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First US Tax Return

First US Tax Return

Old Feb 2nd 2017, 9:12 pm
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Default First US Tax Return

Hi I will be filing my first US tax return since relocating from the UK in Aug 16 and had some questions:
1) Do I need to disclose UK pensions on the US tax return (I am not drawing I am in my 30's). This was accumulated through my prior employment (prior to relocation and taking up residence)

2) Is my income prior to relocating exempt from disclosure on the US tax return

Any other things you foresee that could complicate matters based on your experiences.
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Old Feb 2nd 2017, 9:26 pm
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Default Re: First US Tax Return

2) Maybe. You can elect for "split year" treatment, excluding your non-US income before you arrived, but that would prevent you from filing jointly if you have a US citizen spouse. In either case (whether or not you have a USC spouse) you need to calculate your taxes both ways to determine which way is the most cost effective for you.
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Old Feb 2nd 2017, 9:28 pm
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Default Re: First US Tax Return

1)You do not need to pay tax on your UK pension pot until you start withdrawals. If it is a traditional final salary pension it should be declared on 8938 if you are over the threshold and if its a defined contribution pension where you can choose the investment funds then it should be declared on FBAR and 8938 if you are over the thresholds.

Depending on the UK pension structure some people will advise filing of foreign trust forms and an 8833 to claim the treaty exemption from taxation of current gains if you are a CYA type.

2) If you decide to be treated as a a resident for the full tax year the your UK income would be US taxable, but you can choose to file a dual status return, a 1040 for the US resident time and a 1040NR for your time as a UK resident if you had US source income.
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Old Feb 2nd 2017, 9:50 pm
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Default Re: First US Tax Return

Thanks for your response guys this really helps. I am married to a US citizen so need to figure if it makes sense to file jointly given our incomes. Are there any immediate benefits of filing jointly?

The pensions are unfortunately not final salary. I understand that the aggregate amount needs to be less than $50k to be exempt? Please correct me if I am mistaken on this?

I was thinking of using turbotax but this looks like it will be more taxing than I expected. I miss the U.K. system
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Old Feb 3rd 2017, 1:30 am
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Default Re: First US Tax Return

We used an accountant last year and will probably do so again, for the cost it just wasn't worth the hassle of negotiating my way through filling in an unfamiliar tax return.
For a country where most professional services are extortionate when compared to the UK, I was surprised that this one was about half the cost of the (cheap) one I last used in the UK and that was back in 1994!!! She was familiar with getting the best deal for a couple with taxable issues in two countries and is a 'proper' accountant as opposed to the 3 month temporary booth types that spring up everywhere at this time of year.
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Old Feb 3rd 2017, 10:07 am
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Default Re: First US Tax Return

Originally Posted by londonminneapolis
Thanks for your response guys this really helps. I am married to a US citizen so need to figure if it makes sense to file jointly given our incomes. Are there any immediate benefits of filing jointly?

The pensions are unfortunately not final salary. I understand that the aggregate amount needs to be less than $50k to be exempt? Please correct me if I am mistaken on this?

I was thinking of using turbotax but this looks like it will be more taxing than I expected. I miss the U.K. system
To file jointly you'll have to elect to be treated as a US resident for the whole year. That means you get the full allowances and deductions, but you will also have to pay tax on your UK income before you moved to the US and will have to apply foreign tax credits for UK tax you paid. That could get tricky if you had any stocks and shares ISAs or owned other UK investment funds or contributed to any UK pension plans.....not necessarily bad, but definitely more complicated. Try it first as a dual status alien and see if you even owe any US tax.
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