Parisangel

Hello

Hoping for some advice....we have been in the USA since the end of October on H1B and H4 visas, do we need to complete a tax return? My husband is taxed through his workplace payroll, so surely he has nothing more to pay?

Excuse basic questions but we're very new to all this.

Thanks for any advice.

jeffreyhy

An income tax return is to determine how much tax one owes. Your husband's employer may have withheld too much tax from his paychecks, in which case he is due a refund, or they may not have withheld enough, in which case he does have more to pay.

Either way, an income tax return is required.

Regards, JEff

Bink

Yes, he needs to complete one.

Taxes in the US are nothing like what they are in the UK. It's not the case that the tax deducted is necessarily correct like it is for the most part in the UK.

It's probably worth using a CPA to do your first return for you if possible as you should be able to exclude the tax you have already paid in the UK.

Pulaski

.... you should be able to exclude the income on which you have already paid tax in the UK.

The US taxes deducted from paychecks looks superficially like British PAYE taxes, in practice it is extremely unlikely that the tax deducted is the same as the tax actually owed. The US tax code allows a myriad of deductions, and even if it didn't, the US IRS doesn't assign individual tax codes for your employer to use to calculate how much tax to withhold. In short the US has outsourced most of the burden of preparing tax calculations to the taxpayers and their accountants.

Bink

To the best of my understanding (and I let my CPA deal with this frankly) you can apply foreign tax credit against your US taxes owed. I'm pretty positive this is how it worked for me and there was only so much I could use each year and it got carried over. I think it may depend on how much time you've spent in the US in the year as to the approach that is taken but like I said, I hand this over to my CPA - that's what I pay him for!

Pulaski

OK, I understand that now, though I would have said that you include (get credit for) taxes paid in the UK, rather than exclude them, but that is just semantics!

Bink

The important thing is that the Tax paid in the UK counts!! But yes, reading back through it probably wasn't as clear as it was in my head!

Mr Weeze

You are taxed on your worldwide income. If that income has been taxed at the source (i.e. the UK) then that is taken into account. My understanding is that if you have paid less tax than would have been due in the USA they will look to tax you for the difference.

Though KPMG do mine so I have no idea how it really works.

Bob

It's all about the deductions.

There are some costs of relocating that can be claimed as a deduction which might help.

robin1234

This is one of the freedoms we enjoy, being unpaid penpushers for the US & state government.

Parisangel

ok thanks, that helps. Any idea how much it costs to have professional help with doing this? I can't work in the US, does it apply to me as well as my husband?

ChocolateBabz

The short answer is yes you have to file taxes, no way round it. You will probably file as married filing jointly. Our first year hubby's work provided an accountant to do it for us. This was great as we had lived part of the year in the UK and part in the US plus we had relocation expenses and all sorts of one off stuff to be included. Subsequent years we have used turbotax online.

cranston

I use and recommend this website for producing a tax return.

http://www.taxact.com/

jeffreyhy

You do not have to file an income tax return if your income is less than the minimum amount of income above which filing is required. Note, however, that the requirement is income, not working. Many people who do not work nevertheless have income.

That said, you probably do want to file a joint income tax return with your husband. It will almost certainly reduce the amount of income tax than he owes.

Regards, JEff

captainsensible

I might have got this wrong (Ok, there is a really really good chance I have got this wrong ) but...

If you have only been here since October, then doesn't that mean you fail the 'substantial presence' test for that tax year (2012)? Therefore, the tax return requirement is different and not as 'far reaching'? Obviously, in subsequent years you would not fail this test so it would require a 'full on' return'. I have been reading the IRS stuff as this applies (or doesn't, depending upon my lack of understanding) to me as well (although I would probably benefit from filing jointly with my wife anyway as she is a USC).