To avoid double taxation, you will need to input your UK wage information into the Foreign Earned Income and Exclusion
select. (Please note that your wages need to be reported in USD and need to be reported on a calendar year (Jan 1st through Dec 31) basis:
- Once you are in your tax
return, click on the “Federal Taxes” tab ("Personal" tab in
TurboTax Home & Business)
- Next click on “Wages and
Income” ("Personal Income" in TurboTax Home & Business)
- Next click on "jump to
full list" (or “I’ll choose what I work on” or "see more income")
- Scroll down the screen until
to come to the section “Less Common Income”
- Choose "show more",
then Foreign Earned Income and Exclusion and follow the onscreen
instructions
If you met the Bona
Fide Residence Test, you will be able to claim an IRS
- Foreign Earned Income Exclusion that would exclude a portion of your
foreign source income (up to $101,300 for 2016). Your spouse will also be able to claim this exclusion (that would be 2 separate exclusions), if your spouse qualifies. You may also be able to
take advantage of the foreign
housing deduction. TurboTax will guide you on taking the foreign earned
income exclusion and foreign housing deduction.
If your income is more than the foreign earned income exclusion amount and if you paid foreign taxes on your foreign income
then you will be allowed an offset for these foreign taxes on your US tax
return. If you take a foreign tax credit, your US tax liability will
be reduced by the amount of taxes that you would have paid if the transaction
took place in the US (see this link Claim
Foreign Tax Credit). If you take a foreign tax
deduction on Schedule A, you will be allowed to deduct the full amount of the
foreign taxes paid but you will need to itemize (which could limit your ability
to take the full deduction). The TurboTax software will help you determine
which of these options will lower your overall tax liability.
Please note : If you
have foreign bank accounts, you may be required to file a Report of
Foreign Bank and Financial Accounts (FBAR) if are a US citizen or resident and:
- you had a financial
interest in or signature authority over at least one financial account
located outside of the United States; and
- the aggregate value of all
foreign financial accounts exceeded $10,000 at any time during the
calendar year reported.
To be directed to
the US Treasury Government Website to prepare a Report of Foreign Bank and
Financial Accounts, click FBAR
(TurboTax does not support this form)
