Filed an Incorrect U.S. Tax Return While Living in the UK? Here’s How to Fix It

Realizing You Filed Incorrectly: Don’t Panic

Living abroad in the UK as a U.S. expat can make taxes complicated. Between HMRC rules and IRS requirements, mistakes are common—maybe you forgot to report foreign bank accounts, miscalculated foreign tax credits, or left out income from your UK employer.

The good news: the IRS allows you to correct mistakes through an amended return. What matters is addressing the issue quickly before it grows into penalties.

Common Mistakes Expats Make on U.S. Tax Returns

Some of the most frequent errors for Americans in the UK include:

• Not reporting worldwide income (wages, self-employment, rental income, or investments earned abroad).
  
  
• Missing FBAR or FATCA forms for UK bank accounts or pensions.
  
  
• Incorrect use of exclusions and credits like the Foreign Earned Income Exclusion (FEIE) or Foreign Tax Credit (FTC).
  
  
• Double reporting or misreporting UK pension contributions, which the IRS treats differently from HMRC.
  
  
• Simple math errors or missed forms, such as 1099s for U.S.-based income.
  
  

Step-by-Step Guide: How to Correct an Incorrect U.S. Tax Return

Step 1: Identify the Mistake

Review your filed return against your income documents, bank statements, and HMRC records. Knowing exactly what’s wrong helps you decide if an amendment is necessary.

Step 2: File Form 1040-X (Amended U.S. Tax Return)

• Use Form 1040-X to amend a U.S. tax return or correct errors on your U.S. return.
  
  
• You’ll also need to attach any new or corrected forms (e.g., FBARs, Form 1116 for Foreign Tax Credit).
  
  
• Amendments can be filed electronically for recent years or mailed for older returns.
  
  

Step 3: Correct Missing FBAR or FATCA Reports

If your UK bank accounts or investments triggered reporting thresholds, submit the missing FBAR (FinCEN Form 114) and FATCA forms. These carry steep penalties if ignored.

Step 4: Consider Streamlined Amnesty Programs

If you haven’t filed correctly for several years, the IRS Streamlined Filing Compliance Procedures may help you catch up penalty-free. This is often the best route for expats who’ve unknowingly made repeated mistakes.

Step 5: Seek Professional Guidance

Because U.S.-UK tax coordination is tricky—especially around pensions and double taxation—working with an expat tax professional ensures you don’t make more errors.

Deadlines and Time Limits for Amending

• You generally have three years from the date you filed your original return (or two years from the date you paid the tax, whichever is later) to amend.
  
  
• If you’re correcting to claim a refund, acting within that window is crucial.
  
  

What If You Don’t Correct the Error?

Failing to amend an incorrect tax return can have serious consequences:

• Penalties and interest for underreported income.
  
  
• Increased IRS scrutiny, especially if foreign accounts were left out.
  
  
• Risk of losing eligibility for amnesty programs if you delay too long.
  
  

Being proactive often results in reduced penalties—or none at all.

FAQs About Correcting an Incorrect U.S. Tax Return in the UK

Q1: Do I need to amend if I only made a small math mistake?
 Not always. The IRS corrects minor math errors automatically. But errors involving income, credits, or foreign accounts require an amendment.

Q2: Will amending trigger an IRS audit?
 Not usually. Filing an amendment shows you’re trying to stay compliant. Ignoring mistakes is more likely to cause problems.

Q3: What if I forgot to file FBARs for my UK accounts?
 You should file them as soon as possible. If this went on for multiple years, consider the Streamlined Amnesty Program.

Q4: Can I amend more than one year at a time?
 Yes. You’ll need to file a separate Form 1040-X for each year that requires correction.

Q5: Will I owe more money after amending?
 Possibly—but you may also end up with a refund if you missed out on credits like the FTC or FEIE.

Conclusion

Discovering that you filed an incorrect U.S. tax return while living in the UK isn’t the end of the world. With the IRS’s amendment process and expat-focused relief programs, you have pathways to fix mistakes and regain compliance.

The key is to act quickly, understand your obligations on both sides of the Atlantic, and—if needed—get professional help. Correcting now means peace of mind later, without the worry of IRS penalties hanging over your head.