SP84

Hello folks,

My wife and I moved from the USA to the UK in June 2016. So we spent 6 months living and working in the USA (both of us) ... and then we have been living in the UK for the other 6 months of the year (in which I was the only one of us working).

Obviously tax season is upon us and I have no idea how to go about my tax returns. Do my wife and I file one report showing combined USA & UK income? Or do I file my normal US tax return by April 15th (showing USA income) - then file my overseas tax return by June 15th?

I have toyed with the idea of using one of those companies like www.taxesforexpats.com (do you know anyone that has ever had any experience with them?) - or I heard that Price Water Coopers here in the city centre here in Belfast, have a person that deals with US tax returns. I know they will charge more than your average accountant, so I am not sure what to do.

My accountant in San Diego (where we were living) said that he could do it for me - but I honestly am not sure he knows enough about it (even though he says he does). I would like someone with a detailed understanding of pensions, FBAR etc

Just curious if anyone has any pointers / can advise me which direction to look in?

Thanks!

Cook_County

Since you moved to Belfast in June 2016, you are a few months too early to file your US return for 2016 as you do not have a 330 day qualifying period outside of the United States. Assuming you are a US citizen, your US return will report worldwide income and gains.


You are correct that you would do better with one adviser located in the UK who is dually US and UK qualified; to ensure that your global position is to your best advantage.

SP84

Thank you Cook_County, I had no idea about the 330 day stipulation. I am a US citizen (flew back to San Diego in Nov 2016 to complete the naturalization process) - but have been living in Belfast sine June 2016 as previously mentioned.

Have you ever had any experiences with Taxes for expats (or know someone that has)? - or another similar company for that matter. I am waiting on a call back from Price Water Coopers as well. I know I will pay a little more than normal to use one of these companies, just as long as it isn't extortionate!

My returns should be relatively straight forward but for someone that was born in and grew up in the UK - the US tax system seems like a huge labyrinth, in which one wrong turn can really damage you! Therefore I would like to make sure that I do it right!

MMcD

This forum may be helpful....

US - UK Taxes

and this thread:

Taxes- who to use?

SP84

Thank you so much! I'll have a read and maybe post the same question on there. Much appreciated!

Steve_

For the first year you're still considered resident in the US, so you have to file a Form 1116 to claim a foreign tax credit.

In following years, you can file a 2555-EZ and claim the foreign earned income tax credit, which is a bit easier than filling in 1116s usually.

Other types of income (e.g. passive, such as rental income) you would have to file a 1116 for, to claim a foreign tax credit.

Have a read of IRS publication 54, all the common situations are covered in there, but you definitely do have to file a tax return for 2016, the 330-day rule only relates to how you file it, because you can't claim the FEIT.

It will be, and bear in mind these companies might have offices all over the world but they don't talk to each other. PWC in Belfast will know as much about US taxes as the accountant down the street.

Cook_County

There are some helpful discussions here: US - UK Taxes

SP84

Thank you Steve - PWC never got back to me, but I have spoken to and emailed two US based companies that specialize in taxes for expats...

(1) Taxes for Expats

(2) Bright!Tax

Both have given me a quote for doing my returns and I am thinking of using them. The reasons being that..

A) This is my first tax return as an overseas US citizen (so I do not understand the complexities as previously mentioned) - especially having part of my income be USA based, and the other half UK based.

B) My wife and I moved to the UK from California - so not only do we have to file a CA state return, but California is a notoriously difficult state to leave (tax wise) - so I would like to make sure that it is done correctly.

I know I will obviously pay between $400-$500 dollars for them to do the tax return, but for peace of mind it might be worth it.

Just curious if you think that would sound like a good idea Steve?

Also do you know which of the companies would be better?

Thanks!

Cook_County

Can you meet with either company at an office in the UK?

Steve_

Your tax return doesn't sound that hard really, it's probably nearly identical to your 2015 return with different numbers, you've just got to do the 1116 for the income you've earned while in the UK.

Your 2017 return will be different, because then you can claim the FEIT on 2555-EZ and you won't have a State return. It's not brain surgery, like I said just read IRS publication 54.

By the time you've hunted around for an accountant you could have figured it out yourself.

I always say the same thing about tax software, by the time you've figured the software out you could have filled in the forms.

Unless your situation is quite complex, e.g. self-employment income, use the grey matter between your ears, that is the simplest solution.