Am I supposed to pay taxes?

Posted on January 7, 2010 by pacificyorkshirebird

pacificyorkshirebird

Dreamer had a great question on her comment to Yankeebean’s post about the how to go about bringing up the fiance visa question. She writes:

Is it true that if you are an american citizen working in the UK you pay both UK and US taxes? and vice versa?

I went for three years kinda wondering that question and hoping it would just go away like when Hypercolor t-shirts just disappeared after 1992.

Of course, the minute I wanted to import my British guy through US immigration, my history as a taxpayer became very important. With my application, I had to submit tax returns from the last three years, two of which I had to go back and file late as I hadn’t been filing at all since I moved to the UK.  And as it turned out, I needed to be earning over $80,000 a year (or something) in order to have to pay Uncle Sam, so I was off the hook. But I needed help from a smartypants tax accountant. Never in gazillion years would I have known how to file my returns without their help.

Keep in mind that I was earning $0 income in the United States at that point, nor was I employed by a US company and transferred to the UK. And in the past, the hardest part about doing my taxes was subtracting the standard deduction and asking my parents whether I was still being claimed as a dependent.

Oh yeah, and I’m no tax expert so make sure you look into your own situation before you decide what to do. Here’s a link you might find helpful to the IRS FAQ’s.

To make it even more confusion, it turns out I may not have had to go through filing past returns anyways. Because the income part of my visa application was rejected because the income I claimed wasn’t earned in the US!

Anyways, compare that to the UK system where they actually PAID me tax back after leaving the UK because I happened to leave before I paid in the minimum amount for the tax year. HM Revenue & Customs has some helpful information on their website too. Check out the sections on Information on Double Taxation and Social Security Treaties and International Aspects of Personal Tax.

Readers – tell us your tax stories!

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What Others Are Saying

  1. CutieQ February 9, 2012 at 4:53 pm

    Filing my taxes back in USA this week–after 3 years of not doing so….
    for all you in the same boat check out the official IRS publication 54 at http://www.irs.gov/pub/irs-pdf/p54.pdfThis might help :)

  2. Marcia May 30, 2010 at 8:41 am

    I file via Turbo Tax On-Line every year. (but I live in America)
    My taxes are simple, so it’s actually quite easy, not sure how it will be when I finally move back to the UK.

    I’ll be checking back on this page when I do.

    This site is very helpful in more ways than one and I’m sooo happy that I found it by accident :-)

  3. Cheryl January 21, 2010 at 10:33 pm

    Dreamer,
    No I do not pay double tax because I don’t earn more than $87,600 per year in the UK, therefore all my UK income is eligible for the Foreign Earned Income Exclusion.

    Pacific,
    I did a lot of research on the IRS website and on UK-Yankee (www.uk-yankee.com). If your income is simple, all you will need is Form 1040, Form 2555, and a cover letter.

    I hope this helps!

    Cheryl

  4. Dreamer…unrealistic?…do i care? January 20, 2010 at 7:49 am

    thanks pacificyorkshirebird. :) ill check it out.

  5. pacificyorkshirebird January 16, 2010 at 6:10 am

    For those of you wanting to do a little more research, you might head here: http://www.usembassy.org.uk/irs/index.htm

  6. pacificyorkshirebird January 16, 2010 at 5:25 am

    Hi Dreamer – I think you had it correct in your previous comment – but the reassurance of a tax expert wouldn’t be a bad idea.

    Cheryl, how did you figure out which of the 3 or 4 forms you needed. Is it on the London Embassy website?

  7. Dreamer…unrealistic?…do i care? January 14, 2010 at 4:13 am

    so Cheryl, do you have to pay double tax? Tax both in the UK and the US?

  8. Cheryl January 11, 2010 at 5:28 pm

    I have been in the UK now for 5 years and have filed US taxes every year on my own. It’s so easy! Unless you have complicated income streams, I would suggest doing it on your own. You can file everything through the US Embassy in London and it’s literally only 3 or 4 pieces of paper that you have to send in.
    Cheryl

  9. dyana January 11, 2010 at 9:20 am

    another thing to remember is that we US citizens living in the UK get an automatic extension every year. we just need to state that we’ve taken it when we submit our taxes. don’t hesitate to call the irs help line either. first ti e i did my taxes over here i had no idea where to report on the form or what paprrwork to submit, or how to deal w the different tax year end dates! the irs help line got me sorted and i havem’t had a return returned to me yet (and i have in the past!!)

  10. Dreamer…unrealistic?…do i care? January 8, 2010 at 8:41 pm

    i read up on all this stuff last night for awhile and still cant sort it out! you’re probably right..i should hire someone but i am convinced between all of us we should be able to sort this out!! wishful thinking?? :)

  11. Christiana (US meets UK) January 8, 2010 at 7:50 pm

    god, i’m so confused. I know that because Nick doesn’t have his perm. resident card in the us yet I have to file as a single person (b/c i’m married to a “non resident alien”). And thus, my meager income for 2 people (one of who the gov’t won’t let work yet) counts only for one person though it’s really for two. sigh.

    Who knew accountant fees would be added to the cost of international couplings!?

  12. Michelloui January 8, 2010 at 11:50 am

    Argh! I agree Dreamer, this is really really confusing stuff. My best advice would be to hire someone who does this for a living. I know you probably want to figure it out yourself and save that money but hiring someone might save you a heck of a lot of grief in the long run!

  13. Dreamer…unrealistic?…do i care? January 8, 2010 at 4:32 am

    ahhh i am so confused! thanks for all your responses…i dont know why i cant grasp this! Ok so is the following correct?

    1. UK citizen working in the US – ONLY pay US taxes. Don’t have to pay UK taxes?

    2. US citizen working in the UK – Pay UK taxes and ONLY US taxes if over $80K (or close to that)

    Is that right???

  14. Almost American January 8, 2010 at 2:20 am

    I remember someone telling me about that – having to file a return even though most expats won’t have to pay any taxes anyway.

    I got some money back from my UK taxes when I came over here to go to grad school. I had to promise that I wasn’t coming back within a couple of years though.

    Then I kept filing as non-resident in the US, not realizing that tax status and immigrant status are not the same. As a non-resident there were no standard exemptions – so I was paying tax on every dollar! Fortunately an immigration lawyer finally set me straight on that, I filed amended returns, got money back from the US government – and they even paid me interest on the money I had overpaid!!!

  15. andrea January 8, 2010 at 1:32 am

    I was told you have to file taxes no matter how much you have made outside of the UK. But you only will owe taxes if you make over a certain amount which is like $82k. If you are married to a UK citizen (or any non-US citizen) and you are filing from outside the US you would file as married filed separately, not jointly, since your spouse would not be filing taxes in the US at all.

    For the green card app, if doing DCF, you have to prove that you have been filing taxes from outside the US, even if that money won’t apply towards your income requirements.

  16. Teri January 7, 2010 at 11:52 am

    Will be dealing with it for the first time as well this year! When I first realized I would have to file in the US, I remember reading that the US is something like one of only two countries on the planet that makes you file taxes when you’re not a resident. ANNOYING! I made more money in one month’s salary here than I did my first 22 years in the states (unpaid internships FTW!), so I suppose it’s extra annoying.

    Thankfully my sister is 31 and still has my mom get the family tax man to deal with her’s, so I think I’ll just have to do that as well!

  17. Jenny January 7, 2010 at 9:59 am

    I’ll be dealing with this for the first time this year. I made income in the US Jan-March last year and none in the US or UK since then, so it’s going to look sad and empty I think, but hopefully that will make it easier. BUT I’ve also never filed as married (with dependents) before… but he’s been on benefits here, so I don’t know what numbers I’d put down for that. Oh dear. I better get researching!

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