Double Taxation Treaty

[Lansbury 19]

A US Tax advisor may know about the US system, you will go a long way to find somebody who knows both, and it will cost you.

That isn't necessarily so. We went to the local guy our son uses and he said having an overseas income wasn't much extra work and it wasn't a problem for him to look up the information he needed. We knew what his normal charge was from what our son paid and ours was an extra $50. Well worth it to have someone who understands thier way around the forms sort the first one out.

As ours will be a bit different again for this year, we will not be able to claim the foreign income exemption, just the double tax we will have him do that as well. Hopefully when we have seen one done properly we will do our own from then on, but the fee to have it done hassle free and the instructional value are well worth it IMHO.

Somebody who knows IRS and Inland Revenue.

Yes both it was no problem at all.

Post their details, whe I was looking there was one possibility in the whole of Colorada, I think they charged $100 an hour, could have been more.

My Wife used Price Waterhouse in the UK, they took forever, fortunately the Company was paying. And hers were not that complicated, just salary.

My Brother is an Accountant, asked him if he knew of anyone who did both, nope.

Sherman, Young & Associates

1165 Molalla Avenue

Oregon City

503-657-9447

Not sure if we are a slightly cross purposes. They didn't do a UK tax return for us, only the US one but they were knowledgeable about the double tax and all such matters. In fact they have someone who works there who is a GC holder.

[Daisy 0]

Excellent suggestion Boiler. A link would be wonderful! Not only for anyone in this position but also for the CPA concerned who would get the business!

Our figures are relatively simple, we are not mega earners. Its the interpretation of what goes where and working out when IRS or UK take precedence that is exhausting!!

I finalised the UK return and put it in the post yesterday. I am sure the Inland Revenue will get back if they find any discrepencies.

That is of course if I have posted the paperwork to the correct address.

daisy

[Boiler 43,434]

A US Tax advisor may know about the US system, you will go a long way to find somebody who knows both, and it will cost you.

That isn't necessarily so. We went to the local guy our son uses and he said having an overseas income wasn't much extra work and it wasn't a problem for him to look up the information he needed. We knew what his normal charge was from what our son paid and ours was an extra $50. Well worth it to have someone who understands thier way around the forms sort the first one out.

As ours will be a bit different again for this year, we will not be able to claim the foreign income exemption, just the double tax we will have him do that as well. Hopefully when we have seen one done properly we will do our own from then on, but the fee to have it done hassle free and the instructional value are well worth it IMHO.

Somebody who knows IRS and Inland Revenue.

Yes both it was no problem at all.

Post their details, whe I was looking there was one possibility in the whole of Colorada, I think they charged $100 an hour, could have been more.

My Wife used Price Waterhouse in the UK, they took forever, fortunately the Company was paying. And hers were not that complicated, just salary.

My Brother is an Accountant, asked him if he knew of anyone who did both, nope.

Sherman, Young & Associates

1165 Molalla Avenue

Oregon City

503-657-9447

Not sure if we are a slightly cross purposes. They didn't do a UK tax return for us, only the US one but they were knowledgeable about the double tax and all such matters. In fact they have someone who works there who is a GC holder.

This is not the tricky bit, its making sure both sides benefits are maximised that is.

All the IT based tax filing systems will do overseas earnings. I used Taxact.

[Captain Oates 910]

Hey chaps - nice thread...i expect to land in the US in November - i will have a private pension plus income from rent in the UK.

How do you apportion the pension income etc - in the UK we get our year end p60 - but making up the return to december, do you just use payslips and 'actual' interest received... seems a big subject as the UK estate agents are required to deduct tax before forwarding it to the overseas house owner etc...

Do I need a 2007 US tax return having been in the country 6 weeks ? If I claim to be not eligible, does it affect the nationality thing in 3 years ? so many questions !

alan

[Lansbury 19]

If you arrive November 2007 you will need to do a US tax return for 2007.

When doing a return you just fill out the form, you do not have to submit any supporting documentation. You do need the supporting documents in case you are called for an audit and have to keep them for 6 years. I very much doubt you will have to pay any US income for 2007 as you will be eligible for almost the $80,000 of foreign income you can exempt from tax. It will be $80000 dived by 365 multiplied by however many days for that year you lived in the UK.

In 2008 when you do your US tax you will show on that the tax you paid in the UK on earnings and claim that against US tax.

The above is a very simplified explanation which I hope is right.

[Captain Oates 910]

If you arrive November 2007 you will need to do a US tax return for 2007.

When doing a return you just fill out the form, you do not have to submit any supporting documentation. You do need the supporting documents in case you are called for an audit and have to keep them for 6 years. I very much doubt you will have to pay any US income for 2007 as you will be eligible for almost the $80,000 of foreign income you can exempt from tax. It will be $80000 dived by 365 multiplied by however many days for that year you lived in the UK.

In 2008 when you do your US tax you will show on that the tax you paid in the UK on earnings and claim that against US tax.

The above is a very simplified explanation which I hope is right.

thanks for that - i wondered whether i would get the whole of the $80k deduction but apportionment by days out of the US seems fair.

I am trying to sell my house in the Uk but after 4 months I have had 1 eccentric viewer and everyone else is struggling - so I reckon renting out is the only way I can wriggle out of mowing lawns/heating in the winter and property taxes...

This is unearned income of course so i guess it will be taxable - but only the bit that gets received after I land ? Hum I have a lot to learn..

The UK revenue have told me how to stop tax deuction on my UK bank interest and UK pension but that needs US endorsement and will take 6 months I reckon.

Should keep me busy !

There must be other UK nationals in an identical situation to me so perhaps I am trying to invent the wheel all over again when somebody knows all of it already.

Ye I think filing in 2007 as a resident would keep the naturalization issue (in 3 years) at bay as I am sure I read that filing as a non-resident in any year disqualifies that year for naturalization.

alan

[Daisy 0]

Good luck with the sale of your house. Should you decide to rent it out, your agent is correct in that they or the tenant retain basic tax (on rental income levels over a certain amount) and pay you the net amount only. You then claim back any tax you are owed from Inland Revenue subject to your allowances and any expenses at year end.

Alternatively you are able to apply to IR for permission to receive the gross rent from the agent/tenant, paying the tax in the following tax year. Obtaining the permission is subject to having your tax affairs up to date. The advantage is that you put the 'tax' in your savings account and gain the interest prior to paying IR.

www.hmrc.gov.uk/cnr/nr_landlords

When you firm up a date re. leaving the UK, send in form P85 to IR and claim any tax you are owed.

With regard to un-earned income, I thought exactly the same there must be others in the same position declaring both sides of the pond.

Happy Reading.

daisy

[Captain Oates 910]

Good luck with the sale of your house. Should you decide to rent it out, your agent is correct in that they or the tenant retain basic tax (on rental income levels over a certain amount) and pay you the net amount only. You then claim back any tax you are owed from Inland Revenue subject to your allowances and any expenses at year end.

Alternatively you are able to apply to IR for permission to receive the gross rent from the agent/tenant, paying the tax in the following tax year. Obtaining the permission is subject to having your tax affairs up to date. The advantage is that you put the 'tax' in your savings account and gain the interest prior to paying IR.

www.hmrc.gov.uk/cnr/nr_landlords

When you firm up a date re. leaving the UK, send in form P85 to IR and claim any tax you are owed.

With regard to un-earned income, I thought exactly the same there must be others in the same position declaring both sides of the pond.

Happy Reading.

daisy

Thanks Daisy - I almost wish i was going back to wisconsin so i would have those dark cold winter days to research it all online - but we are off to florida this time -and it seems a shame to be on the net all the time....

anyway i still have 10 weeks or so to do here in england (fingers crossed) so i will have to get cracking !

yes thanks for the link - thats good

[pumbaA 0]

I have a similar kind of problem and I'm hoping someone can tell me what I need to do. The IRS and HMRC websites are very confusing on the issue.

I moved to the US on a K1 Visa last year and am awaiting AOS.

I'm going to be doing some work for a UK company for a few months.

What steps do I need to take to avoid paying income tax in both the UK and the US?

I'd appreciate any help anyone can give me.

Thank you,

-Pumbaa

[Captain Oates 910]

I have a similar kind of problem and I'm hoping someone can tell me what I need to do. The IRS and HMRC websites are very confusing on the issue.

I moved to the US on a K1 Visa last year and am awaiting AOS.

I'm going to be doing some work for a UK company for a few months.

What steps do I need to take to avoid paying income tax in both the UK and the US?

I'd appreciate any help anyone can give me.

Thank you,

-Pumbaa

Can't give you any detailed guidance but you know that if you pay tax in the UK then you can deduct it when you do your U.S. taxes under 'double taxation relief'.. so you won't pay twice...

However, getting paid 'tax free' in the UK is more complicated I guess .....

anyway you won't lose out... alan

Edited September 7, 2007 by saywhat

[Lansbury 19]

I have a similar kind of problem and I'm hoping someone can tell me what I need to do. The IRS and HMRC websites are very confusing on the issue.

I moved to the US on a K1 Visa last year and am awaiting AOS.

I'm going to be doing some work for a UK company for a few months.

What steps do I need to take to avoid paying income tax in both the UK and the US?

I'd appreciate any help anyone can give me.

Thank you,

-Pumbaa

As Alan says, if the UK company do deduct UK income tax you claim that on your US tax return.

[RaTBoX 1]

I have income in the UK a pension from my job over there. As it is a government pension the UK insist they tax it.

For my US tax return I just claim the foreign income tax exemption which is $80,000 per year, so it doesn't even come into the US tax equation.

We went to a tax accountant for our first US tax return and that was the way they did it, as the exemption also then gets carried over to our States income tax.

Not sure why you are paying tax to both. If you are completing a UK tax return and have paid tax on the income in the US do you not claim the exemption from tax on the UK form and money does not change hands.

In the US the foreign tax exemption is claimed on a seperate form submitted with your US tax return.

Sorry to hijack this thread, but just a quick question on this post.

I have a company pension here in the UK with me, and I have yet to decide if I should leave it in the UK until I retire, or transfer it into what ever US company pension fund I get set up when I start working (I'm only 24 so I haven't decided which is the best open given the many number of years until retirement). Am I right in thinking, after reading that post, that should I opt to keep the fund in the UK, I have to declare the cash in that fund on my US Tax Returns as foreign income?

[Captain Oates 910]

I have income in the UK a pension from my job over there. As it is a government pension the UK insist they tax it.

For my US tax return I just claim the foreign income tax exemption which is $80,000 per year, so it doesn't even come into the US tax equation.

We went to a tax accountant for our first US tax return and that was the way they did it, as the exemption also then gets carried over to our States income tax.

Not sure why you are paying tax to both. If you are completing a UK tax return and have paid tax on the income in the US do you not claim the exemption from tax on the UK form and money does not change hands.

In the US the foreign tax exemption is claimed on a seperate form submitted with your US tax return.

Sorry to hijack this thread, but just a quick question on this post.

I have a company pension here in the UK with me, and I have yet to decide if I should leave it in the UK until I retire, or transfer it into what ever US company pension fund I get set up when I start working (I'm only 24 so I haven't decided which is the best open given the many number of years until retirement). Am I right in thinking, after reading that post, that should I opt to keep the fund in the UK, I have to declare the cash in that fund on my US Tax Returns as foreign income?

[Captain Oates 910]

You wont be able to transfer it, as in keep the tax free status and move it into a tax free pension investment in the USA. I think you are talking about a refund which is only possible in the first couple of years in most schemes. You might then be allowed to make a voluntary contribution to your USA pension but the UK will have taxed the refund

I don't see the accrual of value in a UK scheme as 'taxable income' in the USA until you actual receive the pension many years after I am dead and escaped from the US immigration system and all other mortal worries.. At that point it is taxable...

Its like shares - if you owned shares directly in the UK, the US cannot tax you until you sell them. If they are held in a UK tax free arrangement like an ISA, the US will not recognize that and will tax you on the income of those shares (capital and dividends) at a very high rate not exceeding 100% as they are classed as 'passive foreign investments' - but again I emphasise - ONLY when they are sold...

It's as sneaky back-door way of banning them - they allow you to have them but tax you at 100%

I have dumped 200k of ISA's to avoid a possible 100% tax (I bought them for 60k)

Transferring anything from the UK is vitually impossible including credit rating/driving licence/insurance history for anything/health history etc etc etc... you are an alien thats what you are - you might as well have landed from Mars . I am an alien too but it has always been part of the tradition to rip off new immigrants right back to the Irish and the potato famine and the tradition is alive and well...

The only thing where I managed a connection was my GM visa card - US gm visa actually gave me a card with a $500 credit limit to recognize my £10k limit in the UK. Nobody else would touch me with a bargepole.

I offered to show em a million bucks in the bank and pension in payment income guaranteed for life by the UK government if they would give me a $500 dollar visa card and 4 banks said no. Then gm said yes.

Edited September 9, 2007 by saywhat

[Lansbury 19]

I have income in the UK a pension from my job over there. As it is a government pension the UK insist they tax it.

For my US tax return I just claim the foreign income tax exemption which is $80,000 per year, so it doesn't even come into the US tax equation.

We went to a tax accountant for our first US tax return and that was the way they did it, as the exemption also then gets carried over to our States income tax.

Not sure why you are paying tax to both. If you are completing a UK tax return and have paid tax on the income in the US do you not claim the exemption from tax on the UK form and money does not change hands.

In the US the foreign tax exemption is claimed on a seperate form submitted with your US tax return.

Sorry to hijack this thread, but just a quick question on this post.

I have a company pension here in the UK with me, and I have yet to decide if I should leave it in the UK until I retire, or transfer it into what ever US company pension fund I get set up when I start working (I'm only 24 so I haven't decided which is the best open given the many number of years until retirement). Am I right in thinking, after reading that post, that should I opt to keep the fund in the UK, I have to declare the cash in that fund on my US Tax Returns as foreign income?

My wife tried to transfer her pension fund from a university to her pension fund in the US when we moved over and it wasn't possible. Not sure of the exact reason but you can only transfer if the IRS recognise the fund and of course being a UK one they don't.

I should have made clear the foreign income exemption you can only claim the 1st year you arrive, once you are in the UK you claim any overseas tax paid on your tax return. As it is a fund presumable not producing any income as I understand it you are not required to declare it.