Are you a U.S. citizen or green card holder living in the U.K.? If so, you may still have tax obligations to the U.S. government. Unlike many other countries, the U.S. taxes its citizens and permanent residents on their worldwide income, regardless of where they live. This can create confusion and potential tax liabilities for American expatriates. Here’s what you need to know about U.S. tax help while living in the U.K.
Do I Need to File U.S. Taxes from the U.K.?
Yes! As a U.S. citizen or green card holder, you must file a U.S. federal tax return if your income exceeds the minimum filing threshold. This applies even if you are paying taxes in the U.K. However, there are provisions in place to help prevent double taxation.
Key Tax Provisions for Expats
- Foreign Earned Income Exclusion (FEIE) – This allows you to exclude up to $120,000 (for 2023) of your foreign-earned income from U.S. taxation, provided you meet the physical presence test or bona fide residence test.
- Foreign Tax Credit (FTC) – If you pay taxes in the U.K., you can claim a dollar-for-dollar credit against your U.S. tax liability to avoid double taxation.
- Foreign Bank Account Report (FBAR) – If you have foreign financial accounts with a total value exceeding $10,000 at any time during the year, you must file an FBAR (FinCEN Form 114).
- FATCA Reporting (Form 8938) – If your foreign assets exceed certain thresholds, you must report them to the IRS using Form 8938 under the Foreign Account Tax Compliance Act (FATCA).
How to Stay Compliant with U.S. and U.K. Taxes
- File on Time: U.S. expats get an automatic two-month extension (until June 15) to file their federal tax returns, but taxes are still due by April 15. You can also request an additional extension to October 15.
- Report All Foreign Income: Even if your income is below the FEIE threshold, you must report it to the IRS.
- Check U.K. Tax Obligations: The U.K. has its own tax system, and you may need to file a tax return with HMRC depending on your earnings and residency status.
Getting Professional Tax Help
Understanding U.S. and U.K. tax laws can be complex. Seeking professional tax assistance can help you:
- Ensure compliance with both U.S. and U.K. tax regulations.
- Maximize deductions and credits to reduce tax liabilities.
- Avoid penalties for missed filings or errors.
At RIWA Tax Services, we specialize in helping U.S. expatriates with their tax filings, ensuring compliance with IRS regulations while optimizing your tax position. Whether you need help with filing your annual tax return, claiming foreign tax credits, or navigating FATCA and FBAR requirements, we’ve got you covered.
Final Thoughts
Living in the U.K. doesn’t exempt you from U.S. tax obligations, but with the right strategies, you can minimize your tax burden and avoid penalties. Staying informed and seeking professional tax assistance can help you remain compliant and stress-free.
Need help with your U.S. taxes while living in the U.K.? Contact RIWA Tax Services today for expert guidance!
Contact us: +1 (972)-996-6644
Email us : info@theriwa.com Visit our website : https://theriwa.com/
