# Sold US stocks, where to I pay tax on them?



## AmInUK (Feb 12, 2015)

Hi,

I'm a US citizen living in the UK. 

In December 2014 I sold a small amount of US stocks worth around $5,000.

My question is, since I reside in the UK I need to pay taxes here on all my income. Then because of dual taxation treaties I don't need to pay tax on my income in the US as long as my income is below the $97,000 threshold (it is--even with this stock sale).

I'm just trying to clarify that as long as I pay capital gains taxes on this sale of this stock in the UK I do not need to pay any tax on it in the US. Is that correct?

So when I'm doing my tax return this year would I just put this stock sale under the Foreign Income section?

Thanks!


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## Bevdeforges (Nov 16, 2007)

Not quite.

That $97,000 exclusion only applies to "earned income" - i.e. salaries and similar income related to your employment.

You need to declare the capital gains on your US return just like you would normally if you were back in the US. Then, you claim the taxes you paid to the UK as a tax credit (using form 1116) against whatever taxes they generate on your US forms. 
Cheers,
Bev


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## AmInUK (Feb 12, 2015)

Hi Bev,

Thanks for the answer. In the UK the first £10,000 or so (about $16,000) of capital gains is tax free. This is built into tax law so technically I am abiding by and meeting the UK tax requirements by paying no taxes on my $5000 worth of stock I sold. Does this mean since I paid no tax on it to the UK (because I was legally entitled not to) I'll need to pay US tax on it?

Thanks


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## Bevdeforges (Nov 16, 2007)

It depends on your tax situation. Capital gains have to be declared like anything else - but they go into figuring your AGI - adjusted gross income - on the first page of the 1040. Turn it over and then you start to apply your personal exemption and your standard deduction. Up to about $10,000 (depending on your filing status) you'll wind up having 0 tax to pay.

Plus, if you sold $5000 worth of stock, you get to subtract whatever you paid for the stock - so your capital gain is something less than that.

In the long run, I suspect you won't wind up paying any tax to the US. But you have to run the numbers to be sure of that.
Cheers,
Bev


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