# US Expat in the UK - Paying US Tax



## mandyhoov

Hi there!

My husband and i moved to the UK last July, 2011. Both he and i worked in the US prior to our move, and have worked in the UK since our move (through the remainder of 2011). I'm curious, and have looked in this forum but haven't been able to find a quick answer - do we have to declare and pay tax on the income we made here in the UK?

It seems odd to have to declare that income when we are paying UK taxes for it, but after looking into doing our taxes, it seems that perhaps we do?

If anyone has any advice, or can point me in the direction of a thread (i'm sure this topic has been covered before, but can't seem to find it easily!!) that would be super appreciated!! 

This is a first for me, and i'm already a bit overwhelmed - thought it would be as easy as filing as though we were still living in the US, but alas... it's not!

thanks all!
cheers,
xo


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## Bevdeforges

If both you and your husband are US citizens, then yes, you do have to file a US tax return for 2011. Take a look over at the Expat Tax section here in the forum, starting with the sticky post http://www.expatforum.com/expats/expat-tax/100308-help-us-citizens-filing-abroad.html

You should download Publication 54 for overseas filers. Basically, you can claim the FEIE (Foreign Earned Income Exclusion) for earned income (salary) earned while resident overseas. You may, however, need to file for an extension until you have met the physical presence test - i.e. until you have been outside the US for 12 consecutive months.

Ultimately, it's not all that difficult - but the first time through it can be a little hairy.
Cheers,
Bev


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## mandyhoov

*Thanks!*

Thanks for this! Yes, i've been reading through, but it's just a lot of information! 

He's a UK citizen, so that may change things... 

I'm glad we have a 2 month extension!! 

m


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## Bevdeforges

mandyhoov said:


> Thanks for this! Yes, i've been reading through, but it's just a lot of information!
> 
> He's a UK citizen, so that may change things...
> 
> I'm glad we have a 2 month extension!!
> 
> m


If he isn't a US citizen (and isn't hanging onto a Green Card), then you have the option to file jointly for 2011. The only catch to that option is that you will then be treated as US residents for the entire year and cannot take advantage of any of the tax treaty provisions (like the Foreign Earned Income Exclusion).

Otherwise, he files as a non-resident alien for his earnings in the US and you file married, filing separately (which means you would have to take an extension until you have been living overseas for a full 12 consecutive months). 

It's the first year that is complicated. Filing after that becomes easier. But Publication 54 is your main guide.
Cheers,
Bev


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## mandyhoov

Bevdeforges said:


> If he isn't a US citizen (and isn't hanging onto a Green Card), then you have the option to file jointly for 2011. The only catch to that option is that you will then be treated as US residents for the entire year and cannot take advantage of any of the tax treaty provisions (like the Foreign Earned Income Exclusion).
> 
> Otherwise, he files as a non-resident alien for his earnings in the US and you file married, filing separately (which means you would have to take an extension until you have been living overseas for a full 12 consecutive months).


Thanks - he does have a green card, which makes it sound like we have to file separately? Or can we file jointly?

I'll have a dig thru the download, thanks so much for your help!!


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## Bevdeforges

If he has a green card, then you can file jointly (if you wish) or separately - and each of you can take the FEIE if you qualify.

But, be very careful about your husband's Green Card status. If he intends to maintain it, he should probably check with the Consulate to see how to register the fact that he is living outside the US, but is not intending to abandon his resident immigrant status. This one tends to come back and bite people if you don't do things the official way.
Cheers,
Bev


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## mandyhoov

Reading through 54, I'm curious - if we file US taxes with my husband claiming US green card holder, do we need to file that way for our UK taxes and keep it congruent, even though he is also a UK citizen?

this is actually a really interesting read - i am surprised at how much i am enjoying the ins and outs of US taxes!


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## theOAP

The UK taxes on an individual basis. There is no such thing as a "married filing jointly" option. There are very, very few instances when being married enters into tax. The only one I can think of offhand concerns the married couples allowance where one individual must be over 75 to claim the allowance. I'm guessing you may be a bit younger!


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## mandyhoov

theOAP said:


> The UK taxes on an individual basis. There is no such thing as a "married filing jointly" option. There are very, very few instances when being married enters into tax. The only one I can think of offhand concerns the married couples allowance where one individual must be over 75 to claim the allowance. I'm guessing you may be a bit younger!


Thanks! Yeah, i know that it's a bit different over here - i thought sorting out taxes in ONE country was hard enough to wrap my brain around! 

I'm curious though, not about filing jointly, but keeping my husband's "status" congruent through both returns - US and UK, after reading through Publication 54. Basically, my husband (a UK citizen with a US green card) will be filing our US taxes as a US resident alien, and i'm wondering if, when he fills out his UK taxes, he needs to file them as a UK citizen, or file them as he filed his US taxes, as a US greencard holder/resident alien who is over in the UK semi-permanently. Sorry if this is confusing. 

Thanks, all, for any help!


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## theOAP

Your husband is a UK citizen, and will therefore pay his UK tax as such. His US 'status' is not considered (as it's not considered for anyone working in the UK for a period). The only issues for a 'UK citizen' are domicile, ordinarily resident, and resident. These determine whether he can file on the arising basis, or the remittance (or possibly Non-Dom) basis. The Non-Dom status carries a £30,000 (soon to be £50,000) levy per year.

For simplicity, if he will be in the UK for 183 days or more per year, he will be taxed on the arising basis as is normal for anyone working in the UK. This means he will be taxed on his 'worldwide' income (as a UK domicile due to his UK citizenship) when filing in the UK. Whether he will need to do a self-assesment return, or be covered under PAYE, will depend on any income he may have from the US (interest, etc.).

This won't answer your question exactly, but may be a place to start:

Income Tax when arriving in the UK : Directgov - Money, tax and benefits


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## Bevdeforges

mandyhoov said:


> Thanks! Yeah, i know that it's a bit different over here - i thought sorting out taxes in ONE country was hard enough to wrap my brain around!
> 
> I'm curious though, not about filing jointly, but keeping my husband's "status" congruent through both returns - US and UK, after reading through Publication 54. Basically, my husband (a UK citizen with a US green card) will be filing our US taxes as a US resident alien, and i'm wondering if, when he fills out his UK taxes, he needs to file them as a UK citizen, or file them as he filed his US taxes, as a US greencard holder/resident alien who is over in the UK semi-permanently. Sorry if this is confusing.
> 
> Thanks, all, for any help!


There's no need to worry about "congruence" between your UK and US returns - at least not as far as filing status is concerned. The two filing systems are completely independent in that regard. 

The only thing they might compare - and only really if there is something "odd" about one filing or the other - are the amounts and sources of income reported. But your returns would have to pop up on the radar for something fairly major for them to get the two revenue services together like that.

I worry a bit, however, about your comment that your husband will be "filing our US taxes as a US resident alien" - if he does that then neither one of you can take any treaty benefits for being overseas, including the FEIE. FWIW, the IRS seems to use very different criteria for determining when a Green Card holder is no longer subject to filing US taxes than the State Dept does for determining whether someone is a "resident alien" or not. 
Cheers,
Bev


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## mandyhoov

Bevdeforges said:


> I worry a bit, however, about your comment that your husband will be "filing our US taxes as a US resident alien" - if he does that then neither one of you can take any treaty benefits for being overseas, including the FEIE. FWIW, the IRS seems to use very different criteria for determining when a Green Card holder is no longer subject to filing US taxes than the State Dept does for determining whether someone is a "resident alien" or not.
> Cheers,
> Bev


Thanks, Bev... sorry for all the questions. What would be our other option for filing if filing jointly? I haven't yet read in 54 that him claiming this status would make us ineligible for the FEIE... thanks again!


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## mandyhoov

I think i answered my own question - we are attaching to our return a declaration of choice to be US residents for the entire tax year, name, SSN, etc... hope this is what we need to be doing! May need to hire someone to help after all... *gulp*


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## Bevdeforges

mandyhoov said:


> I think i answered my own question - we are attaching to our return a declaration of choice to be US residents for the entire tax year, name, SSN, etc... hope this is what we need to be doing! May need to hire someone to help after all... *gulp*


It's up to you - and in some circumstances, it could be advantageous to be taxed by the US rather than the UK. (I'm afraid I don't know much about the UK tax system, so can't really tell you more than that.) Normally, the option to be treated as US residents for the entire year is only open for the year you leave or the year you enter the US for a long stay. (But honestly, I doubt the IRS would refuse your taxes!)

Just be aware that you need to declare you worldwide income even if you are electing to be treated as US residents - this includes anything you earn in the UK and any and all UK interest and investment income.
Cheers,
Bev


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## mandyhoov

Bevdeforges said:


> It's up to you - and in some circumstances, it could be advantageous to be taxed by the US rather than the UK. (I'm afraid I don't know much about the UK tax system, so can't really tell you more than that.) Normally, the option to be treated as US residents for the entire year is only open for the year you leave or the year you enter the US for a long stay. (But honestly, I doubt the IRS would refuse your taxes!)
> 
> Just be aware that you need to declare you worldwide income even if you are electing to be treated as US residents - this includes anything you earn in the UK and any and all UK interest and investment income.
> Cheers,
> Bev


This was our first year (moved in july), so i think it makes the most sense... what would we file as the following years when we are living 100% in the UK? I thought that my only option was to file as a US resident, being a US citizen... 

Thank you again, a million times over, for all your assistance! This is so much easier to work through with all the great advice.


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## Bevdeforges

mandyhoov said:


> This was our first year (moved in july), so i think it makes the most sense... what would we file as the following years when we are living 100% in the UK? I thought that my only option was to file as a US resident, being a US citizen...
> 
> Thank you again, a million times over, for all your assistance! This is so much easier to work through with all the great advice.


Normally, you would wait to file until you had fulfilled the "physical presence" test (i.e. had been living overseas for 12 consecutive months) and then make use of the FEIE (form 2555).

If your plans are to remain in the UK, you will be able to file for 2012, claiming the FEIE under the bona fide resident criteria, and thus excluding your foreign earned income from taxation by the US. (Or you can take the Foreign Tax Credit, using form 1116 - though, depending on your income level, this can invoke the Alternative Minimum Tax.)

The thing to be careful of, in your case, is your husband's status. As a Green Card holder, he continues to be subject to US taxation. If he surrenders his Green Card, you may want to consider filing separately (i.e. married filing separately) - though the IRS is funny about recognizing their loss of jurisdiction when someone voluntarily gives up their Green Card.
Cheers,
Bev


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## James2121

Thanks to all for this thread. My wife( an American citizen) and I (a Brit) will be moving from Idaho to the UK for a job for her, in October 2013. I think i have most of what I was checking covered in this thread, although my situation here in the US is slightly different. From all my thread hunting and general research....Thank you very much Bevdeforges for always being willing to help others....nice to see!!!


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