to say thank you for helping me get my spousal visa!  Now hoping someone can help me decipher what I need to do for my taxes :(


I entered the UK on my spousal visa on 28.05.18 and have lived in the UK since then (today is 16.03.19).  I started work early August here and have been on an annual income of 25,000 GBP since starting in August.  Before I moved to the UK I was technically self-employed working from January up until I left (I didn't earn much, I think it was between 8-12k USD).


Like most jobs in the UK I'm PAYE with taxes over here so I am not really sure how I need to file in the UK (or if I do at all) and how I need to file in the US.  My wife only worked January - late July in 2018 as she is a teacher but unfortunately was unwell and had to cancel her contract at the school she was working at for the new school year as her recovery time was significant.  I guess you could say she has been unemployed from August 2018 to February 2019.


And if it helps, my wife is the UK citizen, I'm the US citizen.  We got married in April 2018 in the US, she went back to the UK while I waited on the spousal visa. 

I don't even know where to start with taxes and I know it is really late to start figuring all of this out now but I would really appreciate any help or advice.  Thank you guys for your time and help, it is remarkable what you all do!


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Re: Tax Help
« Reply #1 on: March 18, 2019, 04:29:55 PM »
Hello and welcome.

I am NOT a tax professional, just an ordinary ex-pat, now retired, but my first year back in the UK, I had SE income in the US, but no UK income.

You are lucky in that you have almost reached a critical time point which affects your filing situation in the US for 2018. When you meet either the bona fide residence test or the physical presence test, you can either exclude your UK earnings or take a credit for UK tax paid. In any case, you will declare all your earnings for 2018. See https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion-physical-presence-test and have a look at Publication 54 https://www.irs.gov/forms-pubs/about-publication-54.

The UK tax year is April 6-April 5, and if you are on PAYE and have NO foreign income (interest, dividends, employment earnings, rental income or any other type of foreign source income), then you normally never need to file a return here. That part is simple - if your tax code is correct, the PAYE covers your tax due.

Since the US is on a calendar year, you need to do a spreadsheet (or whatever works for you), and calculate your gross earnings for 2018. Going forward, keep a spreadsheet to make future filing easier. Don't forget any interest you may have earned here, which is normally paid gross (no tax withheld) for most of us. You then convert the UK income to US$. There's no official rate, so you can use a Fx site and calculate the value on the day, or use the US Treasury year-end rate, which is the average for the year. Do both, and see what works to your advantage.

You get an automatic extension to June to file, and can actually extend extend further, but  - and this is important - any tax due must still be paid by the normal April 15 deadline. So, figure that part out, and if you owe anything (not forgetting SE tax on your US earnings), make a payment before the deadline if you didn't make estimated payments.

Once you have reached the magic 330 day mark, you can file and exclude your UK earnings; it's still reported, but excluded. See https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion for more detail. This date is also key in claiming the exclusion from health insurance coverage for 2018 (I'm assuming you dodn't continue any cover you may have had after you moved here).

Assuming your wife had no US income, which I suspect is likely, you will file MFS, because you do NOT want to include her income, which you would if MFJ. For most of us, MFS works best, and is far simpler.

If you had an interest in, or signature authority over any non-US financial accounts (bank accounts are the most common) and the aggregate value exceeded $10,000 at any point during the year, you will also need to file a FBAR. That's only done electronically, and it not a tax document; it;s a report to the Treasury Department. https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html.

Normally income earned BEFORE you moved to the UK is not taxed in the UK. That would include US income earned from April 6-May 28 when you arrived in the UK.

Others with more and likely better information will likely jump in to help, so don't be shy about asking questions. On the face of it, your situation is relatively simple, and likely only requires a tolerance for paperwork.

A lot of folks use TurboTax or similar software to file their US return, and that may also well work for you.

good luck.



Married December 1992 (my 'old flame' whom I first met in the mid-70s)
1st move to UK - 1993 (Letter of Consent granted at British Embassy in Washington DC)
ILR - 1994 (1 year later - no fee way back then!)
Back to US in 2000
Returned to UK July 2011 (Spousal Visa/KOL endorsement)
ILR - September 2011
Application for naturalization submitted July 2014
Approval received 15-10-14; ceremony scheduled for 10 November!
Passport arrived 25 November 2014. Finally done!


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Re: Tax Help
« Reply #2 on: March 24, 2019, 06:11:33 PM »
Wow! You are so so so so helpful! Honestly I've been freaking out but I feel much better now lol.

So I've been reading I need to pay the estimated tax I owe by April 15th, but I should automatically qualify for a two month tax extension right? So do I need to apply for the extension to meet the 330 day requirement to meet the physical presence test?

Also, if my wife and I went on our honeymoon to Spain for 10ish days do I need to count these days out? If I count these days out I'm worried I won't meet the physical presence test in the time I need to (which is ridiculous as I've been in the UK for almost a year now).


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Re: Tax Help
« Reply #3 on: March 25, 2019, 01:21:01 AM »
I’m pretty sure the 330 day requirement is for time living overseas and a vacation to Spain during that time would be included in that.
Dual USC/UKC living in the UK since May 2016


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Re: Tax Help
« Reply #4 on: March 25, 2019, 09:41:50 AM »
Wow! You are so so so so helpful! Honestly I've been freaking out but I feel much better now lol.

So I've been reading I need to pay the estimated tax I owe by April 15th, but I should automatically qualify for a two month tax extension right? So do I need to apply for the extension to meet the 330 day requirement to meet the physical presence test?

Also, if my wife and I went on our honeymoon to Spain for 10ish days do I need to count these days out? If I count these days out I'm worried I won't meet the physical presence test in the time I need to (which is ridiculous as I've been in the UK for almost a year now).

The initial extension is automatic. Just pay what you think you owe by April 15th. If you overpay, you will be entitled to a refund.

IMHO, if the honeymoon in Spain was AFTER you moved to the UK on the spousal visa, then yes, those 10 days count. Would be different if you married in the US< went to Spain, then you came back to apply for your visa and she returned to the UK.
Married December 1992 (my 'old flame' whom I first met in the mid-70s)
1st move to UK - 1993 (Letter of Consent granted at British Embassy in Washington DC)
ILR - 1994 (1 year later - no fee way back then!)
Back to US in 2000
Returned to UK July 2011 (Spousal Visa/KOL endorsement)
ILR - September 2011
Application for naturalization submitted July 2014
Approval received 15-10-14; ceremony scheduled for 10 November!
Passport arrived 25 November 2014. Finally done!


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Re: Tax Help
« Reply #5 on: March 27, 2019, 02:18:05 PM »
Thanks both, yeah Spain was after I moved over on my Visa, at least several months after.


So is there a form I need to fill out for the 2 month extension? I'll be sure to pay my estimated tax, can this be done with direct debit? I don't have any checks to send back home with a signature or anything so direct debit would be my preferred option.


What form do I need to fill out for my estimated tax? I was self employed for the money I made in the US.


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Re: Tax Help
« Reply #6 on: March 27, 2019, 04:57:03 PM »
Thanks both, yeah Spain was after I moved over on my Visa, at least several months after.


So is there a form I need to fill out for the 2 month extension? I'll be sure to pay my estimated tax, can this be done with direct debit? I don't have any checks to send back home with a signature or anything so direct debit would be my preferred option.


What form do I need to fill out for my estimated tax? I was self employed for the money I made in the US.

I’m afraid I don’t know the answer on how to pay if you don’t have a US bank account. I pay direct to the IRS using eftps

https://www.irs.gov/payments/eftps-the-electronic-federal-tax-payment-system

There are phone numbers listed to call for info. If they don’t support foreign banks maybe they can tell you other methods.

Maybe someone here who doesn’t have a US bank account will come along and let you know.

Looks like you can pay by debit or credit card so you should be good to go

https://www.irs.gov/payments
Dual USC/UKC living in the UK since May 2016


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Re: Tax Help
« Reply #7 on: April 10, 2019, 11:19:20 AM »
So just to clarify, if I don't meet the 330 day requirement before I am supposed to file like normal on April 15th, will I get the late filing penalty?

Should I pay as much as possible before April 15th to avoid the late payment penalty?

Also do I need to fill form 4868 in order to get the automatic extension? How does the IRS know I'm given an automatic extension to June 15th (i.e. how do they know to not charge me with a late filing penalty)?
« Last Edit: April 10, 2019, 11:24:40 AM by NCsandHert »


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Re: Tax Help
« Reply #8 on: April 10, 2019, 03:23:04 PM »
So just to clarify, if I don't meet the 330 day requirement before I am supposed to file like normal on April 15th, will I get the late filing penalty?

Should I pay as much as possible before April 15th to avoid the late payment penalty?

Also do I need to fill form 4868 in order to get the automatic extension? How does the IRS know I'm given an automatic extension to June 15th (i.e. how do they know to not charge me with a late filing penalty)?

The fact that you have an overseas address listed at the top of the form should be sufficient. This is my 3rd year to file after moving to England and since being here I have never filed before April 15 and never filed for an extension, and never had a late filing penalty.  I have also made sure that I have paid enough by April 15th to not be penalized.

https://www.investopedia.com/articles/personal-finance/020316/estimated-tax-deadlines-2016.asp

Quote
Current year safe harbor. If the taxes you pay for the year through withholding and estimated taxes turn out to be at least 90% of your final bill for 2019 and you made all of your required estimated payments on time, no penalties will apply.
Prior year safe harbor. If you peg your payments for 2019 to your 2018 tax bill, you are also assured of being penalty free. The taxes you pay (estimated and withheld) for 2019 must be at least 100% of your 2018 bill. However, if your adjusted gross income for 2018 was more than $150,000 ($75,000 for those who are married filing separately), the 2019 payments must be at least 110% of the 2018 bill. (Different rules apply to farmers and fishermen.)
Dual USC/UKC living in the UK since May 2016


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Re: Tax Help
« Reply #9 on: April 14, 2019, 11:53:46 AM »
So if you don't file an extension and don't file by April 15th, how do you pay or did you pay in your first year?

Can I just pay the estimated of what I owe today (April 14th) from my US bank account without filing anything? How will they know how much I owe or have already paid?

Also just to make sure I don't get scammed, I assume I can pay online on the IRS.gov site?

You keep mentioning turbo tax, is this free? How exactly does it work?


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Re: Tax Help
« Reply #10 on: April 14, 2019, 03:11:03 PM »
So if you don't file an extension and don't file by April 15th, how do you pay or did you pay in your first year?

Can I just pay the estimated of what I owe today (April 14th) from my US bank account without filing anything? How will they know how much I owe or have already paid?

Also just to make sure I don't get scammed, I assume I can pay online on the IRS.gov site?

You keep mentioning turbo tax, is this free? How exactly does it work?

I make my payments to the IRS through eftps.gov. You can make a payment at any time and also schedule quarterly payments.  Unfortunately you are too late now to make a payment before tomorrow (15th) because the initial set up of the account requires them mailing you a PIN. After that initial set up it is easy to make, schedule and cancel payments.
https://www.eftps.gov/eftps/login/loginInitial

TurboTax is not free, I have used it for over 20 years so am very familiar with it. You can complete your return using an interview type process and switch between the actual forms and the interview. I buy a downloaded version so it is easy to run different scenarios through the year to estimate my taxes. The online version is cheaper, and easy to use.
« Last Edit: April 14, 2019, 03:13:21 PM by durhamlad »
Dual USC/UKC living in the UK since May 2016


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Re: Tax Help
« Reply #11 on: May 19, 2019, 09:13:21 AM »
Hi all,

Thanks for all your help, I have one last question:


I have to automatic two month extension and have now met the physical presence test. I have paid both my federal tax and state tax on the 15th of April.


Can I mail in my tax forms to the US embassy in London? Or do I have to send everything to the Charlotte, NC office like I normally do?


Also I thought I was meant to fill out the 2555-EZ but I don't see it. Do I have to fill out the 2555? Also when I work the numbers I just want my foreign earned income to be excluded but it asks alot about housing and I don't know how to make the numbers work to be honest because we live in the flat my wife owns outright and have only paid bills, service charges, ground rent, etc.



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Re: Tax Help
« Reply #12 on: May 19, 2019, 11:47:55 AM »
I’m retired so don’t have any earned income but I did help my son do his taxes and Turbotax lead him through the 2555 to exclude his earned income. I think he just ignored or said no to the questions on housing and all his earned income was excluded as expected.
Dual USC/UKC living in the UK since May 2016


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Re: Tax Help
« Reply #13 on: May 21, 2019, 02:44:10 PM »
On the 2555-EZ it says in order to use the form you can't have self-employment income.


Does it mean you can't have any self-employment income in the 2018 tax year (I was a sole proprietor in the US from Jan 1st to May 27th 2018 when I moved over, but haven't been self-employed since living in the UK)?


Or does it mean you just can't have any self employment income in your foreign earned income (meaning if I was a sole proprietor in the US, but haven't been self employed since I moved to the UK, I can still file 2555-EZ)?


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Re: Tax Help
« Reply #14 on: May 21, 2019, 04:08:46 PM »
Self employment income is reported elsewhere on the 1040, as is interest, dividends, capital gains and pension income.

Earned income from an employer is reported on line 1.

The only income that can be excluded using form 2555 is that on line 1, but you can have multiple sources of income including self employed income.

At least that is my understanding.
Dual USC/UKC living in the UK since May 2016


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