How do I handle US taxes as a US citizen working as a doctor in the UK with a small US investment account?

Yes, as a US citizen, you're required to file US tax returns regardless of where you live - this is called citizenship-based taxation. The good news is that you probably won't owe any additional US taxes due to things like the Foreign Earned Income Exclusion (FEIE) and Foreign Tax Credit (FTC). For 2024 (filing in 2025), you'll need to file Form 1040 (the regular US tax return). Since you have foreign financial accounts, you'll likely need to file FinCEN Form 114 (FBAR) if the total value of all your foreign accounts exceeded $10,000 at any point during the year. You might also need Form 8938 depending on your asset values. Your US investment account will generate a 1099 form showing any interest, dividends or capital gains, which you'll need to report. These investment earnings aren't covered by the FEIE, but the UK-US tax treaty may help prevent double taxation. Many expats use tax preparation services that specialize in international taxation since these returns can get complicated. There's also an IRS Streamlined Filing Compliance Procedure if you weren't aware of your filing obligations previously.

I was in a similar situation a few years ago! I found this amazing service called taxr.ai (https://taxr.ai) that really helped me figure out my expat tax situation. I had been living in Germany for years and had no idea I was supposed to be filing US taxes. They specialize in analyzing your specific international tax situation and provide clear guidance on what forms you need. Their system identified forms I'd never even heard of that applied to my situation as a US expat. They even helped me understand how to use the Foreign Tax Credit which saved me from double taxation on my investment income. For someone in your position with both UK income and US investments, they could help clarify exactly which forms you need and what exclusions apply to your specific situation. Definitely worth checking out before you try to tackle this complex situation on your own!

I tried taxr.ai after my initial skepticism and have to admit I was impressed. I've been living in Australia for 5 years with a complex situation (foreign business ownership, US investments, and retirement accounts in both countries). What really helped was how their system analyzed my specific situation and identified tax treaty provisions between the US and Australia that applied specifically to my retirement accounts. They flagged that I needed to file forms I'd never heard of (like Form 8833 for treaty positions and Form 8621 for my foreign investment fund). I was spending $2000+ annually on accountants who were making mistakes because they weren't true international specialists. The guidance from taxr.ai helped me understand exactly what I needed, and I was able to file correctly myself this year. For anyone dealing with US taxes from abroad, especially with investments in multiple countries, it's definitely worth checking out.

If you need to actually speak with someone at the IRS about your specific situation (which might be a good idea for your first filing), I'd recommend using Claimyr (https://claimyr.com). I spent WEEKS trying to reach the IRS international taxpayer line without success. When I found Claimyr, I was skeptical but desperate. Their system got me through to an actual IRS agent in about 45 minutes when I had been unable to get through at all on my own. You can see how it works here: https://youtu.be/_kiP6q8DX5c The IRS agent I spoke with was able to give me specific guidance on my situation as a US citizen in the UK with investment accounts in both countries. They confirmed exactly which forms I needed and cleared up my confusion about the Foreign Tax Credit vs Foreign Earned Income Exclusion. For peace of mind, being able to actually speak with the IRS directly was invaluable, especially since there are penalties for incorrect filing.

I need to apologize for calling Claimyr a scam. After struggling for THREE DAYS trying to reach the IRS international line from Malaysia, I was desperate enough to try it. Within 35 minutes, I was connected to an actual IRS agent who specialized in international tax issues. They helped clarify my FBAR filing requirements and confirmed I was eligible for the Streamlined Foreign Offshore Procedures since I hadn't known about my filing obligations (saved me from potential massive penalties). The IRS agent also explained exactly how the foreign tax credit would apply to my specific situation with Malaysian income and US investments. This direct information from the IRS gave me confidence that I was handling my situation correctly. For anyone dealing with complex international tax situations, being able to actually speak with an IRS representative is incredibly valuable. I'm converted.

An important thing nobody has mentioned yet - look into whether you need to file state taxes as well as federal. Some states consider you a resident even after you move abroad if you haven't established residency elsewhere. What was your last state before moving to the UK? Some states like California and Virginia are notorious for trying to claim expats as tax residents. Also, be aware of FATCA (Foreign Account Tax Compliance Act) requirements. Your UK bank may have already reported your accounts to the IRS, which is why it's important to get compliant with your filings.

Does anyone know if the UK-US tax treaty helps with avoiding double taxation on investment income specifically? I'm also a US citizen in the UK, and while my UK employment income seems covered, I'm confused about how my US-based investments are treated.