Tax Question

[Hotter Otter 1,211]

I moved to the US in July and worked up until the end of June in the UK. I have claimed back the tax I paid for this tax year in the UK April-June (although I am yet to receive it back). Now my wife and I are doing federal returns on Turbo Tax and it is asking about my foreign income. As I paid taxes in the UK on my income up to April am in right in understanding that I need to record the amount I earned from April to June and not from January to June because of the reciprocal tax agreements between the two countries? Or do I need to write every thing from Jan - June even though I was already taxed in the UK on some of this?

Thanks! (A slightly confused Otter).

[Nich-Nick 3,354]

I moved to the US in July and worked up until the end of June in the UK. I have claimed back the tax I paid for this tax year in the UK April-June (although I am yet to receive it back). Now my wife and I are doing federal returns on Turbo Tax and it is asking about my foreign income. As I paid taxes in the UK on my income up to April am in right in understanding that I need to record the amount I earned from April to June and not from January to June because of the reciprocal tax agreements between the two countries? Or do I need to write every thing from Jan - June even though I was already taxed in the UK on some of this?

Thanks! (A slightly confused Otter).

If you file a joint return with your wife, then you will report every penny you earned in the year 2014 converted to US dollars. That is the requirement...report "worldwide income" to use the phrase from the IRS. It is self reported so you don't have to submit a wage statement with the tax return.

Make sure you enter your income first. I think it is under "Less Common Income" in TurboTax which is way at the end of all the possible incomes they ask about. (I haven't looked at the 2014 software program organization because I quit them like many others this year). That's where foreign income was covered in the past.

Then you will do form 2555 Foreign Income Exclusion. You will be asked questions by TT to see if you qualify. You do because you were a bonafide resident of the UK at the time you earned the UK income you wish to exclude.

A mistake people often make is thinking Form 2555 enters and excludes for you. No, your income is entered first and appears added to your wife's on Line 7 of the Form 1040. Then do the exclusion. Your foreign income will appear as a negative number on line 21 of the 1040 so gets subtracted out.

Edited February 8, 2015 by Nich-Nick

[Hotter Otter 1,211]

If you file a joint return with your wife, then you will report every penny you earned in the year 2014 converted to US dollars. That is the requirement...report "worldwide income" to use the phrase from the IRS. It is self reported so you don't have to submit a wage statement with the tax return.

Make sure you enter your income first. I think it is under "Less Common Income" in TurboTax which is way at the end of all the possible incomes they ask about. (I haven't looked at the 2014 software program organization because I quit them like many others this year). That's where foreign income was covered in the past.

Then you will do form 2555 Foreign Income Exclusion. You will be asked questions by TT to see if you qualify. You do because you were a bonafide resident of the UK at the time you earned the UK income you wish to exclude.

A mistake people often make is thinking Form 2555 enters and excludes for you. No, your income is entered first and appears added to your wife's on Line 7 of the Form 1040. Then do the exclusion. Your foreign income will appear as a negative number on line 21 of the 1040 so gets subtracted out.

Thanks Nich-Nick, you are a great help as always!