robbo71

Hi All,
Any help would be greatly received. I think I may be firmly in professional financial advice territory but if anyone knows the ropes and could summarise for me I'd be most grateful.

I'm British and returned to the UK from the USA after 6.5 years there. I left the USA on 31st May 2019. I'm in the process of doing my US taxes with a small US firm that I have used before but I am having doubts that they are up to speed on double taxation etc., maybe I should have been doing it with someone in the UK. And additionally, based on the route they are going with my US tax, I am now concerned about my prospective 2019/2020 UK tax return (e.g. will I need to include US income from 5th April until the day I left). I had in my mind that a double taxation treaty would take care of all this and I would be taxed on US income up to the date I left there and UK thereafter.

In essence the US tax folks are telling me when leaving the USA my end of calendar year status is what matters for the US, (i.e. non-resident) and as such certain rules apply to my 2019 US tax return that aren't particularly favourable (I can claim less back for number of dependents and things like that). That is possible. However they are now telling me also that I need to include *capital gains* until the end of the calendar year as well. In my case that would actually be fine because I had 20k of gains before I left the US but 20k of losses after I arrived back in the UK, so that would reduce my US tax. But it doesn't really seem to ring true to me that capital gains when in the UK would be subject to US tax, whilst employment income is not. Finally if it is indeed true, can I then claim my UK capital gains losses in the second half of 2019 AGAIN for UK tax? That would seem unlikely.

Anyway if someone has been through this and could just clear the waters for me with the basics I'd really appreciate it. Also if anyone knows of a reputable tax person in the UK.

Thanks,
Rob

Pulaski

It definitely sounds like you need a competent accountant in the UK experienced with US income taxes. That said, if you're taxed by Uncle Sam for the "entire year" I belive that you should be getting a deduction for all your income in the UK (outside the US) after you left the US. And I agree, the CGT advice doesn't sound right - though it is possible that you could end up pay some tax in both countries, with a credit for tax paid in one country to partially offset the tax due in the other. and counterintuitively it is possible under some circumstances to be able to use a capital loss in twice in differnt countries, but I would only do so after getting specific advice from an experienced tax professional.

Aoi

I used taxact.com for a Dual Status tax return.
https://www.taxact.com/support/22211...tatus-taxpayer

Here is a page from the HMRC Capital Gains Manual about split-year treatment:
https://www.gov.uk/hmrc-internal-man...manual/cg10978

robbo71

Many thanks Pulaski, many thanks Aoi, that's more info than I had, and confirms the 1040-NR vs. 1040.

Aoi, are you able to confirm - if you had a similar case to me - that for a regular Joe such as myself, all income in the US, that's wages in capital gains in my case is taxed in the US...and all my income in the second half of the year, that's wages and capital gains loss, is taxed in the UK. i.e. no overlap whether for wages or CGT?

It does seem clear to me on the UK side that capital gains (or loss in my case) is 'payable' in the UK since I qualify comfortably as resident in the 2019/2020 tax year, but I'm still unsure about the tax rules for the US. Did you have any CGT-related issues after you returned to the UK that were relevant to your US return or were they entirely ignored?

Thanks,
Rob

Aoi

I am not able to advise you further other than to suggest trying taxact.com. It has step by step guidance and support. It might enable you to do your US tax.