My client is a US National, self-employed and self-assessed in the UK and for the past few years I have filed her US tax return as well as her UK return, declaring her UK figures and claiming the Foreign earned income exclusion so her US return is effectively Nil. This year, following a lump sum from her new husband, she has bank interest and some dividends to declare in the UK. Do I also need to show these on her US tax return and claim a foreign tax credit?
Furthermore, she was granted British citizenship in April 2012; will she still be obliged to file US tax returns in the future?
All help greatly appreciated.
Thank you
BD
Replies (3)
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My understanding is:
Yes you do declare & claim tax credit ( so no tax to pay ). As long as she is a US citizen she should file a US tax return, but if she has no tax to pay the IRS don't seem to care. The issue that may arise is where US & UK have different tax approaches. So income tax is similar, albeit with different rates, but not so property gains.
PS watch ISAs
I think you'll find that UK annual ISA income is taxable in the USA - as there is no exemption there for our ISAs income!