richbogle84

Hi All,

My wife is a USC living here in London with me, and she needs to prepare and file her 2012 tax return with the IRS. We were going to use TurboTax online, but since her tax return isn't perticularly straightforward (she lived and worked in USA [$], she married me, she lived and worked in UK [£], she was added to my UK accounts, etc) we are thinking of paying someone to prepare the return.

Does anyone know or have experience of a firm/person in London who provides this service? If so, do you have any indication of costs we should expect to incur?

Many Thanks, Rich.

Note; In trying to use TurboTax in the first instance, she ran into issues because [despite choosing Married Filing Separately] it wanted her to provide a SSN for me, which I don't have as yet.

HartleyHare

Hi,

We are planning a move to the US and are using US Tax and Financial Services to give us advice on UK/US taxes. They are based at London Bridge and have quoted us £260+ VAT per hour for a consultation. They also prepare tax returns.
Their website is http://ustaxonline.com/index.htm.

There may well be cheaper companies out there, but they are next to my OH office so are convenient for us.

I also have this information from the US Embassy:
http://photos.state.gov/libraries/un...n_services.pdf

Michael

Since she likely spent only a short period of time working in the US, her tax return should probably be pretty easy to fill out and will likely get a 100% of her US taxes paid back.

I suspect the easiest and cheapest way would likely be to use Turbo Tax Deluxe online (you don't pay for Turbo Tax unless you file a return) as married filing separately declaring her US and foreign income with foreign taxes paid and if her refund is for all the US taxes paid, that is about as good as it gets. Although there are more complicated ways to file a return, it probably won't make any difference in her case. Turbo Tax deluxe supports form 1116 (tax credits for foreign income and taxes paid) but there may not be a menu entry for that so the form may have to be filled out manually but Turbo Tax will calculate taxes based on all forms whether filled out through a menu or manually. If she didn't work in the UK, then it is very simple and definitely no need for a CPA and she can probably use Turbo Tax basic.

Complexity will likely occur when you become a LPR since there may be several ways to fill out the tax return for the first year and Turbo Tax does not support dual status filing.

You have nothing to lose except a little time by trying Turbo Tax on line.

slummymummy

My husband used this accountant in north London. Not sure if you really do need an accountant but if you do, he sorted out my husband's somewhat messy finances and "translated" it into proper US tax return format.

http://www.jaffeandco.com/index.cfm?asset_id=1373

richbogle84

Hi Michael,

Thanks for this. I've been flicking through Turbo Tax today and trying to work out how my wife's 2012 tax return should be completed. Being new to the US tax process, it feel a lot like I'm just blundering my way through the questions

She was working in CA for only the first four months of 2012, but the refund figures are still under $1K somehow. I think it may be because she is paying taxes on even foreign-earned income.

Ran into some issues because TT was asking for my SSN, which I don't yet have as a UKC, but deluxe online wouldn't let me proceed. I've been informed though, that I can download the desktop application and print the forms off from there, manually edit it to say Application Underway in response to the spouse SSN questions.

I'll spend some more time on it, print the forms, and review it with my wife. I was going to get a firm to prepare the return as recommended by HartleyHare, but the quotes seemed high and she hasn't earned heaps

Thanks, Rich.

Michael

Unless she wants to include your UK income, she should file "married filing separately". If she files "married filing jointly", your income is included and she will apply for an ITIN for you when filing the return (you can't get a social security number until you become a permanent resident). A social security number is not required for you if she files "married filing separately" and if it does, that is a bug so just print out the return without your social security number and file a paper return.

The downloaded version of deluxe has the 1116 form included for foreign income and taxes paid but maybe the online version doesn't. So if she just entered her foreign income as US income, that may be why she doesn't get a full refund. The downloaded version is also easier to work with.

Cook_County

She may simply be too early to file since she may not have a qualifying period yet for physical presence.

The deadline is June 15th and she could still file for an extension.

Make certain the adviser you are dealing with is actually qualified in both countries.

JAJ

Unclear what's meant by this if she is a U.S. citizen.


Except that dual qualified advisers are normally high priced and/or in short supply. Most people are realistically going to have to have U.S. and U.K. tax advisers who talk to each other (not that hard to do).

Cook_County

[QUOTE=JAJ;10578436]Unclear what's meant by this if she is a U.S. citizen.

QUOTE]

US citizes living overseas need a qualifying period overseas before filing a US return claiming the foreign earned income exclusion.

Michael

Correct but it generally it doesn't make any difference whether the foreign earned income exclusion (form 2555) or foreign tax credits (form 1116) is used for high tax countries. The foreign earned income exclusion is usually only beneficial over foreign tax credits in low tax countries.

richbogle84

Frustrating given that she only has two months of UK income to file on her tax return, but nevertheless, we have no choice but to go through the process. TurboTax online wouldn't let her proceed or e-file without entering a SSN for me [her UKC husband].

Because of that, it looks like we're going to have to purchase the TurboTax Deluxe local install, and file manually

Thanks, Rich.

JAJ

Obviously an online forum can't do technical support, but if your wife is electing to file her taxes as "married filing separately" the software should not do this.

Bomjeito

Just a few thoughts as a USC who lived abroad for decades on and off.

1. Turbo Tax online DOES prompt easily through the Foreign Earned Income Exclusion. IRS publication 54 is your friend.

2. Pub 54 helps her decide if she's eligible. Its not for folks only a few months having worked abroad. It is based on residency, physical presence and time. Pub 54 will help her determine that....but look at the chart for eligibility in this IRS publication.

3. When I lived in UK and was married to a UKC, I filed married, filing separately. She CAN file with a foreign husband who does not have an SSN. She is to write who you are (as husband) and write NRA. Non-resident Alien.

4. I understand (I can be wrong, I could not read in depth the situation) that she had some months income in California. Hence, she must file state taxes there. I'd recommend an accountant or CPA do her taxes in California. My CPA lives in NY - he charged $120 for a federal filing. 260quid is a lot. For federal, anyone can do it if you don't want to do it yourself. The first and last split year (until you can simply claim bona fide presence) are tricky. I usually had a CPA do mine when I was claiming under physical presence. But that was before Turbo Tax did Foreign Earned Income Exclusion.

5. Why isn't SHE doing her taxes? No offense intended, but if you've never done a US tax return, you are going to take forever to understand it!

In ending, it isn't that complicated as it seems because it sounds like she isn't self-employed, doesn't have a business and it is simply the matter of income. Have her start plugging in the info into turbotax online - the foreign earned income exclusion is under Other Tax Situations.

$30 vs 260 quid...

Steve_

Sounds to me as though her tax filing situation isn't that complex, read the instructions in IRS publication 54.

If she was a tax resident of the US last year it's just a question of claiming a foreign tax credit on Form 1116 most likely for the UK earnings. She would file as married, filing separately.

You're not clear on what your plans are, if she's left the US and she's actually left and not planning to go back, then she should file a 2555 with the 1040 depending on when she left the US.

Read the instructions for form 1116 and form 2555 and IRS publication 54 has helpful information as well.

If you get stuck, call: (267) 941-100 (eastern time) and talk to the IRS international division. There is also an IRS office (or was) at the US embassy in London who can provide assistance, not sure if it still open though.

Using tax software without knowing exactly what you want it to do is just going to confuse you, actually understand what you're trying to do first.

HartleyHare

Just to clarify, I didn't say that a return cost £260, I said that this was the cost for a consultation. I only said that the company were able to do returns as well. I have no idea what the charge for that service would be.