# How do I do my own US taxes?



## Lauren456 (8 mo ago)

I'm an accidental American and since I found out I have become compliant and have always used a tax accountant to prepare and submit my taxes.

My tax situation has become simpler in the last year or so in that I no longer have any rental income, just a full time PAYE job, so I'm thinking of doing my taxes myself next year and saving my money. I have NO CLUE where to start though - I'm assuming I just more or less copy what my accountant did this year and change the numbers. Is there a free software I can use? How do I know what exchange rate to use? Is there any reason why I shouldn't do it myself?


----------



## Bevdeforges (Nov 16, 2007)

The IRS has a program for Free e-filing through various online tax preparation software providers. One major caveat is that there are usually only a very limited number of the member providers who can handle overseas taxpayers, either because they don't have the necessary forms (for the FEIE or Foreign Tax Credit) or because they can't handle foreign addresses in their systems. 

This is the IRS information site on the program: Free File: Do your Federal Taxes for Free | Internal Revenue Service

There is also the IRS Free File Fillable Forms - but as they note on the page I referenced, there is no real guidance. You need to have a pretty good idea of where information goes and how to fill in your forms yourself. Again, there are some forms that the IRS system can't handle in e-file format.


----------



## Harry Moles (11 mo ago)

Here's a better idea: renounce US citizenship or simply stop filing US tax returns, unless you've got plans of moving to the US in the future. You'll save money in the long run. If you received your $3,200 stimulus benefit, quit while you're ahead.


----------



## srendipitymad (6 mo ago)

I used OLT this year. On-line and free. It had all the forms I needed.


----------



## Moulard (Feb 3, 2017)

I will also give a thumbs up for OLT

1) it is cheap - if you end up in a position where you have to pay something rather than falling into the free file camp.
2) they support non-US centric means of two factor authentication (may providers require a US phone number)
3) if you endup having to pay for the return ... they support methods of payment other than a credit card with a US bank

The only downside is that there interface is not as well polished as the others, but if your income is straight forward you should be able to follow their Q&A to enter the values and walk yourself through the return from start to end... 

If you are coming in completely cold then IRS Pub 54 is a good place to start to help interpret and understand the Q&A but for the most part it will be self evident.

If you choose to use Foreign Tax Credits rather than the Foreign Earned Income Exclusion as the means offset any potential US tax liability, then I will say the Q&A provides little help .. and the form is convoluted in the way it is written and changes this year to the form do not help. But don't dispair... when you get to that point there are a number of us... me included .. that can help you to parse what you need and how to calculate it.

If you had an accountant prepare a US return for you and your circumstances are less complex, then you should be able to use that return as a sanity check against your DIY return. ie. one you have gone through the Q&A, print a draft out, and compare side by side with the one the accountant prepared to see if you missed anything.

As to exchange rates, technically you are meant to use a spot rate on the day any income was received or deduction incurred, but many people use an average annual rate.

With a few exceptions (mostly foreign account reporting related) you can use any publically published rate - and those exceptions require you to use a rate published by the US Treasury Department


----------



## Lauren456 (8 mo ago)

I only have one source of income and it's under £35k so I won't have any tax to pay. I think my accountant normally uses FEIE.

Reading through some of the forms, I don't really understand why they make it so complicated: "add together line 4 and 8 and write the number in line 14 but NOT if the number on line 7 is over 6000 and only if there's an R in the month". It feels like an exam they want you to fail.

The suggestions are really helpful, thank you - I will check them out!

@harry Miles renunciation is an option I'm considering.


----------



## Bevdeforges (Nov 16, 2007)

If all your income is from salary and thus subject to the FEIE, it should be fairly easy to just follow the instructions blindly whether they make any sense to you or not. The IRS pays little or no attention to the details once it is obvious that you will owe no taxes like that.

The reason things are so complicated is that on the US forms, they actually make the taxpayers calculate for themselves what they owe. Plus, with the various "options" and "choices" involved, the IRS is unlikely to correct you if you err in their favor. 

Renunciation is a pricey option - though like the Mastercard advert says, not having to worry about that stuff ever again, "priceless." You do need to take into account your situation and whether or not you might ever have need or desire to take advantage of that accidental nationality - say for a job transfer to the States, study, or other long-term stay. At the present time, they are unlikely to interfere with any holiday travel to the US (on the visa waiver program) but if you would need a visa, they could make life seriously difficult for you or even deny you any sort of long-stay visa, simply on the technicality.


----------



## Harry Moles (11 mo ago)

Never filing again is also an option. Not filing in the first place was the better option, but that ship has sailed.

Right now the returns are simple. Later in life, who knows, with the acquisition of wealth and property and investments, they won't be so simple, nor might they result in nothing owing.

As ever, there are three basic options: comply; ignore; renounce.


----------



## Moulard (Feb 3, 2017)

Lauren456 said:


> Reading through some of the forms, I don't really understand why they make it so complicated: "add together line 4 and 8 and write the number in line 14 but NOT if the number on line 7 is over 6000 and only if there's an R in the month". It feels like an exam they want you to fail.


Because the politicians write stupid, needlessly complex and internally inconsistent tax laws and the IRS has to try to create forms that deal with every permutation and combination that is possible.

If you are excluding all of your earned income then it should be quite simple..

Add your wages on Line 1 in 
Add any interest or other income if you have it on Lines 2-7
Remove you wages on Line 8 (via the circuitous route of Form 2555 and Schedule 1
Take the standard deduction on Line 12
Out of that will most likely pop a taxable income of 0 on line 15

The only other thing to note is that even if you have no taxable interest you will still need to submit Schedule B to report that you have foreign financial accounts

If in the end your return doesn't look like that.. then recheck -- it is for example easy to add wages as if they are US wages not foreign - or accidentally add rather than subtract the excluded income.

If you have financial assets that exceed $10k USD then you have FBAR filing requirements that are separate






Individuals Filing the Report of Foreign Bank and Financial Accounts (FBAR)







bsaefiling.fincen.treas.gov


----------

