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Tax return - part of tax year in the UK

Tax return - part of tax year in the UK

Old Jan 24th 2011, 12:42 pm
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Default Tax return - part of tax year in the UK

What did you all do for the first tax filing you did after you arrived here? (We moved here in August 2010 so obviously earnt and paid taxes in both the UK and US last year). Do any tax return programs handle this or is it worth paying someone to do it for us?

Other than the split tax year the filing should be pretty simple - the only question I have is whether we can claim moving expenses (my husband's company paid him some relocation costs), or are you only able to claim moving costs when you move from US state to US state?
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Old Jan 25th 2011, 5:58 am
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Default Re: Tax return - part of tax year in the UK

If you do need a good accountant I recommend Pete Newton who we found here on BE. He did our taxes last year and will be doing ours this year. He also helped us with my husbands UK tax returns. www.doug-tax.com
My husband moved here in September 2008 and we did put his UK earnings on our taxes. The US and UK do have a double taxation agreement so you can't be taxed twice.
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Old Jan 25th 2011, 1:26 pm
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Default Re: Tax return - part of tax year in the UK

Thanks - any idea of rough costs? I assume it doesn't need to be an accountant in my state who does our return?
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Old Jan 28th 2011, 4:38 am
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Default Re: Tax return - part of tax year in the UK

Originally Posted by NatashaB View Post
Thanks - any idea of rough costs? I assume it doesn't need to be an accountant in my state who does our return?
Sent you a PM
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Old Jan 28th 2011, 2:24 pm
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Default Re: Tax return - part of tax year in the UK

thankyou!
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Old Jan 29th 2011, 6:06 pm
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Default Re: Tax return - part of tax year in the UK

Originally Posted by NatashaB View Post
thankyou!
You're welcome!
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Old Jan 29th 2011, 6:52 pm
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Default Re: Tax return - part of tax year in the UK

Originally Posted by NatashaB View Post
What did you all do for the first tax filing you did after you arrived here? (We moved here in August 2010 so obviously earnt and paid taxes in both the UK and US last year). Do any tax return programs handle this or is it worth paying someone to do it for us?

Other than the split tax year the filing should be pretty simple - the only question I have is whether we can claim moving expenses (my husband's company paid him some relocation costs), or are you only able to claim moving costs when you move from US state to US state?
It is not quite that simple. Since you don't have a green card, you will have to determine whether you can file as a non resident (substantial presence test). If you can, you can then only use your US income when filing your taxes as a non resident (1040NR).

However, when filing as a non resident, certain tax breaks are not available to you.

If you qualify as a non resident you can choose to be treated as a resident for tax purposes. If you don't qualify as a non resident, you must then file as a resident and report worldwide income. In this case, taxes paid to a foreign government can be used to offset US taxes for that income. This may be advantageous over filing as a non resident due certain tax breaks may be able to be used.

http://www.irs.gov/instructions/i104...01.html#d0e300

Tax preparation programs normally can't handle taxes for a partial year residence.

Last edited by Michael; Jan 29th 2011 at 6:59 pm.
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Old Jan 29th 2011, 10:34 pm
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Default Re: Tax return - part of tax year in the UK

Originally Posted by NatashaB View Post
...the only question I have is whether we can claim moving expenses (my husband's company paid him some relocation costs), or are you only able to claim moving costs when you move from US state to US state?
You can claim some costs, but it's pretty limited on what you can claim.
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Old Jan 30th 2011, 3:32 am
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Default Re: Tax return - part of tax year in the UK

Originally Posted by NatashaB View Post
What did you all do for the first tax filing you did after you arrived here? (We moved here in August 2010 so obviously earnt and paid taxes in both the UK and US last year). Do any tax return programs handle this or is it worth paying someone to do it for us?

Other than the split tax year the filing should be pretty simple - the only question I have is whether we can claim moving expenses (my husband's company paid him some relocation costs), or are you only able to claim moving costs when you move from US state to US state?
When we moved we arrived at the end of April.
As part of my relocation package I was given the use of a tax account up to the cost of $1000 (not sure what the bill was as I didn't see it)
Anyway he said for our situation it was better to file for the whole year and report my UK earnings from Jan-April.

For the last two years we've been doing our own taxes as its pretty straight forward (for us anyway). The info we had to provide the tax dude was pretty much the same info we put into TurboTax.

THe only thing I would be weary of is the tax withheld. Its very different from the UK paye where everything is worked out exactly. In the US it seems like its only an estimate (and a low balled one at that) such that when me and my wife were both working they were taking out far too little tax and we owed alot at the end of the year!

Last edited by ImmortalNinja; Jan 30th 2011 at 3:36 am.
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Old Jan 30th 2011, 7:18 am
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Default Re: Tax return - part of tax year in the UK

Originally Posted by ImmortalNinja View Post
When we moved we arrived at the end of April.
As part of my relocation package I was given the use of a tax account up to the cost of $1000 (not sure what the bill was as I didn't see it)
Anyway he said for our situation it was better to file for the whole year and report my UK earnings from Jan-April.

For the last two years we've been doing our own taxes as its pretty straight forward (for us anyway). The info we had to provide the tax dude was pretty much the same info we put into TurboTax.

THe only thing I would be weary of is the tax withheld. Its very different from the UK paye where everything is worked out exactly. In the US it seems like its only an estimate (and a low balled one at that) such that when me and my wife were both working they were taking out far too little tax and we owed alot at the end of the year!
Filling out the W4 form (estimated withholding statement) can be very inaccurate when there are two earners, multiple jobs, irregular overtime pay, two earners with large differences in salary, bonuses or exercised stock options, and/or when a spouse works a partial year.

Although the the Two Earners/Multiple Jobs Worksheet which both spouses must fill out tries to estimate taxes owed, it is complex and there as so many variables (marginal tax brackets, credits, exemptions, etc.) in the tax law that it is just a rough estimate.

Companies withhold taxes based on your weekly/biweekly/monthly salary assuming that you will make that salary for the full year. If overtime, bonuses, or exercised stock options are paid during that pay period, the company has an option of how to tax that additional income. They can either withhold a straight 25% or include it as part of the employees salary. If 25% is withheld, that could be either too much or too little depending on your marginal tax bracket. If it is included as part of your salary for that pay period, generally too much will be withheld.

You should try to get an accurate withholding since the federal government may charge penalties and interest. You won't have penalties and interest accessed if you owe less than $1,000 or 90% of the taxes owed were withheld or the taxes withheld was the same or more than you paid in federal income taxes during the previous year.

To get the withholding more accurate, you could use the total amount extra owed this year and divide that by the number of pay periods and change your w4 from so that extra amount is withheld each pay period (can be done on one spouses w4 or half can be applied to each spouses w4).

When large bonuses or exercised stock options are paid, you can normally contact your HR department and ask them what percentage is withheld. If you feel that not enough is withheld, you can normally ask them to withhold more.

Last edited by Michael; Jan 30th 2011 at 7:21 am.
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