Help, taxes

Old Feb 13th 2009, 3:19 am
  #1  
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Default Help, taxes

I'm sorry if this has been posted before...

I'm a dual national of America and the UK and moved to the States (Indiana) at the end of Sept 2008 and have been employed here since Nov 2008. I'm low income and have had taxes taken out from my wages. I got my w-2 form and *thought* I had filed correctly for federal wage taxes this morning but now realise I didn't declare any of my income from the UK etc (I've never been a US resident before, only a citizen by birth). I'm also unsure how to file my IN state tax. If anyone out there has any advice, that would be great as I'm pretty certain if I went to a tax company I'd end up paying all my refund in the bill!

I've been searching on the net for information and it's making my head spin with all the form numbers etc!

Also, since I may be over here only a few years, should I inform the inland revenue service asap or does that make such a difference? (I don't mind paying my NI etc but I don't want to lose my UK bank accounts etc or get hit for double tax in both countries!)
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Old Feb 13th 2009, 7:27 am
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Default Re: Help, taxes

I used turbo tax online to report my Canadian income, its free if your income is under X amount. Register with them and tick the box for foreign income and it asks a series of questions and guides you through it.

Took me 10 minutes last night, way easier then trying to decipher the IRS website. (You have to convert it into USD $$ though)
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Old Feb 13th 2009, 11:01 pm
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Default Re: Help, taxes

I personally like Turbo Tax online as well. I'd consider that for next year.

The phrase you're looking for with the IRS regarding your UK income is "Foreign Earned Income Exclusion" (IRS Publication 54 and Form 2555).

I think you're saying that you've already filed your 1040 form for 2008. If so, you may or may not want to look into Foreign Earned Income Exclusion and file an amended return (which you can't do electronically with Turbo Tax, but it will prepare the forms for you to send). It shouldn't change what you owe, so don't panic and no need to rush if you do decide to file an amended return.

So far as Indiana tax goes, I'm pretty certain that as your "domicile" was outside of Indiana until Sep 2008, you'd file as "part year resident" and would not be liable for Indiana tax on income prior to that date.

I would definitely tell the Inland Revenue. If you're going to be here for more than a complete UK tax year, they will consider you "not ordinarily resident" and won't expect UK tax/NI payments on US income, in fact if you were working PAYE from April-Sept in the UK, you'll be due a refund of tax (as you only got half a year's worth of personal allowance).

If you're working here (which it sounds like you are), then you can voluntarily pay Class 2 NI contributions (few quid a week) by direct debit if you want to - whether or not that's worthwhile will depend on your age and what your contribution record is like.

Most UK banks should have no problem with you keeping your bank account open - don't voluntarily close them as they are very useful. Give them your US address and they'll send you statements, cards etc. no problem.

If you have more than $10,000 worth in foreign bank accounts, google
"td f 90-22.1"

Getting US/UK tax right is a bit tricky, but if you do things by the book you don't have to worry about being double taxed - there's a treaty in place between the US and UK which is clear about who gets to tax what in all but the most complicated cases.

On the UK end, the HMRC website's crap, but the phone/email service is excellent. The Inland Revenue have a special unit for expats (technically "HMRC Residency" last time I checked) who are very friendly and helpful.

On the US end, the IRS publications are pretty clear but I'm unaware of any way to talk to someone at IRS who knows what they're talking about when it comes to international issues. It's either the IRS website, or a tax professional (but not all know much about international issues).

Last edited by rew1000; Feb 13th 2009 at 11:05 pm.
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Old Feb 13th 2009, 11:56 pm
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Default Re: Help, taxes

Go and see H& R Block ... I get totally confused by the system. I do know that you don't have to pay the inland revenue anything .. in fact if you didn't claim a refund when you came here then tell then and get your refund now
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Old Feb 14th 2009, 1:08 am
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Default Re: Help, taxes

Originally Posted by Patrick Hasler View Post
Go and see H& R Block ...
...and have someone fuck up your tax return and charge you $150 for the privilege!

Great advice Patrick!
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Old Feb 14th 2009, 2:47 am
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Default Re: Help, taxes

Thank you everyone for the replies, sounds like I should try to get my family to dig out my tax documents in the UK or at least look into get into copies of them so that I can sort it out on both sides of the pond and not worry about it.

Turbo Tax next year I think!
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