US taxes for residents abroad
Jan 13th 2006, 12:01 pm
#1
Guest
Posts: n/a
US taxes for residents abroad
My wife is a US citizen, and she moved to England with me last summer.
I know that earned income up to $80,000 is exempt from federal taxes
for residents abroad, but what about investment income? If my wife were
to open an investment account with a UK broker, for example, would all
her income be subject to federal taxes, or would it be covered by the
$80,000 exemption?
Thanks,
Marco
I know that earned income up to $80,000 is exempt from federal taxes
for residents abroad, but what about investment income? If my wife were
to open an investment account with a UK broker, for example, would all
her income be subject to federal taxes, or would it be covered by the
$80,000 exemption?
Thanks,
Marco
Jan 13th 2006, 12:47 pm
#2
Account Closed
Joined: Aug 2002
Location: Kentucky
Posts: 38,865
Re: US taxes for residents abroad
Originally Posted by Marco
If my wife were to open an investment account with a UK broker, for example, would all her income be subject to federal taxes, or would it be covered by the $80,000 exemption?
Ian
Jan 13th 2006, 12:55 pm
#3
strangely floppy..
Joined: Mar 2005
Location: Ohio - originally London
Posts: 1,719
Re: US taxes for residents abroad
Originally Posted by Marco
My wife is a US citizen, and she moved to England with me last summer.
I know that earned income up to $80,000 is exempt from federal taxes
for residents abroad, but what about investment income? If my wife were
to open an investment account with a UK broker, for example, would all
her income be subject to federal taxes, or would it be covered by the
$80,000 exemption?
Thanks,
Marco
I know that earned income up to $80,000 is exempt from federal taxes
for residents abroad, but what about investment income? If my wife were
to open an investment account with a UK broker, for example, would all
her income be subject to federal taxes, or would it be covered by the
$80,000 exemption?
Thanks,
Marco
Jan 13th 2006, 1:56 pm
#4
Guest
Posts: n/a
Re: US taxes for residents abroad
"ian-mstm" <member2954@british_expats.com> wrote in message
news:[email protected] m...
>> My wife is a US citizen, and she moved to England with me last summer.
>> I know that earned income up to $80,000 is exempt from federal taxes
>> for residents abroad, but what about investment income? If my wife
>> were
>> to open an investment account with a UK broker, for example, would all
>> her income be subject to federal taxes, or would it be covered by the
>> $80,000 exemption?
>> Thanks,
>> Marco
> I'm guessing that since investment income is not earned income, only the
> investment income would be taxable.
^^^
Actually the "earned income" applies to the exclusion, not the income, so by
your reasoning the investment income would not be excludible and therefore
taxable.
The way I read that section of tax (and I've read it lots of times...) is
the the investment income is still foreign earned income. It is money you
earned outside the US. In this context the term "foreign earned" refers to
where you earned the money, rather than how.
I am not a tax professional and some of the points I've made require
qualification. I suggest you read the IRS documentation very carefully.
There are a number of publications and if you take the time to read and
understand them all you may see a clear answer.
Feel free to seek out a qualified tax accountant but (as you may already be
aware), most US based accountants are not going to be familiar with the UK
dimension of the equation. I suggest you make yourself as familiar as
possible.
I knew a poor teacher in saigon who's Dad got an accountant to file US taxes
for him and he told me he only paid $400 in taxes. He'd been out of the US 3
years at the time. His tax should have been $0. The accountant was an idiot.
-F
> Ian
> --
> Posted via http://britishexpats.com
news:[email protected] m...
>> My wife is a US citizen, and she moved to England with me last summer.
>> I know that earned income up to $80,000 is exempt from federal taxes
>> for residents abroad, but what about investment income? If my wife
>> were
>> to open an investment account with a UK broker, for example, would all
>> her income be subject to federal taxes, or would it be covered by the
>> $80,000 exemption?
>> Thanks,
>> Marco
> I'm guessing that since investment income is not earned income, only the
> investment income would be taxable.
^^^
Actually the "earned income" applies to the exclusion, not the income, so by
your reasoning the investment income would not be excludible and therefore
taxable.
The way I read that section of tax (and I've read it lots of times...) is
the the investment income is still foreign earned income. It is money you
earned outside the US. In this context the term "foreign earned" refers to
where you earned the money, rather than how.
I am not a tax professional and some of the points I've made require
qualification. I suggest you read the IRS documentation very carefully.
There are a number of publications and if you take the time to read and
understand them all you may see a clear answer.
Feel free to seek out a qualified tax accountant but (as you may already be
aware), most US based accountants are not going to be familiar with the UK
dimension of the equation. I suggest you make yourself as familiar as
possible.
I knew a poor teacher in saigon who's Dad got an accountant to file US taxes
for him and he told me he only paid $400 in taxes. He'd been out of the US 3
years at the time. His tax should have been $0. The accountant was an idiot.
-F
> Ian
> --
> Posted via http://britishexpats.com
