# US tax return and foreign income



## twinks (Feb 23, 2010)

Hi,

So I arrived in the US October 1st, 2010 and started work in my new job here. I've just got my W-2 for 2010 and am starting to look at filling in my return.

I saw ads for turbotax on the TV and figured it would be a good place to start something which is all new to me, and one of the questions it asks me is about foreign income.

Obviously before I came here (and before I had anything at all to do with the US) I had a job in the UK and during 2010 I have earned money there. I've also already paid taxes in the UK on that income and am all up to date.

Do I really have to pay tax *again* on this money that I've earning in the UK during this period? Or does it only apply to people that have been in the US and pay tax here, but then go to work in a foreign country for a while and then come back?

If I put the income in turbotax is telling me I will owe something like $3K in tax which just seems crazy, especially when I consider had I have come here on the 1st of January 2011 instead there would be absolutely no tax to pay.

Like I said I have moved here for the first time, and have had nothing to do with the US before this date. Not claimed anything or used any public services or anything. Please tell me this is wrong, or there is some excemption or whatnot?

Thanks,
Twinks.


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## Bevdeforges (Nov 16, 2007)

Ok, take a look here under the heading "First Year of Residency" Publication 519 (2009), U.S. Tax Guide for Aliens This is a section from IRS publication 519 for Aliens. (Don't you just love that name?)

In general, you must declare your worldwide income to the IRS and then apply tax credits or other treaty provisions so that you aren't taxed twice on the same income. Your first year in the States (and your last year) is an exception. Next year, you'll be expected to declare all income, including any interest or other miscellaneous income from back home, even if you have already paid tax on it. (You then take the Foreign Tax Credit - form 1116.)

TurboTax (or any of the other tax programs out there) may or may not be able to handle the precise treatment of your first year of residency or other "alien" tax niceties. Worst case, you can make any necessary notations by hand on the returns before you send them in.
Cheers,
Bev


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## twinks (Feb 23, 2010)

Thank you Bev for the link and info. Sounds like I should be fine then but I might need to go speak to a professional to help me rather than rely on the online tools, at least initially.

Regards,
Twinks.


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## Bevdeforges (Nov 16, 2007)

twinks said:


> Thank you Bev for the link and info. Sounds like I should be fine then but I might need to go speak to a professional to help me rather than rely on the online tools, at least initially.
> 
> Regards,
> Twinks.


Check around in the area where you are located - public libraries or the local Post Office particularly - to see if there are any tax help programs. Probably won't start up until mid-February this year as there are a couple of forms that have yet to be released for use. If you have a community college or state university nearby, their business students sometimes offer tax assistance.

Look for something like VITA (Volunteers in Tax Assistance) which is a free tax assistance program. You could check for store-front tax services, which are somewhat less expensive than a tax accountant or attorney. The other option is to contact an enrolled agent. They're qualified by the IRS and often can offer tax assistance a bit more economically than an accountant or attorney.
Cheers,
Bev


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## BlackBelt (Jan 18, 2011)

I had the same problem on my first yeard of residency in the US. In the first year, you can choose what is called a "dual status alien", because you spend less than 6 months living in the US, the income you earned before moving to the US is not reportable and not taxable to the IRS. Only any income earned after you move to the US is reportable. If you are still in doubt, here a CPA.


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