Wondering how much tax a US expat pays? Or what this thing called double taxation is for Americans living abroad? Or perhaps want to know if you need to pay expat taxes at all? And those are probably only a few questions you have about US expat taxes in the UK, let alone how to file them. In this post, find answers to popular questions Americans have about filing expat taxes while living in the UK and a simple solution to filing so you don’t have to.
US Expat Taxes – you don’t have to figure it out alone
If you’re not a finance wizard, figuring out tax implications as an expat is overwhelming. At least it is for me. Calendar year to file for one country, April-to-April for another, and then math to back out overlapping months, days in location…I could go on. 🤦🏼♀️
Since understanding the tax implication of moving overseas is a big component of whether to go or not, aBroad purpose partnered with the CEO of MyExpatTaxes.com, Nathalie Goldstein, to answer frequently asked and complicated expat tax questions for Americans living in the UK.
Nathalie is an American expat herself. Her finance and information systems background along with her own experience filing taxes abroad fueled her to create an affordable expat tax filing solution for US Americans living abroad.
Nathalie Goldstein, CEO & Expat, MyExpatTaxes.com
This post contains some affiliate links for your convenience (which means I may make a small commission if you make a purchase after clicking a link but costs you nothing more). Read here for the full disclosure policy.
US Expat Taxes In The UK
Whether you’re just getting started on sorting out how to file expat taxes or factoring the tax impact into your decision to move overseas, here are popular US expat tax questions answered for US citizens living in the UK.
This post is brought to you by MyExpatTaxes.com in collaboration with aBroad purpose.
US Expat Tax Q&A For Americans Living In The UK
Answered by: CEO of MyExpatTaxes, Nathalie Goldstein, MyExpatTaxes.com
1. Do the number of days spent in the UK determine if and how taxes need to be filed in the USA? And is there an income threshold?
If you are a US Citizen, it’s not about your travel that determines your requirement to file US taxes, but your total worldwide gross income (so income earned in the US, UK, anywhere all combined before taxes).
The filing income threshold changes every year, so it’s important to stay up to date with what category you fall in. For example, the single filing status now starts from $12,250). Here is more information on the filing threshold for 2024.
In terms of travel though, if you want to exclude your income via the famous expat tax credit Foreign Earned Income Exclusion and you are either a digital nomad or moved abroad mid-year (so first-year filing expat taxes), it’s advised to generally limit US travel to 35 days or less during the tax year. Otherwise, traveling to the US too much can make you fail the physical presence test which means you can’t claim the Foreign Earned Income Exclusion (claimed on Form 2555).
2. If my primary residence is not the USA and I am paid in British pounds while living in the UK, do I need to file US taxes?
As long as you are a US citizen living abroad, and meet the filing threshold, you will need to file US taxes.
Just be sure to convert British pounds to US dollars using an approved IRS exchange rate when filling out the paperwork. Otherwise, the MyExpatTaxes software can do this for you!
3. If I fail to file US taxes, how long do I have to report taxes?
Americans abroad that don’t owe taxes and live outside the USA do NOT have to worry about the US tax deadline date of April 15th. Expats automatically receive a 2-month extension until June 15 of every year to report their worldwide income to the IRS.
However, if you know or are not quite sure if you’ll owe taxes, file by April 15th. Otherwise, you may end up paying interest on the debt.
4. Is there any sort of grace period for Americans since the reporting tax months are different (Jan through Dec vs. April through March)?
If you need an additional extension beyond June 15th, you can apply for FREE via the MyExpatTaxes app for the October 15th deadline. Keep in mind this is an automatic filing extension!
Alternatively, you can file for the 4-month extension beyond April 15th yourself using IRS Form 4868.
If you do owe tax, you should make an estimated payment to avoid interest accruing. MyExpatTaxes can help you with this.
5. Will I have to pay for all the years missed filing US taxes while abroad?
If you missed out on filing taxes in the previous years, you can use the Streamlined Procedure through us for an affordable price of 149 Euro (about 125 pounds) for every tax season missed, plus 100 Euro/84 pounds for personalized support (we are one of the most affordable expat services out there!).
The Streamlined Procedure is an IRS Amnesty Program that allows you to catch up on ALL missed tax years as an expat by filing three back years of federal tax returns + 6 back years of FBARs (sent to the US Treasury, not the IRS).
6. If I have a baby while living abroad as an American expat, do I need to register them before filing US taxes? Is there a priority order of steps that must be followed to report myself and children for tax reporting? (ie registering with the embassy, SSN, valid passport, etc.)?
You don’t need to register your newborn to do your US taxes, but you should!
If your child has a valid US Social Security Number prior to when your expat taxes are due, you may be eligible for the Additional Child Tax Credit.
If you have a qualifying child (ie: under 17 with a social security number) with more than $2,500 of taxable earned income, you can receive a refundable tax credit of $1,400 per qualifying child towards your next tax bill (if you owe taxes). Otherwise, you can get a $2,000 non-refundable credit against any US taxes owed.
If you have three or more qualifying children, you might be able to claim the credit regardless of your income amount.
7. What is double taxation? Does it apply to all American expats living in the UK?
Double taxation is when your income taxes are paid twice on the same source of income. Fortunately, there are multiple expat tax benefits and treaties that can prevent you from being double-taxed.
The US has made agreements with certain countries around the world to prevent double-taxation via Tax Treaties and Totalization Treaties. The United Kingdom is one of them, so Americans who live in the UK will most likely not be double taxed and can utilize benefits through our software like the Foreign Tax Credit, Foreign Earned Income Exclusion, and Treaty Disclosures.
*SPECIAL MYEXPATTAXES DISCOUNT* 👇🏻
Readers of aBroadpurpose.com get a 15% discount for MyExpatTaxes software when creating an account for the first time!
New account users will receive a discount when filing their expat taxes. Click the special offer link to create an account and the discount will be automatically applied. Must be a US American abroad to claim this offer.
No number of US state-to-state moves prepares you for the nuisances of filing expat taxes once you decide to live and work overseas.
Thankfully, MyExpatTaxes.com offers support and an affordable solution to how to file US taxes abroad. As the winner of the best expat tax management platform since 2019, you can rely on this subject matter expert company for your US expat tax filing needs.
Looking for more about living in the UK? Try these.
- Tips For Expats Finding A Job In The UK
- 6 Fab Essentials Every Expat Woman Needs
- Moving abroad? Get step-by-step help 👉🏻 HERE
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3 comments
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