# US Tax return UK resident



## Andy-Pandy (Aug 28, 2014)

Hi everyone, this is a very simple question but I don't appear to be able to find the answer anywhere!

My wife is a US citizen living in the UK and to cut a long story short we are having some wranglings with the IRS since she has had to fill in her own tax returns for the first time.

When calculating your income, do you use the Net (after UK tax) or Gross value?

She has worked here for over 4 years and as far as i'm aware every tax return she has submitted up to 2017 used the Net value.

Thanks in advance.


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## Bevdeforges (Nov 16, 2007)

Technically speaking you're supposed to use the gross amount. Social insurances and other "benefits" charges are not deductible for US tax purposes.

Generally speaking, you either take the Foreign Earned Income Exclusion (up to about $105K) against the gross amount of income - or you take your UK income tax paid as a Foreign Tax Credit again what taxes you generate on your US forms. (Or, if your earned income exceeds the limit of the FEIE, you can take both the FEIE and the FTC, though the mechanics of that can be tricky.)


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## Andy-Pandy (Aug 28, 2014)

Thanks for the quick reply, her earnings are way below the FEIE limit even using the gross figure.
The result is zero tax to pay either way, just want to make sure we get the figures right this time.


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## shony (Jun 13, 2019)

Gross income. That is only the way to report. Do you report your net income to UK?


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## Bevdeforges (Nov 16, 2007)

shony said:


> Gross income. That is only the way to report. Do you report your net income to UK?


Actually, in some countries (for example, France, where I live) you report your "taxable income" which is gross income reduced by certain social insurances - usually things like health care and retirement.


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