More on expat US taxes
Apr. 26th, 2025 04:18 pmHaving already complained about the IRS expecting expats to file taxes but often requiring them to have a US telephone number, I should note that I was lucky enough to set up my EFTPS account before allowing my US cellphone plan to lapse and I have remained able to use it since.
An interesting aspect of US taxes is how individuals have many options for how to file. Some of those choices affect and may even constrain future years. In my limited experience, this is in marked difference to the UK where, as an individual, if I must file at all then I just tell them what happened and they go away and figure it out for me and explain what they did.
As a US expat, a particular set of choices is how to handle my employment income. I can try excluding it using form 2555, I can try to get credit for the tax paid using form 1116, I can try deducting that tax on Schedule A, etc. (I itemize because I can deduct my mortgage interest.) Furthermore, I can combine these: e.g., excluding part of the income then applying another form to the pro-rated remainder. Then, I get to try out different form 1040 tax worksheets to see how it works out in each case. So far, I've not needed form 1116 but it's always worth checking. Annoyingly, a few years ago they changed the law such that I can't deduct UK council tax, though at least my reading of the US-UK tax treaty suggests that I can deduct my payroll-deducted pension contributions. (There's also a social security treaty that can be useful for self-employment tax.)
An interesting aspect of US taxes is how individuals have many options for how to file. Some of those choices affect and may even constrain future years. In my limited experience, this is in marked difference to the UK where, as an individual, if I must file at all then I just tell them what happened and they go away and figure it out for me and explain what they did.
As a US expat, a particular set of choices is how to handle my employment income. I can try excluding it using form 2555, I can try to get credit for the tax paid using form 1116, I can try deducting that tax on Schedule A, etc. (I itemize because I can deduct my mortgage interest.) Furthermore, I can combine these: e.g., excluding part of the income then applying another form to the pro-rated remainder. Then, I get to try out different form 1040 tax worksheets to see how it works out in each case. So far, I've not needed form 1116 but it's always worth checking. Annoyingly, a few years ago they changed the law such that I can't deduct UK council tax, though at least my reading of the US-UK tax treaty suggests that I can deduct my payroll-deducted pension contributions. (There's also a social security treaty that can be useful for self-employment tax.)