dunroving

OK, I don't know if this is just a US/UK question or applies equally to Oz/UK, but here goes.

Returned to UK in July 2006 (halfway thru US tax year, which runs Jan-Dec). This was also obviously partway thru the UK tax year (runs Apr-Mar).

Do I declare my UK income July-Dec on my 2006 US tax return? Do I declare my US income Apr-July on my UK tax return?

I know about the dual tax treaty b/w US and UK, but I'm stumped as to how the much more liberal tax laws in the US (allowed to offset mortgage interest and relocation expenses) would be figured into my UK tax calculations (in short, will the Inland Revenue say "he should have paid more tax on his US income, so we'll take the difference")?

Anyone who returned in the last couple of years, have any advice?

chance to be

nOT Sure if this helps but other people ive spoken to...
say you arrive in uk in august...that year u claim tax in uk from aug-april. the april to august bit would be oz/us claim. people i know just claim as though all they earnt in the financial year was from one country so for one year you do well out of the systrem!
this may be illegal/wrong but thats the only way i know people have done it

dunroving

Tnanks, that is what I am thinking of doing currently. I think strictly speaking you are supposed to figure out what tax you paid for a segment of the year in each country, but that's not easy because (a) the income was taxed according to a different set of rules (e.g., US tax relief on mortgage interest) and (b) the tax years in UK and US don't run concurrently.

It seems there probably is something a bit naughty about what you described but the alternative is so complicated to figure out I just wouldn't know where to start figuring it out.

Mercedes

Why don't you chat to an accountant/firm who also specialises in US/UK taxation, s/he will be able to advise you to your best advantage hopefully. I personally like to put taxation in their hands and then if they screw up I have somewhere to go back to.

JAJ

Problem sometimes is that the fees are more than the potential tax involved.

JAJ

As I understand it, as far as the UK is concerned, if you establish tax residence you are not taxed on any overseas income arising before that date, even in the same tax year.

It gets complex if you were only away for a short period of time as you may never have become non-resident.

There's plenty of information if you look at http://www.hmrc.gov.uk

In principle I would think the same should work for the US (assuming you are not a US citizen or green card holder) but you may have to do some searching at http://www.irs.gov

dunroving

Thanks for the suggestions. I am too concerned at the charges of a professional UK/US accountant. I'm afraid I currently have an allergy to financial professionals in the UK after being extremely underwhelmed by the few I have met.

I'm hoping that JAJ is correct as that's what I think I am going to do (submit a UK and US tax return and only include earnings in the relevant country). I've been away for several years so it seems I do fall under the situation JAJ described - will check out those sites, too.

Scout

I had US Income last year......so I plan on reporting that in the US.......on a US tax return..........and the UK income will go on a UK tax return......the start up of our business is probably going to be a loss for the first few months so that's a plus with the UK tax man as far as I am concerned. The one thing I figured out lately is that the interest on my UK savings account has to be declared as income on my US tax return....and doesn't fall under the rules of the treaty....which sucks because that means double taxation as far as I am concerned.

I looked into an accountant specialising in international returns...they are not cheap ...I dread tax season this year.........I am trying to get my friend in the States to send me my US info that's she's recieved and it's like pulling teeth to get her to mail it.