# What's my tax liability for 2018?



## deebie (Jun 12, 2018)

Hello everyone,

I'm new to the Forum, but look forward to being a regular contributor 

I am a US expat and have been living and working in the UK for nearly two years. I would like to get more clarification on my tax liability for 2018. I am a bona fide resident (qualified last year and situation is still the same) and my total income will be about $150k. I have about $145k USD in foreign UK income and about $6k USD in US source income from when I was on business for two weeks in the US. All of this income is taxed in the UK by my employer. I will pay about $42 USD in foreign taxes.

I assume using just the FTC or a combination of the FEIE, HE and FTC will cover the tax on the foreign income. But what about the $6k in US source income? Will my standard deductions/child credits cover this amount? Note that I am married and would likely file jointly and have two children under the age of 17.

Thank you all in advance and best,
Deebie


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## Moulard (Feb 3, 2017)

Is your spouse a US person? If not you might want to consider either filing as Head of Household or Married filing separately. While they can elect to be treated as a US person for tax purposes, I personally would want to keep them out of the US tax system. But if they are a US person (US Citizen or green card holder - even if expired) then filing jointly is beneficial inasmuch because of the higher reporting thresholds for things like foreign bank accounts.

While your circumstances may vary depending on the split of passive and general income in that 145k, from a tax planning perspective you may well be better off excluding the FEIE and go with the FTC as you may well have excess tax credits that you can carry forward for up to ten years.

I would recommend doing a back of the envelope calculation by completing your taxes both ways and then assess which will yield the better result both for the current filing year, and in the future from a planning perspective.

Note that as of the 2018 filing year the standard deduction will be removed - so you may want to factor that into your thoughts.


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## deebie (Jun 12, 2018)

Thanks, Moulard. My wife is a U.S. citizen and since she has no income so it seems like it's in our best interest to file jointly.

All but $100 of that 145k is general income (the $100 is passive). The FTC would definitely take care of all of the foreign income and I have some carryover from previous years. I would need to revoke the FEIE since I used it last year though. I don't plan on moving to a lower income tax country so I don't think that's an issue.

The question I still have though is--what about the 6k in US earned income? Since I lose the standard deduction I assume two child tax credits would take care of that additional tax (22% of 6k). Is that assumption correct?


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## Bevdeforges (Nov 16, 2007)

Moulard said:


> Note that as of the 2018 filing year the standard deduction will be removed - so you may want to factor that into your thoughts.


If I read the new tax law stuff correctly, I don't think it's the standard deduction that is lost in 2018, but rather the personal exemptions. The standard deduction has been nearly doubled - but you get no more exemption amount per family member in the household. (And, if you have itemizable deductions that total more than the standard deduction, you can always go for itemizing rather than taking the standard.) Or do I have that completely backwards?

If you go the FEIE route, your standard deduction (or itemized deductions) have to be apportioned between your earned income being excluded by the FEIE and your unexcluded income (passive or the amount by which your salary/earned income exceeds that year's limit). 
Cheers,
Bev


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## deebie (Jun 12, 2018)

In 2018, the standard deduction doubles for married filing jointly. The personal exemption is gone, but you still get the child tax credit, which would apply to any tax you owe (not a deduction on income).

My understanding is that the standard deduction can't be used if you use the FTC, but I may be mistaken. Does anyone know?

My thinking is that in my case, the FTC would fully cover my foreign taxes. And with the 6k in US earned income, the child tax credits (2 children=$4k) would more than cover my burden. Am I mistaken here?


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## Moulard (Feb 3, 2017)

Bevdeforges said:


> If I read the new tax law stuff correctly, I don't think it's the standard deduction that is lost in 2018, but rather the personal exemptions.


Yes. You are right, I should not post before the coffee has kicked in.


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## Bevdeforges (Nov 16, 2007)

Moulard said:


> Yes. You are right, I should not post before the coffee has kicked in.


We all run into that issue now and then....:ranger:
Cheers,
Bev


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