Zen10

Only if you earn above a certain level. You have to do a return, but you only pay if your wage is high enough.

trottytrue

windsong...If anyone leaving the US is not sure they are going to be able to settle down in the UK then it makes sense to get your citizenship it makes returning much easier. You only pay taxes on money you have earned in the US you do the same in the UK if you leave the country unless the tax has already been taken out. Someone more knowledgeable with be able to explain it better. If you are happy in the UK then you dont do anything the UK does not have a policy reconizing your US citizenship if you are British.

dunroving

I'm not an expert, but from previous threads about US citizenship and taxes, I think the following negatives have been raised:

Having to file taxes and various tax-related forms every year.

IRS doesn't recognise tax-free status of things such as ISAs, endowments, maybe also SIPPS(?). Not sure about tax-free benefits of UK pensions - seems a lot of UK pensions (like SIPPS and employer-sponsored investment vehicles tied to pensions) allow you to withdraw a certain amount as a tax-free lump sum (up to 100% in some cases), whereas AFAIK, in the US, cash lump sums taken at retirement are taxable ...

It seems that people with complex investments, higher income or investment capital, etc., are affected more by having US citizenship than people with less income, fewer investments, more simple investments, etc.

Of course, you can always rescind US citizenship (correct?) although at one time you would continue to have to file tax forms to the IRS for a while after - though I think someone said this has changed.

The downside of not getting US citizenship is the moment you realise you made a mistake and want to go back - much easier if you are a US citizen.

windsong

It would make return easier if it didn't work out, that's true. I just worry about the USA changing the laws in the future.

windsong

I thought you had to pay taxes on income you earned anywhere in the world if you if you retain US citizenship but live in the UK. I might be wrong, though.

Almo

Presumably it will always be possible to renounce a citizenship if one holds two or more?

I've never lived in the States so can only comment generally but it would seem foolhardy to me not to take out a citizenship, particularly in the case of someone who has not lived in the UK for a long time. Having an escape route is never a bad thing.

rebeccajo

It doesn't matter where in the world a US citizen lives. They always are beholding to Uncle Sam.

However, in countries like the UK, where there is a reciprocal tax agreement, there is an "exemption" for income below a certain level. I don't know the exact figure (it changes each year) but presently the amount of money you will not be taxed on (by the US government) is around $92000.

rebeccajo

I don't think you have a lot to worry about there.

These tax laws can't be changed willy-nilly by Capital Hill. They stem from unilateral tax treaties between the participating nations. These treaties cover all manner of things including pension "parity" for citizens of the two countries.

Plus, it has been reported that the US and UK and working on a new trade agreement. It's all early days and hard to say what that may mean. What this means to you though, is that it's highly unlikely the US and UK would change tax agreements for the worse. If anything they should improve.

windsong

That's terrific news and makes me feel a lot more at ease

dunroving

Not sure I'd describe the UK-US agreement re: pensions as "parity". There is a lot of inconsistency between how pensions are treated by the two countries, and the US WEPs state pension for many UK citizens, but we don't do the same to them.

Zen10

I have already explained the situation in my previous post.

rebeccajo

Yes, I used the term loosely, I know. And you are right to "clean it up".

I was trying to say these agreements cover a lot more than just income tax. The implication being the agreements can't just be "changed" by one side.

Cape Blue

With 13 years here you have probably hit the minimum 40 credits required to get a SS pension, but you might want to check.

Cape Blue

That book saved me a chunk of change, if only in lawyers fees.

sallysimmons

There's also an exemption for tax paid in the UK no matter how much you earned (as long as its straight income and not investments, pensions etc). If you pay more in income tax in the UK than you would have had you stayed in the US - and anyone with a high income would! - then you don't owe anything in the US. Note: this does not apply to other forms of income.

As well as filing taxes, you also have to report all your bank details and balances to the US government if you have savings of more than a certain amount (I think it's $10,000 but we had money from a house sale so I'm not sure of the exact limit).

You also need to apply for a certificate of exemption to prevent FICA being assessed.

Because it can be complicated, we felt we needed an accountant who knows both US and UK tax rules. There aren't many of them and they charge an arm and a leg.

If I knew then what I know now, I'd never have applied for citizenship.