Individual Tax Returns
Form 1040, Form 1040-NR, Form 1116, Form 2555
US federal returns for Americans living in the UK and British nationals with US income, prepared with the UK figures in view.
What does Individual Tax Returns involve?
US citizens and green card holders file a federal return on worldwide income wherever they live. A UK salary, a UK pension and a UK savings account all belong on Form 1040, even when HMRC has already taxed them. We prepare the return with the UK figures in front of us, so the two sets of numbers agree.
Forms and filings involved
- Form 1040
The annual federal return for US citizens, green card holders and US residents, reporting worldwide income wherever the filer lives.
- Form 1040-NR
The federal return for people who are not US citizens or residents but have US-source income, a US business or a refund to claim.
- Form 1116
The form that turns UK income tax into a credit against US tax on the same income, with carryovers for unused amounts.
- Form 2555
The election to exclude a capped amount of foreign earnings from US tax, with a separate housing exclusion or deduction.
- Form 4868
A short application that extends the time to file Form 1040 or 1040-NR, though not the time to pay any tax due.
Filing a US return from a UK address
The return is due on 15 April. Filers living outside the US on that date get an automatic extension to 15 June, and Form 4868 moves the filing date to 15 October.
Neither extends the time to pay, and interest runs from 15 April on any balance. Because the UK tax year ends on 5 April and the US year on 31 December, UK income has to be re-cut to the calendar year before anything else is done.
Double taxation on earnings is relieved by one of two mechanisms. The foreign tax credit on Form 1116 sets UK tax paid against the US tax on the same income, and unused credits carry back one year and forward ten. The foreign earned income exclusion on Form 2555 removes up to $130,000 of earnings from the return instead. Because UK rates are generally higher than US rates, the credit often gives the better result and preserves carryovers. Revoking an exclusion election bars re-election for five years without IRS consent.
Filing status matters more abroad than at home. A US citizen married to a non-US spouse usually files as married filing separately, and that status carries a gross income filing threshold of $5, so almost any income creates a filing obligation. An election to treat the spouse as a US resident allows a joint return and the $31,500 standard deduction, but it brings the spouse's worldwide income into the US net. We model both before either is chosen.
What goes into the annual return
- 01
- Form 1040 with UK income converted to dollars and re-cut to the calendar year
- 02
- Form 1116 and Form 2555 compared on the numbers before one is chosen
- 03
- Foreign tax credit carryovers tracked from one year to the next
- 04
- Form 8938 and the FBAR checked against the same list of accounts
- 05
- Form 1040-NR for British nationals with US-source income
Who this is for
US citizens and green card holders living and working in the UK
- Accidental Americans born in the US who left as children
- British nationals with US rental, partnership or employment income
- Americans married to a non-US spouse deciding how to file
Why US UK Tax Returns
Each return is prepared with the other country's return open beside it, so a credit, election or disclosure on one is supported by the other.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
I already pay tax in the UK through PAYE. Do I still need to file in the US?
Generally yes. The US taxes its citizens and green card holders on worldwide income regardless of where they live, and the filing thresholds look at gross income before any credit or exclusion. UK tax paid usually reduces or removes the US tax due, but that relief is claimed on the return itself. Whether a return is required in a given year depends on filing status and gross income.
Should I use the foreign earned income exclusion or the foreign tax credit?
It depends on the mix of income, but for most people paying UK tax at UK rates the credit gives the better result. It covers unearned income as well as salary, and it builds carryovers that can be used in later years. The exclusion can suit lower earners or years with little UK tax. Switching away from the exclusion has consequences for later years, so the choice should be modelled first.
When is my US return due if I live in London?
The standard date is 15 April. If you live outside the US on that date you have until 15 June without asking, and Form 4868 extends filing to 15 October. These are extensions to file, not to pay, so interest on any balance runs from 15 April. Most UK residents owe little or nothing after credits, but that needs checking before relying on the later dates.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
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