The Day I Realized My U.S. Taxes Didn’t End When I Moved
When I accepted a job offer in London, my focus was on new adventures—afternoon tea, exploring Camden markets, and finally seeing Big Ben in person. What I didn’t expect was a letter from the IRS reminding me that filing U.S. taxes in the UK was still my responsibility.
That was the moment I learned the golden rule for U.S. expats: even if you live abroad, the IRS still taxes your worldwide income.
Filing U.S. Taxes in the UK: What I Learned
1. You Still Have to File Every Year
Unlike most countries, the U.S. taxes based on citizenship, not residency. That means:
- You must file if you earn above the standard filing thresholds.
- Self-employment income of $400 or more triggers a filing requirement.
- U.S. income (like rental property or dividends) is always reportable.
2. Double Taxation Isn’t as Scary as It Sounds
At first, I panicked—did this mean I’d pay tax twice, once to HMRC (the UK’s tax authority) and once to the IRS? Thankfully, U.S.–UK tax treaties and credits exist to help avoid this.
Through the Foreign Earned Income Exclusion (FEIE) and the Foreign Tax Credit (FTC), I reduced my U.S. liability while staying compliant.
3. FBAR and FATCA Are Serious
Living in the UK means you’ll likely have a UK bank account. If the combined value of your foreign accounts exceeds $10,000 at any point in the year, you must file an FBAR. Forgetting this could mean fines up to $10,000 per account.
How I Filed My U.S. Taxes from London
Here’s the step-by-step process that worked for me:
- Collected My Paperwork
- U.S. forms (W-2, 1099s, dividends, etc.)
- UK income statements (P60, P45, or self-employment records)
- Bank statements for FBAR reporting
- Chose an Expat-Friendly Tax Platform
Not all U.S. tax software understands foreign income. I picked one that supports FEIE, FTC, and foreign housing exclusions. - Converted GBP to USD
The IRS requires all foreign income reported in U.S. dollars using yearly exchange rates. - Double-Checked for Tax Treaties
The U.S.–UK treaty helped me avoid double taxation on certain income like pensions. - Filed Online
Instead of mailing forms across the Atlantic, I e-filed. The confirmation email gave me peace of mind.
Challenges I Faced Filing in the UK
- Currency exchange rates: Deciding which IRS-approved rate to use can be tricky.
- Foreign pensions: UK retirement accounts are treated differently under U.S. tax law.
- Complex rules for self-employed expats: National Insurance contributions in the UK don’t exempt you from U.S. self-employment tax.
FAQs: Filing U.S. Taxes in the UK
Q1: Do I still file if I pay UK taxes?
Yes. You must still file a U.S. return in the UK, but tax credits help offset what you already paid to HMRC.
Q2: Can I skip filing if I owe nothing?
No. Filing is mandatory regardless of liability.
Q3: What if I didn’t file in past years?
The IRS Streamlined Amnesty Program lets expats catch up without heavy penalties.
Q4: Do I need a tax professional?
If you have simple income, online software may be enough. But for business owners or dual pensions, a tax professional is worth considering.
Final Thoughts
Filing U.S. taxes while living in London wasn’t the easiest part of moving abroad, but it was one of the most important. I learned that staying compliant doesn’t just protect you from penalties—it also gives peace of mind while you’re building a new life overseas.
The key takeaway? Whether you’re sipping tea in Kensington or catching the Tube in Canary Wharf, the IRS still expects to hear from you each year.
