DebraJulia

I'm presuming the quote below from the IRS is what I was referring to?

"Exemptions
Resident aliens can claim personal exemptions and exemptions for dependents in the same way as U.S. citizens. However, nonresident aliens generally can claim only a personal exemption for themselves on their U.S. tax return.

Resident Aliens
You can claim personal exemptions and exemptions for dependents according to the dependency rules for U.S. citizens. You can claim an exemption for your spouse on a separate return if your spouse had no gross income for U.S. tax purposes and was not the dependent of another taxpayer. You can claim this exemption even if your spouse has not been a resident alien for a full tax year or is an alien who has not come to the United States.

You can claim an exemption for each person who qualifies as a dependent according to the rules for U.S. citizens. The dependent must be a citizen or national (defined earlier) of the United States or be a resident of the United States, Canada, or Mexico for some part of the calendar year in which your tax year begins. Get Publication 501 for more information."

DebraJulia

Hey Tom, I'm near Chicago too! Rockford Il

anotherlimey

I'm in Schaumburg, NW suburbs, or Chicagoland whichever you prefer.

-tom

dbj1000

I went through all this last year. Personally I find the IRS documents and tax rules reasonably easy to understand, and I have become quite an expert on my own tax status, at least.

One thing that's definite is that you're both (DebraJulia & Family and anotherlimey) resident for tax purposes. Damned lucky really, since non-residents filing tax here get very few or none of the tax deductibles that resident-for-tax-purposes individuals get.

DebraJulia, your husband can "claim" for you and your kids just like any other American resident filing their taxes. As a resident-for-tax-purposes family you have the same tax rights as any other American, despite being non-resident aliens due to your visa status.

anotherlimey, can I suggest that you do NOT go to H&R Block? They were at least honest enough last year to tell me that my tax status was too complicated for them, given that I had significant earned income in the UK for part of 2003 and had then relocated on an H1B visa. Instead they pointed me towards H&R Block Premium. 5 weeks later, having re-drafted my tax return 3 times from scratch, they finally got it right... but only because I had learned more about my tax status than they knew, and was able to correct it for them. Because of their "maximum refund or it's free" guarantee, I got all that work for nothing, but it was only worth it for the H&R Block Tax Specialist's signature on the return, ensuring that they would defend it to the IRS if necessary.

This year I plan to file online using H&R Block's Signature service, where you file your own tax return using their online system, but they review and sign it, again giving you their garantee to defend it in case of an IRS audit. This will work for me, but only because I was forced to learn so much about my tax rights last year.

For you guys, I suggest finding a licensed CPA with experience of filing expat tax returns. Make sure they provide a cast-iron guarantee that the return they file will be accurate and correct, and get them to put in writing the fact that they have filed returns for foreign expats in the past.

Last year I found a company online that specialised in expat tax returns (Global Tax Network) but didn't end up using them, despite a reasonable quote, good reviews and very, very helpful people. You may want to check them out as an option.

Others on these boards may tell you that filing online is simple, and they've always just used TurboTax. I can assure you that they have not received their maximum refund if their tax status is as complex as someone who has relocated from the UK within the last year. The difference between my refund calculated by TurboTax Pro and the professionally prepared refund for me last year was over $5000!

I hope this is of some help. Feel free to PM me if you have any questions

anotherlimey

Thanks for the advice dbj, I now remember having heard on this forum that H&R Block aren't the best, so I think I'll go with your suggestion.

-tom

DebraJulia

Thank you so much! What great advice, coming from someone, who has been there, done that and no doubt has the t-shirt! Take care!

Debs

ukemigrant

Just arrange an appt with H&R block or call the IRS and ask them (call about 3 or 4 times and average out the answer in case it's different ).

People at H&R are supposed to know these things. Of course it'll cost you money to get the answer but at least you'll know for sure.

nun

I agree with the majority of posts here that your husband is a resident for tax purposes. If all his income arose form US sources, ie the US branch of his company paid him, I think doing your taxes with TurboTax will be just fine and you don't need HR Block or any fancy expatriate tax consultants. Has your husband talked to his HR department at work, they may have some advice.

Also are you paying Social Security (FICA tax). I'm not sure of the position for L visas but on J visas you can opt out, the assumption being that you'll be going home and won't need US social security. Its also a good idea to keep up your NI payments while you're out of the UK. You'll probably be able to pay Class II which costs about 100 pounds a year. This is a good deal even for the ridiculously low a state pension that the UK has thanks to Thatcher's disasterous attempts at privatization in the 80's.

neil

I used Turbotax last year - it was my first time filing and it was probably more straightforward as I started getting paid in the US from the 1st of January so there was no split year (although the UK was a different story). It was all quite easy really.

I am on an L1 visa and opted out of Social Security. I keep up my NI payments in the way you mention, and I'm also lucky enough that my company still pays into my pension scheme in the UK also.

AdobePinon

Too much HR Block and TurboTax around here!

To anyone who's filing US taxes for the first time, I would recommend this:

1. Get Pub 519 and work out for yourself whether you need to file as resident or non-resident.
2. If resident, you file 1040, 1040A, 1040-EZ, etc... In this situation you can probably trust TurboTax and HR Block just fine.
3. If non-resident, you file 1040NR or 1040NR-EZ. In this situation there is absolutely no substitute for learning to file your own taxes. It's not really too complex - all the info you need is on www.irs.gov, but 99% of accountants / attorneys / consultants do not know enough to be trusted.

Some other things to consider if you file 1040NR:
1. You have fewer options for deducting from your taxable income (than with a resident 1040). If you follow the rules on form W4 for calculating witholding allowances you may end up oweing a lot of money at some point (because those rules are designed for residents). Be careful!
2. Keep track of exactly when you entered / left the US for at least the last seven years. Some NR categories (exempt individuals) require that you provide this information to IRS, so you want it to be consistent from year to year.
3. Some categories of exempt individuals have a time limit. For example, if you are here as an exempt F-1 student for five years, you will enter resident status after that time, regardless of your student status.
4. State income taxes can be a real pain in the ass as a foreign non-resident (different from a US non-resident). Many states fail to remember that they have foreign non-resident tax payers when they write their tax instructions, but still expect you to know the differences. A common difference is that you may not be entitled to the full deductions / tax credits enjoyed by US non-residents. (Note that state NR forms are typically targeted at US citizens who owe tax to that state, but live in another.)

dbj1000

I totally agree that there's no substitute for learning about your own taxes. I was able to calculate my rebate to within about $50 last year, even given a complex situation with redundancy income in the UK, mortgage interest in the UK, Foreign Earned Income exclusion etc....

...but I would still use a CPA every time.

Why? Because while I can afford $150 to pay someone to fill out tax forms that I could do myself, what I cannot afford is to pay $1000s for a CPA to defend me in the event of an IRS audit.

It may come down to personality and personal preference, but given how "grey" many tax laws can be, I can never feel confident enough in my own tax calculations while I am still handling issues like a UK mortgage penalty which may be deductible here as pre-paid mortgage interest, or deducting Council Tax as Property Tax for the purposes of my return.

I want a "professional" to sign my return - not because they have any more understanding of my taxes than I do, but because they will handle any enquiries the IRS might make in the future. To me, that's worth $150.

In a couple of years, I'm sure I'll be like 90% of my US colleagues who have filed 1040-EZ every year in living memory, and can't imagine paying someone to do it for them.

I'm just not ready to do that yet