BigBoss1984

Hi all,

I'm gonna be working remotely in the U.S. for a UK employer (who has no U.S. presence) - I'll probably be doing it as a contractor, so will be responsible for all my own taxes etc.

Can someone advise on my situation? IE how much I'll be looking at tax wise? I've never been a contractor before so have no idea!

Another option is for the company to get incorporated and set up a U.S. desk for me in an office somewhere - what would the implications be for this?

BigBoss1984

It should be noted that I will be there for less than five years as we plan to move back to the United Kingdom after my spouse finishes up college - I looked at this;

http://www.ssa.gov/international/Agr...phlets/uk.html

And it seemed to indicate I should be paying United Kingdom taxes as I'll be in the U.S working for five years or less?

Thanks

OCKF

As you will be doing the work whatever it is FROM US you will need to do your US Tax Return I believe but I am sure more people with more experience will be along shortly and let you know exactly......

BigBoss1984

Great thanks - it's all very confusing haha, some insight from people with experience on this would be appreciated. Thanks for your comment

penguinsix

If this is a short term assignment, I would treat it as a contractor relationship and not go through the hassle (paperwork) of a foreign company setting up an office or even of you setting up a corporation. There are significant BURDENSOME tax requirements on non-US citizens owning or operating a company in the United States. It's not a major tax hit--in fact there really isn't that much difference financially, but the forms for a foreign owner of a US company or for a foreign entity operating in the United States can be quite complicated and will likely require a professional accountant with skills in cross-border corporate tax reporting requirements.

If you are just operating a sole contractor, you'll report your income to the Feds and the States once a year on April 15. You will probably need to make estimated tax payments throughout the year (every quarter).

Note you will be liable for your "self-employment taxes" which is the employer's share of the social security, medicare and unemployment insurance payments (aka PAYE-like payments). It is usually about 6.5% of your total income or something so you may want to talk to your employer about a "top up" of your salary to handle these expenses which would be much cheaper than them setting up an office and then having to pay them for you.

Pulaski

Not so much a "top-up", but more of a transfer of UK payroll taxes (employers NI) to the contractor so he can pay the self-employment/employers taxes in the US. In other words, there should be little if any additional cost to the employer in the UK to pay a contractor located in the US.

nun

US self employment tax rate is 15.3%.

If the OP is going to be a sole proprietor in the US they need to charge an hourly rate that reflects income and expenses. So account has to be made for insurance, office, travel, taxes etc. Reading the Schedule C is a good starting point to see the categories of expenses that might apply.

nun

This is for intra-compnay transfers and anyway has nothing to do with income tax.

Cook_County

Your employer needs to understand local US employment law, immigration law and corporate tax law before employing you. They may want to take advice including that relating to your own position.

Nutmegger

Do we know what the OP is actually going to be doing? If he can just work as an independent contractor, bill the UK client, have the money wired into his US account and then pay his own US taxes, I don't see the need to worry about any of these factors.

Pulaski

I nearly said exaclty the same thing! ..... In fairness the last paragraph of post #1 does mention the alternative of forming a US corporation and hiring him as an employee.

Nutmegger

It just seems that the route that is taken may be dependent upon what the job is. The whole corporate setup may be unnecessary -- or there again, it may be a good idea!

BigBoss1984

I think we'll be going the contractor route - certainly seems simpler! Thanks guys