Freelancing in UK after moving to US

[Dzny85 3]

Hi Guys,

I've recently had my K1 visa approved and I am due to enter the US in approximately one month. I am aware that I cannot legally get work in the US until I have had my I-765 EA approved which I believe could take a couple of months.

In order to keep my finances ticking over I have agreed with my current UK employer that I will be able to do some freelancing for them up until Christmas which is great.

However, I am really confused as to how this works with regards to tax and national insurance, etc. As I see it I will be a UK citizen working for a UK company, who will be paying into my UK bank account...but I'll be living in the US - so I should pay my UK taxes and NI to HMRC as normal.

I am slightly concerned, however, that since I am living abroad I should be declaring my earnings to the IRS even though they are not with a US company.

Can anyone shed any light or give me some advice on this please?

(P.s. Sorry if this is in the wrong section, seemed the logical place to put it!)

Thanks!

[lost_at_sea 995]

So, I'm sort of doing what you are doing and I haven't figured it out yet. I'm paying UK tax etc. and all the money relating to the work I'm doing goes into my UK bank account. I think what'll happen is when we get around to doing our taxes, I'll be declaring my foreign assets as required (I think you have to declare everything over $10,000 abroad).

I'm not sure if I need to be declaring it sooner in some other way?

I'm actually intending to wind up my freelance work in the next 2 months and get a full-time job here instead, because the UK doesn't pay as well as the US for my time and I'd rather just not have this problem.

Edited August 7, 2013 by lost_at_sea

[Dzny85 3]

Nice to know I'm not the only one in this situation.

I'm trying to arrange a meeting with an accountant in the UK before I move just to get an idea on what I should be doing. The last thing I want to do is get into the bad books with the IRS as soon as I move! ha!

[kzielu 1,147]

Being US permanent resident you need to report your worldwide income to IRS. You may not need to pay tax on it if it's been paid in UK (sometimes there is thereshold below which you don't pay) - all depends on treaty details between UK and US.

[Nich-Nick 3,353]

Hi Guys,

I've recently had my K1 visa approved and I am due to enter the US in approximately one month. I am aware that I cannot legally get work in the US until I have had my I-765 EA approved which I believe could take a couple of months.

In order to keep my finances ticking over I have agreed with my current UK employer that I will be able to do some freelancing for them up until Christmas which is great.

However, I am really confused as to how this works with regards to tax and national insurance, etc. As I see it I will be a UK citizen working for a UK company, who will be paying into my UK bank account...but I'll be living in the US - so I should pay my UK taxes and NI to HMRC as normal.

I am slightly concerned, however, that since I am living abroad I should be declaring my earnings to the IRS even though they are not with a US company.

Can anyone shed any light or give me some advice on this please?

There is debate whether what you plan is allowed without work authorization. It's a gray area with many opinions and no clear answer from USCIS that I've seen. Many do it however.

So, I'm sort of doing what you are doing and I haven't figured it out yet. I'm paying UK tax etc. and all the money relating to the work I'm doing goes into my UK bank account. I think what'll happen is when we get around to doing our taxes, I'll be declaring my foreign assets as required (I think you have to declare everything over $10,000 abroad).

I'm not sure if I need to be declaring it sooner in some other way?

I'm actually intending to wind up my freelance work in the next 2 months and get a full-time job here instead, because the UK doesn't pay as well as the US for my time and I'd rather just not have this problem.

You have a greencard and are allowed to work, of course. I wonder If you have your $10,000 mixed up with requirements of the banking section of the Patriot Act. Any cash brought Into the country (or monetary instruments think it says) that exceeds $10K must be declared to CPB. A wire transfer in would be reported by the banks involved. So we are talking about pockets full of cash on you when you enter would require a report. That has nothing to do with income tax or the IRS and costs you nothing.

For both of you: Income Tax

Tax year 2013 ends Dec 31, 2013. If you are married even one day in 2013 you can file jointly with your spouse. You don't have to have a greencard or ever worked to do this. You don't have to have even moved to the US, but you must be married. It is almost always an advantage to file jointly. So if you file jointly you must report everything you earned in the year 2013 no matter if was while in the UK, US, or your online in the UK while in the US. Then you are also allowed the Foreign Income exclusion up to a max of around $96,000. It is prorated, so if you lived in the UK half the year, then half that max figure is allowable. In the UK 3/4 of the year, then your allowance is up to 3/4 of the max. Unless you had a very high income that exceeds the exclusion then your earnings abroad generally are reported, but then subtracted back out. It's not totally that simple arithmetic, but I'm painting a picture in broad strokes here.

Another option because you can pick the one that works out best-- If you don't want to file jointly then you don't have to file at all if you didn't earn US income. If you earned at least $3800 in the US, then you are required to file. But your spouse, because married in 2013 would have to file "married filing separately". That will generally make the spouses taxes higher filing in that category. And that is why a joint return with a spouse whose foreign income is excluded usually is better because you get the extra exemptions with two people while the tax is levied on basically the American's earning for 2013.

Also there are provisions where foreign taxes paid can be deducted. But you can't exclude the foreign income and the tax paid on it. This one if you figure the full US tax owed on the foreign income, you may have credit for the foreign taxes paid already. You have to pick which works out best.

The tax treaties tend to make the break of who you owe taxes to at the point of moving to the other country.

[lost_at_sea 995]

There is debate whether what you plan is allowed without work authorization. It's a gray area with many opinions and no clear answer from USCIS that I've seen. Many do it however.

You have a greencard and are allowed to work, of course. I wonder If you have your $10,000 mixed up with requirements of the banking section of the Patriot Act. Any cash brought Into the country (or monetary instruments think it says) that exceeds $10K must be declared to CPB. A wire transfer in would be reported by the banks involved. So we are talking about pockets full of cash on you when you enter would require a report. That has nothing to do with income tax or the IRS and costs you nothing.

For both of you: Income Tax

Tax year 2013 ends Dec 31, 2013. If you are married even one day in 2013 you can file jointly with your spouse. You don't have to have a greencard or ever worked to do this. You don't have to have even moved to the US, but you must be married. It is almost always an advantage to file jointly. So if you file jointly you must report everything you earned in the year 2013 no matter if was while in the UK, US, or your online in the UK while in the US. Then you are also allowed the Foreign Income exclusion up to a max of around $96,000. It is prorated, so if you lived in the UK half the year, then half that max figure is allowable. In the UK 3/4 of the year, then your allowance is up to 3/4 of the max. Unless you had a very high income that exceeds the exclusion then your earnings abroad generally are reported, but then subtracted back out. It's not totally that simple arithmetic, but I'm painting a picture in broad strokes here.

Another option because you can pick the one that works out best-- If you don't want to file jointly then you don't have to file at all if you didn't earn US income. If you earned at least $3800 in the US, then you are required to file. But your spouse, because married in 2013 would have to file "married filing separately". That will generally make the spouses taxes higher filing in that category. And that is why a joint return with a spouse whose foreign income is excluded usually is better because you get the extra exemptions with two people while the tax is levied on basically the American's earning for 2013.

Also there are provisions where foreign taxes paid can be deducted. But you can't exclude the foreign income and the tax paid on it. This one if you figure the full US tax owed on the foreign income, you may have credit for the foreign taxes paid already. You have to pick which works out best.

The tax treaties tend to make the break of who you owe taxes to at the point of moving to the other country.

Brilliant. Thanks. That helps a lot!

And yes, I think I may be confused re: the $10,000. Fortunately, my husband's accountant has just had to deal with my husband being in the UK for 18 months, so when we file jointly next year, I think I'll throw all my info at him and let him work it out.

[Dzny85 3]

Thank you so much for the very detailed response. I had a brief chat with an accountant today and my mind has been put at ease slightly. I think once I enter the US I need to get an accountant and make sure I am doing everything correctly.