Usa taxes

[peppera-ann-]

I just thought of something.... What about taxes in the US once I move to the UK? Can i still file for my last 2 income taxes while im in the us?

[Fatbrit]

Originally Posted by peppera-ann-

I just thought of something.... What about taxes in the US once I move to the UK? Can i still file for my last 2 income taxes while im in the us?

You don't escape the 1040 just because you've moved to Blighty! You need to file it every year!

[US to Maidenhead]

I heard I will have to pay US taxes for the first year I am living and earning in the UK.....will I have to pay both US and UK taxes? Is there anywhere I can do some research?

[peppera-ann-]

Originally Posted by Fatbrit

You don't escape the 1040 just because you've moved to Blighty! You need to file it every year!

actually wasnt even thinking of trying to evade it....wow


so yer...just wondering to everyone else .... who doesn't think the worst in people...

any different filing status's you have to go under etc

[Fatbrit]

Originally Posted by US to Maidenhead

I heard I will have to pay US taxes for the first year I am living and earning in the UK.....will I have to pay both US and UK taxes? Is there anywhere I can do some research?

If you're a US citizen, you always have to file a US tax return -- wherever in the world you are living and wherever your income comes from.

So if you're a US citizen living and working in the UK, you will account for your income taxes to two governments: Her Majesty's and Uncle Sam's. This obligation will not reduce to one government after a year.

[Fatbrit]

Originally Posted by peppera-ann-

actually wasnt even thinking of trying to evade it....wow


so yer...just wondering to everyone else .... who doesn't think the worst in people...

any different filing status's you have to go under etc

You misunderstood. You don't get out of accounting for your US taxes for Uncle Sam every year until you are no longer a US citizen -- and even then it can be tricky. Moving to the UK does not absolve you of that responsibility.

[Joppa]

But you do get a foreign income allowance of around $86,000 a year and further $14,000 in housing allowance, so if your earnings come below them, you have no liability to pay income tax to IRS, but you still have to make your return.

[Bevdeforges]

Basically, what Fatbrit and Joppa have said, with a couple of caveats:

The overseas earned income exclusion is up to slightly over $91,400 for 2009. This only applies to earned income, i.e. salary. And as Fatbrit pointed out, you must file a tax return each year in order to claim the exclusion (and to claim the exclusion, you must meet certain requirements about residing outside the US).

The first year is the toughest, as you are not entitled to take the exclusion until you have spent either an entire calendar year outside the US, or until you have spent 12 consecutive months outside the US.

You still have to pay US taxes on various forms of "unearned income" - usually stuff like interest, investments, rents, etc. Anything basically that doesn't come in the form of a paycheck with local taxes and social insurances taken from it. If you're in business for yourself, you can usually treat your income as "salary" but not always - it depends on how your business is set up. In some cases, you may still be subject to social security contributions at the self-employed rate (i.e. double). (IOW, it pays to set up a personal business carefully when you're overseas in order to avoid the hassle.)

Peppera-ann - chances are you'll have to file your US returns as "married, filing separately" which has certain disadvantages, though nothing too extreme until you start drawing social security from the US.
Cheers,
Bev

[peppera-ann-]

Originally Posted by Bevdeforges

Basically, what Fatbrit and Joppa have said, with a couple of caveats:

The overseas earned income exclusion is up to slightly over $91,400 for 2009. This only applies to earned income, i.e. salary. And as Fatbrit pointed out, you must file a tax return each year in order to claim the exclusion (and to claim the exclusion, you must meet certain requirements about residing outside the US).

The first year is the toughest, as you are not entitled to take the exclusion until you have spent either an entire calendar year outside the US, or until you have spent 12 consecutive months outside the US.

You still have to pay US taxes on various forms of "unearned income" - usually stuff like interest, investments, rents, etc. Anything basically that doesn't come in the form of a paycheck with local taxes and social insurances taken from it. If you're in business for yourself, you can usually treat your income as "salary" but not always - it depends on how your business is set up. In some cases, you may still be subject to social security contributions at the self-employed rate (i.e. double). (IOW, it pays to set up a personal business carefully when you're overseas in order to avoid the hassle.)

Peppera-ann - chances are you'll have to file your US returns as "married, filing separately" which has certain disadvantages, though nothing too extreme until you start drawing social security from the US.
Cheers,
Bev

thanks bev!! always appreciate your detail!