NYC to London, advice needed on tax pls
 

There are likely some similar threads but I’ve not seen this exact scenario addressed, so any advice would be hugely helpful and greatly appreciated.

Following on from my other thread, my wife and I intend to move back to London from NYC in late Feb, assuming her visa is approved. It’s crucial that I engineer the cleanest and most water tight ‘break’ from the US tax system, but in my 3 years here I must admit I have not found a satisfactory tax advisor, so am desperate for some recommendations. Deloitte/PWC both seem like ‘safe’ options but I am aware there must be many others.

My financial situation is:

One current account, one credit card account, and one brokerage account (used exclusively to purchase UK treasury GILTS.) All of these are with Citibank

I also own my apartment in Brooklyn. While I intend to sell it ASAP, this will likely not happen until towards the end of this year, long after we have left the country, as our immediate focus is on the baby. In the meantime the apartment will likely be empty as the building is a coop that does not favor renting. Not ideal but very understandable.

As I cannot engineer a quick total financial exit from the US due to the property (and possibly the GILTS) I need sound, experienced advice on how to play the next 12 months so I am not forever being chased by the US tax man.

Any thoughts or personal recommendations would be unbelievably helpful. I’ve found this board much much more reliable than random internet reviews that’s for sure. Thank you in advance,

Tim.

Re: NYC to London, advice needed on tax pls
 

What's your citizenship and status in the US? No one can comment without that info.

Re: NYC to London, advice needed on tax pls
 

Ah ok. I am on an L1 visa (inter company transfer) no marriage green card as we only got married earlier this year and are moving back to uk.

Re: NYC to London, advice needed on tax pls
 

Your wife is USC? And you have a baby?

Re: NYC to London, advice needed on tax pls
 

Yes she is. Baby on the way in May.

Re: NYC to London, advice needed on tax pls
 

Unless she renounces US citizenship, your wife will always be 'tied' to the US w/r/t filing a tax return. If she has income over the filing threshold, she must file a return. Depending on the balances in financial accounts which she either owns or has signature authority, she may also need to file the FinCen Form 116 with the US Treasury. Similarly, your child will also be subject to the same requirements as the child will be a USC.

Your requirement to file a return typically will end in the last year you are resident. However, if you have US source income, that could mean you may have to file in future years.

Re: NYC to London, advice needed on tax pls
 

Thank you, that’s very helpful. Can you or anyone else recommend a good tax advisor or firm? I definitely need assistance navigating the next 12 months, to ensure I pay the right amounts pre and post property sale and can correctly end my ties with the US tax system for now, even if my wife will still have to file.

Re: NYC to London, advice needed on tax pls
 

I cannot recommend a firm, as we have always done our own returns. Surely your company has other employees who have been in the same situation - can they not work with you on this?

The big firms are fine, but you would likely pay more than if you just paid whatever maximum tax indicated by Turbotax or similar software when you file your 2018 return. Your 2017 return will be no different than any other full year of residence in the US.

If you don't have any capital gains on the sale of the coop apartment, even that my not generate any particular issues. BUT - the recently pass (so-called) tax reform has yet to hit the streets, so whatever you know/read on the IRS website may not apply for your 2018 filing. Having said that, I would read everything on the IRS website that speaks to filing requirements for non-resident aliens (which you will be after you move back to the UK).

Don't overthink your situation. Unless you continue to have US source income, your filing requirement ceases after you move (2018 being the exception, as you will have income during January and February). For example, if you rent the apartment, that will generate a filing requirement.

I'm not familiar with how the brokerage account used to purchase GILTS will affect you, but is there any reason to keep that open? Having a credit card or current account doesn't affect your filing requirement unless you will be earning a heck of a lot more interest than my account currently earns on the current account. The interest (if any) earned after the move will be reported to HMRC as foreign income (assuming it's over £1), but only amounts earned after the move are potentially subject to UK tax. You will likely have no filing obligation in the UK until the 2018/2019 tax year, unless there are other income sources that you haven't mentioned.

EDIT - DISCLAIMER.....I am not a tax expert and both hubby and I are dual-nationals (USC/UKC). Plus, we are retired and our tax situation is pretty simple at the moment. Our US tax return for first year after we moved back was a little tricky, but even that wasn't as onerous as I thought it might be.

Re: NYC to London, advice needed on tax pls
 

Vadio, thank you very much for the detailed reply, it’s informative and reassuring.

Point taken on the property, although I must confess to be unclear as to what determines whether it would be subject to capital gains tax? I presume sale price. I will do my homework there.

Re the GILTS, yes the plan would be to either ‘sell’ them or transfer them to my Uk acccount, but depending on their maturity date there may be penalty fees associated with that. I am investigating that now.

Finally, that’s good news re the current account as you’re right that it earns a very standard (i.e. small) amount of interest, so sounds like I will be fine to keep it.

Thank you again for the above, especially for taking the time over the holiday period.

Edit: no sadly my firm won’t be any help as they only provide tax support for the most senior exes. So I’m flying solo in finding the right advisor. I have one who seems competent but it’s hard to know for sure until after the fact.

Re: NYC to London, advice needed on tax pls
 

Another reason to keep a US current account is to use when visiting the US. I am sure that you will be getting some 'baby presents' and it's convenient for your wife's US relatives. If you aren't with HSBC, I would advise getting an account with them in the US and in the UK. It's easy to transfer money between the two accounts.

Read this: https://www.irs.gov/taxtopics/tc701. It will lead you to other IRS publications, but remember the new tax bill may change the rules for 2018.

Re: NYC to London, advice needed on tax pls
 

The US expats in the UK message board has an extensive section on taxes that you might find helpful. Many of them utilize London-based or UK-based accountants versed in the peculiarities of US-UK tax issues. As has been noted, your spouse will have US tax filing requirements and more onerously US money laundering requirements (FBAR and FATCA) if she reaches certain levels. She may also have state income tax requirements depending on whether / when you sell your property (state income tax can be really complicated if property is involved--basically many states don't consider you really a 'non-resident' if you are living overseas and own property back in that state. In fact some states don't think you're a non-resident if you move to another country--you're just temporarily absent until such time as you return).

US - UK Taxes

Re: NYC to London, advice needed on tax pls
 

Thank you both for the above. Lots to digest and very clear and useful. Appreciate it. This place is a godsend