snowscreamer

Hello,

I wonder if any of you lovely people could share some tax expertise? We've been here 3 years now and the 2020 return will be our 3rd tax return. I have copies of the previous two. Unfortunately my husband's company was badly let down by their accountants last year (who including our tax returns as part of a good price - too good to be true perhaps). The new company accountant wants $3000 to do our return this year which seems unnecessarily steep so I'm exploring other options. It's still bloody complex compared to the UK but having read the two returns I feel like I have a reasonable idea of the numbers and info I'll need to input at least.

Our income comprises of:
* US employee earned income x2. No job changes in 2020 for either of us. We have the W-2s.
* UK rental income
* Some interest in the UK - only around a thousand pounds

Expenses:
We have owned a house for the last 6 months in the US but suspect the standard deduction will be better. I suspect I am capable of doing the calculation to work this out if need be.
We also have 2 kids in daycare and wish to claim the child and dependent care credit

Do I need a CPA or will TurboTax do the job? And if so what version? I think our W-4s are pretty bang on so as long as I can get enough expenses and depreciation on our UK house hopefully our bill will be small. I can look at the previous returns to figure out what the accountants did on the expenses front for the house. I remember and have records of sending them receipts for work we had done on the UK house to work out the depreciation

The other thing is the previous accountants dropped the ball on sorting an ITIN for our eldest UK-born daughter, plus all the tax offices closed for much of last year, so I need to start that again and resubmit 2018 and 2019 tax returns to get refunds. Anyone got any experience of this process? Any tips? I'm assuming I'll file 2020 in paper with W-7 and accompanying documentation and then resubmit original 2018 tax return (which claimed her - IRS then charged us $1800 when no ITIN was forthcoming) and then have to redo 2019 via TurboTax or CPA?

Thanks for all advice!!

civilservant

Personally, based on this slightly messy prior tax year situation, I would feel more comfortable having a CPA straighten things out.

After this has all been straightened out, I think using Turbotax from now on would be just fine. When you start using it, it will direct you which product you need as you answer questions. Based on what you have said, it'll most likely be TT Premier I'm guessing.

snowscreamer

Thanks civilservant, that's really helpful. Any tips on finding someone suitable? I'm guessing the regular "$99 tax return" types found in strip malls may not be the ones? Should I be looking for a regular CPA or a foreign income / resident alien specialist?

Glasgow Girl

Turbo Tax Premier will handle everything you outlined and a lot more, except the amended returns for 2018 and 2019 and that is only because you did not file with them originally. Submitting amended returns manually is fairly straightforward though if you pay attention to detail. I have done it a couple of times and it took the IRS about 12 weeks to process them.

In prior years you could use Turbo Tax for free until the point that you want to file, and I am sure that is the case this year as well, so maybe give it a go. If it works great, if not you lose nothing but some time.

It will walk you through your income and deductions and advise you whether you should take the standard deduction or not. It will also walk you through your rental property income and expenses in detail making it very easy to complete that task.

If you have a thousand pounds interest from the UK it is possible that you have enough assets to need to complete Form 8938, but it will advise on that and if necessary complete the forms and submit them online with your tax return. It will not do the FBAR but that is done online direct with the IRS and is very easy once you have set up the account with the IRS. The only thing I have found to be not so obvious is where to enter foreign interest and dividends that are not reported on a 1099. I just enter any UK income that falls into that category under the catch all section for other dividends and interest and have never had a problem with that.

Turbo Tax also has a very good online knowledge base. You are able to ask questions and get fairly prompt answers, all included the original cost. In any case it is very inexpensive in relation to using a professional and makes future year returns very easy as it carries over all relevant information making for much less data entry in subsequent years. Give it a go, I think you will be surprised how easy it is.

Dont forget to resubmit you state returns as well to get a refund for 2018 and 2019. Of course Turbo Tax will also do your 2020 state income tax return.

MMcD

I agree...it's definitely worth seeing whether TT will work for you.

I've never tried or seen the free version, which you do online, and pay nothing until and unless you actually proceed to file (as opposed to the 3 TT versions which you purchase ahead of time and download
.
I wonder whether the free version offers the features you might need. Probably not....but it's still worth trying it out. Use what they refer to as the EASY STEP feature. It asks you a series of questions and generates the forms you require, depending upon your answers. And it does all the calculations.

BTW F-Bars are obtained from / filed with the Treasury Dept.
Not the IRS (which is under the auspices of Treasury, but does not handle FBAR.
Here's a link for the PDF download: https://bsaefiling.fincen.treas.gov/NoRegFBARFiler.html
Read the overall instructions and then follow the line by line instructions
This is definitely something you can / should do yourself.

Good luck

neill

I would guess mine's as complex as yours and using TT I can get my paperwork gathering and precalculations done in about 4-6 hours and entered into TT Premier in about 1-2 hours. (Are you telling me I could charge someone *$3K* for that amount of work?)

Cook_County

Where you might struggle with TurboTax if it is does not support preparing Form 8858 for the UK rental activity along with a separate Foreign Branch category Form 1116. You'd have been reporting UK pension plans on Form 8938 and FBARs in previous years, so these should look similar to whatever was reported for 2019.

Glasgow Girl

If you own the property directly, i.e it is not in a trust or some form of a company, and that is how the vast majority of people own property, then you simply report all income and expenses on Schedule E the same as any rental property owned in the US. Turbo Tax will do a great job of taking care of that. You will only need Form 1116 if you paid UK tax on the rental income (or any of your foreign bank accounts or investments) to get credit for the UK tax paid. Turbo Tax has always completed Form 1116 for me when it is required. It asks you questions and determines if you need it or not. It is very user friendly. It does not ask you if you need to fill in Form XYZ, it asks questions and figures it out for you so don’t get wrapped around the axle wondering if you need this form or that form and how to complete them. Turbo Tax does all the hard work, you simply need to answer the straightforward questions, it gathers data and completes the required forms for you. Turbo Tax has never failed me when dealing with foreign income on rental property and investments and has completed whatever forms were required.

Cook_County

While this was true before 2018, the TJCA changed the law with effect from the 2018 return. A so-called "foreign branch" activity of an individual requires filing of IRS Form 8858 starting from the 2018 US tax year. I don't know if TurboTax prepares this form.