Which US Tax Forms?
Are you a US Citizen or a Green card holder living in UK? Are you confused as to whether you still have a US Tax Filing or FATCA Filing Requirement? Here are answers to some of your most common questions about 2014 US tax and FATCA forms and filing requirements
I am an American living and working in United Kingdom. Do I need to file a US tax return? All US Citizens and Green card holders are required to file a US return, no matter where they live, as long as their income earned in the USA and abroad (UK/other foreign country) is just over $9,350 (roughly £5600). Many expatriates wrongly assume that they live and work in the UK and only owe taxes to UK revenue (i.e. HMRC) and do not owe any taxes to the Internal Revenue Service (IRS) in the USA. Some people mistakenly believe that as an expatriate they are eligible to claim the foreign earned income exclusion, which is around $99,200 for the 2014 US tax year, and if their income level is below this threshold limit, and do not have to file a US tax return. It’s a partially correct understanding that you would not owe taxes under certain circumstances when claiming foreign income exclusion and foreign tax credits. However in order to claim the valid exclusions and foreign tax credits you still definitely have a US tax filing obligation. Don’t think that just because your US taxes would be zero, you don’t have to file a US tax return.
16 May 2015
I already pay taxes in the UK. Can I take the benefit of these taxes paid via PAYE and Self-Assessment on my US tax return? Yes, certainly you can: tax you owe to the US on foreign income can be substantially reduced or even zero if you have already been taxed on the same income in your country of residence. You can claim these paid taxes as foreign tax credits on your 1040 Federal return. However careful tax planning
needs to be done by expatriates who are US citizens and Green card holders who are not employed individuals and who run their own limited company or partnership with directorship and/or shareholding positions. Self-employed individuals run a much higher risk of being double taxed and you should contact an international tax professional tax advisor for optimal structure of your entity set up and to claim the appropriate treaty posi-
What forms do I need to file with my tax return? (these are the most common) US Citizens/Green Card holders/ Resident Aliens
Foreign Nationals/ Non Resident Aliens (NRA)
-Form 1040 (income/exemptions/credits/taxes)
-Form 2555 (for foreign income exclusion) -Form 1116 (for foreign tax credit) -Form 8938 (FATCA since 2011 tax year - if financial assets value exceeds limits)
-Form 8833 (for treaty claim)