Asg123

Is my plan for filing my taxes ok?

I want to request an extension to file. (I sold a property in England in 2015, and I need to file my UK taxes before I can file my US taxes).

After filing for an extension, I want to file FBAR and form 8938 myself (it'll be my first time filing these two), and when my UK tax is done find a CPA to file my taxes for me.

To file for an extension, I want to go on the IRS website and file form 4868. I understand that an alternative is to pay tax now, but I don't want to do this because I won't know how much my US tax will be until the UK side is done. If I have to enter estimated tax on form 4868 I'll put zero (because I don't know how much my tax will be yet).

If I've got things wrong I would appreciate it if anyone could please point them out to me, thank you.

Cook_County

If you sold a UK property before 6 April 2015 you would already know how much foreign tax credit to pay.


If you sold a UK property after 5 April 2015 you would have filed one of those odd non-resident capital gains returns with HMRC within 30 days of the sale. This would not be the final liability necessarily. Unless you paid any UK tax to HMRC by 31 December 2015 you would not have any foreign tax credit to claim for 2015.

MidAtlantic

8938 is part of your US tax return, so you cannot file it yourself separately.

FBAR would be no problem and must be filed by June 30. No extension is allowed

Owen778

Bear in mind that an extension for tax filing doesn't mean an extension to pay any taxes still owed. This is why they require an estimate of taxes owed. When you do file after the extension, interest and penalties can be levied if you are significantly underpaid.

Asg123

So 8938 must be filed with my tax return, I see. Thank you.

Asg123

The property was sold after April 2015. My co-owners (not USCs) handled the sale and their accountants are handling the UK taxes. I haven't paid any taxes yet; I understand that I'm liable for UK tax on any increase in price between April 2015 and the date of the sale. It hadn't occurred to me that any UK tax I pay in 2016 may not be credited to my US tax for 2015, even though they relate to the same property sale.

Pulaski

Taxes, both US and UK are accounted for on the basis of actual payments out of pocket, or actual receipts if applicable. You do not include taxes not yet paid/rebates received, only those actually paid/received.

mrken30

I noticed H&R block mentioned April as FBAR filing deadline. I am not sure if this is the reason why

The recently enacted Surface Transportation and Veterans Health Care Choice Improvement Act of 2015 changes the standard FBAR due date to April 15 beginning with the 2016 calendar year reports, which are due in 2017. The FBAR deadline for calendar year 2015 reports remains June 30, 2016 (with no extensions allowed).

maybe some more knowledgeable person can confirm this.

MidAtlantic

It changes to April for the 2016 reports. ie 2016 reports must be made by April 30, 2017.

mrken30

I think the tax may be due on the gain in price from the original purchase price. Hopefully someone else can clarify this.

Asg123

I expect my UK tax which I will be paying in 2016 for the property sale in 2015 will be small or zero, but in case it turns out to be large, is there anyway I can plan so the credit will be applied to my 2015 US taxes? (which it should really because it should be credited to tax on the property sale). (It would probably be of little use to me in 2016). Otherwise I would be paying both UK and US tax on the sale of the property, which I would have thought would be contrary to the tax treaty.

Pulaski

No, only the gain after April 2015 is taxable. It is customary in the UK to calculate CGT based on "sale price - purchase price - capital improvements", such as an extension, and then apportion the gain between taxable and none taxable periods. This means you don't need a valuation as at April 2015. ..... I haven't seen for certain that it works this way for post April 2015 gains, but as historically it has for all other CGT calculations, I expect it does.

Pulaski

No. Taxes are accounted for strictly on a cash-paid basis - you can't arbitrarily move the credit to a different time/tax period. If the taxes have not been paid, or were paid after 1/1/16, it is now impossible to match them to your 2015 US taxes.

Asg123

Thanks everyone.