# First tax filing



## jacktheenglishman (Feb 26, 2013)

Hello all

Hope someone can help.

My American wife has to file her first tax return since moving to the UK; actually first ever as it happens, as she never worked in the States as we met before she graduated college.

The first thing we're struggling with is the physical presence test.

She moved to the UK on 14 February 2014 and has not been back to the US for more than 30 days since. So in the 2014 US tax year she was in the UK for 321 days out of 365 which doesn't seem to meet the criteria.

However, she has now been in the UK for 365 days out of the last 365 and was physically present in the UK for the whole of the 2014/15 UK tax year. Not sure if either of those is relevant.

She got her first job in the UK in September 2014 and by 31 December 2014 had earned approximately £5,000. She did not pay any tax in the 2014 calendar year as her earnings fell within her UK personal allowance.

By the end of the UK tax year (i.e. on her P60) she had earned approximately £8,000.

So we're not sure 

(1) what tax - if any - she has to pay,
(2) what exemptions she can/should claim, and
(3) what forms she needs to return to the IRS.

Next year should be pretty straightforward I think, as she will at least have passed the physical presence test, but given the uncertainty around that for this year, I'm confused about what's the right way to approach the return.

Many, many thanks in advance to anyone who can help.

Jack


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## Bevdeforges (Nov 16, 2007)

Actually, it sounds like she's in pretty good shape.

For the physical presence test, it's 330 days in any period of 12 consecutive months - so she can claim the FEIE anytime after 14 February 2015. For those who move overseas after April or June of the year, you have to wait to file until after you've had the full 12 months outside the US. So she qualifies by now, hands down.

UK tax year is completely irrelevant for US filing purposes.

She should report what she earned from the job start date to 31 December. Pull together the relevant pay slips or, if all else fails, divide her UK tax year earnings by the number of months covered, and multiply the monthly average by 4 (September through December). Note down the remainder and add that to the figure she reports next year for April through December.

On the form 2555, she'll have to factor the FEIE for the time since she arrived in the UK - but that's still more than enough to "exclude" her entire salary.

OK - so she files a 2555 (or 2555EZ if she meets the criteria on the front of the form), a long form 1040 and, if she has bank accounts in the UK (or even if not, if you want to be precise about it all) a Schedule B if only to check the little box on the bottom of the form to say that you do or don't have foreign bank accounts.

Ultimately, on the 1040, all that should be left in the last line on the front of the form is any "unearned" income she might have (usually just bank interest from either UK or US sources). Then turn the form over, claim her personal exemption and the standard deduction - until you get to the line that says, if the result is less than 0 just enter 0. And that should do it!
Cheers,
Bev


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## BBCWatcher (Dec 28, 2012)

jacktheenglishman said:


> She moved to the UK on 14 February 2014 and has not been back to the US for more than 30 days since. So in the 2014 US tax year she was in the UK for 321 days out of 365 which doesn't seem to meet the criteria. However, she has now been in the UK for 365 days out of the last 365 and was physically present in the UK for the whole of the 2014/15 UK tax year. Not sure if either of those is relevant.


The U.K. tax year is not relevant, but the 365 days are. She now qualifies for the Foreign Earned Income Exclusion from February 14, 2014. She has been physically outside the United States for at least 330 days out of 12 months, starting from February 14. The 12 months just have to be past, but they don't have to be the same as the calendar year.

But this won't actually matter, because....



> She got her first job in the UK in September 2014 and by 31 December 2014 had earned approximately £5,000. She did not pay any tax in the 2014 calendar year as her earnings fell within her UK personal allowance.


No problem. Assuming the £5000 is her total gross income for 2014, she is obliged to file a tax return (since she's presumably Married Filing Separately, and she meets the filing threshold). However, she can either:

1. Take the Foreign Earned Income Exclusion (IRS Form 2555); or
2. Rely on her personal exemption and standard deduction since £5000 is well below that figure ($10150 for tax year 2014).

Either way she isn't going to owe any U.S. income tax. I think I'd choose option #2 since it's less complicated (no Form 2555 or 2555-EZ), and I cannot see any harm in not choosing the FEIE this tax year (2014). The FEIE is still available if desired for tax year 2015.



> (3) what forms she needs to return to the IRS.


IRS Form 1040, but I'd recommend she use tax preparation software, even the free stuff such as TaxAct.com or TaxSlayer.com.

She might also be required to file FinCEN Form 114 if she meets that filing threshold.


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