Sign Up

Why sign in to the Community?

  • Submit a question
  • Check your notifications
or and start working on your taxes
cancel
Showing results for 
Search instead for 
Did you mean: 
49tcr
Level 1

I am a US citizen living in the UK. My husband just gave up his green card, so I now have to file at Married filing separately. I earn the equivalent of $25,000 and pay uk taxes. Which form do I file?

 
3 Replies
DanielV01
Employee Tax Expert

I am a US citizen living in the UK. My husband just gave up his green card, so I now have to file at Married filing separately. I earn the equivalent of $25,000 and pay uk taxes. Which form do I file?

You will file Form 1040, US Resident Return.  You will either qualify for the Foreign Income exclusion (Form 2555), or you will claim Foreign Tax Credit (Form 1116) for credit on the UK taxes you pay on your income.  

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
49tcr
Level 1

I am a US citizen living in the UK. My husband just gave up his green card, so I now have to file at Married filing separately. I earn the equivalent of $25,000 and pay uk taxes. Which form do I file?

Thank you.  How will I know whether to file form 2555 or form 1116?   

 

DanielV01
Employee Tax Expert

I am a US citizen living in the UK. My husband just gave up his green card, so I now have to file at Married filing separately. I earn the equivalent of $25,000 and pay uk taxes. Which form do I file?

It depends.  And chances are you will need to choose.  The bottom line is you will want to use the provision that results in the lowest tax.  If you use the Foreign income exclusion with $25,000 of income (provided you qualify to do so), your Federal Tax will be $0.  However, you could have a state tax issue, depending on the state's income tax rules from the state you lived in prior to your move.  This could be the case if that state has an income tax, does not recognize the income exclusion, and still considers you to be a legal resident of the state.

 

If UK taxes are higher than what you would pay in US taxes, the Foreign Tax Credit will also result in a Federal Tax of $0, and will likely provide less state tax complications.

 

See the following two IRS websites for a comparison of each claim:  Foreign Tax Credit | Internal Revenue Service and Foreign Earned Income Exclusion

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
Dynamic AdsDynamic Ads
Privacy Settings
v