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UK + US tax issues: “Foreign earned income exclusion” etc.

UK + US tax issues: “Foreign earned income exclusion” etc.

Old Dec 28th 2022, 3:55 pm
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Default UK + US tax issues: “Foreign earned income exclusion” etc.

Hello, I have a green card through marriage, but currently working in the UK on a contract for a couple of years. I heard that I don’t have to file US tax return as a “non-resident”, which would be bad when it comes to renewing my green card. I’ve spoken to an accountant who specialises in this area (US + UK tax issues), and they quoted me about $700 to do the paperwork – for federal and state tax returns plus a foreign bank account report. Does $700 sound reasonable? It’s a significant proportion of my income, and usually I pay an accountant around $100.

Thanks in advance for any thoughts or advice on this.
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Old Dec 28th 2022, 4:11 pm
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

For $100 you're paying a tax preparer, and $700 sounds reasonable to me for the services of a professional accountant.

Depending on how much a bite out of your British income the $700 takes, you might consider just lumping it in with your US income, taking a deduction for tax withheld in the UK, and paying any extra tax. I.e. would the incremental tax be less than $700?

Last edited by Pulaski; Dec 28th 2022 at 5:42 pm.
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Old Dec 28th 2022, 5:13 pm
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by RTowns View Post
Hello, I have a green card through marriage, but currently working in the UK on a contract for a couple of years. I heard that I don’t have to file US tax return as a “non-resident”, which would be bad when it comes to renewing my green card. I’ve spoken to an accountant who specialises in this area (US + UK tax issues), and they quoted me about $700 to do the paperwork – for federal and state tax returns plus a foreign bank account report. Does $700 sound reasonable? It’s a significant proportion of my income, and usually I pay an accountant around $100.

Thanks in advance for any thoughts or advice on this.
A green card holder by definition has to file a resident return , let alone other requirements to keep or renew a green card.

700 sounds reasonable for a professional accountant if they are familiar with US.UK tax issues.You might get a for a bit less- but the cost of errors can be substantial.
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Old Dec 29th 2022, 9:07 am
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by morpeth View Post
A green card holder by definition has to file a resident return , let alone other requirements to keep or renew a green card.

700 sounds reasonable for a professional accountant if they are familiar with US.UK tax issues.You might get a for a bit less- but the cost of errors can be substantial.
$700 also seems reasonable to me.

On the 1040 the OP will state his foreign address as this is where he is resident and that is important for other things, but as you say, as a Green Card holder he will be taxed as if he was resident. Depending on the State he may also be subject to State taxes since some States such as California and Louisiana will apply State taxes on income from a company registered in that State.
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Old Dec 29th 2022, 9:18 pm
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

On a side note, did you apply for a re-entry permit to protect your status?
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Old Dec 30th 2022, 6:40 am
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by Expatrian View Post
On a side note, did you apply for a re-entry permit to protect your status?
Or consider visiting US every six months ? I know a person who went through similar scenario. Lawyer said don't worry about visiting states every six months- and that was first thing immigration asked later on seeking to renew Green Card.

Another person I knew applied and got re-entry permit, but then had issue trying for a second one.
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Old Dec 31st 2022, 2:19 am
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by morpeth View Post
Or consider visiting US every six months ? I know a person who went through similar scenario. Lawyer said don't worry about visiting states every six months- and that was first thing immigration asked later on seeking to renew Green Card.

Another person I knew applied and got re-entry permit, but then had issue trying for a second one.
That might work in conjunction with filing a US tax return, which as a “US Person” (Green card holder or USC) he is required to do. But I’d be looking to follow the rules to avoid jeopardizing a green card. The US just doesn’t seem to like even US citizens living outside the US, although a citizen can do so indefinitely without loosing citizenship. The expectation when someone naturalizes is he/she “intends to reside in the United States,” stated on the naturalization certificate, but in practice I doubt it’s ever enforced.
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Old Dec 31st 2022, 3:48 am
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by Expatrian View Post
That might work in conjunction with filing a US tax return, which as a “US Person” (Green card holder or USC) he is required to do. But I’d be looking to follow the rules to avoid jeopardizing a green card. The US just doesn’t seem to like even US citizens living outside the US, although a citizen can do so indefinitely without loosing citizenship. The expectation when someone naturalizes is he/she “intends to reside in the United States,” stated on the naturalization certificate, but in practice I doubt it’s ever enforced.
I agree once someone naturalizes as a citizen, they then have few if any problems living outside the country (though their children might). I know someone who has a Green Card having problems with having been out of the country for 2 1/2 years, the legal expense is mounting.
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Old Jan 25th 2023, 8:38 pm
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Thanks for all these helpful comments. I looked through the comments in December, then life got hectic, so I'm late to actual responding. Will reply to a few details one by one.

By the way I'm thinking about getting a quote from a second accountant. Any recommendations? Thanks.
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Old Jan 25th 2023, 8:41 pm
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by durham_lad View Post
$700 also seems reasonable to me.

On the 1040 the OP will state his foreign address as this is where he is resident and that is important for other things, but as you say, as a Green Card holder he will be taxed as if he was resident. Depending on the State he may also be subject to State taxes since some States such as California and Louisiana will apply State taxes on income from a company registered in that State.
Hi, thanks for this. It's NJ. However I'm not sure I understand your point about state taxes and a company registered in that state?
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Old Jan 25th 2023, 8:43 pm
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by Expatrian View Post
On a side note, did you applt for a re-entry permit to protect your status?
Actually, yes, and went for the biometrics, ticked the boxes to request it get sent to London, and was never notified either way. I've been meaning to follow this up, but was hoping it would turn up, and meanwhile, a ton of other things to deal with. Meanwhile, a couple of short visits to the US and everything fine entering with my green card.
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Old Jan 25th 2023, 8:47 pm
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by morpeth View Post
Or consider visiting US every six months ? I know a person who went through similar scenario. Lawyer said don't worry about visiting states every six months- and that was first thing immigration asked later on seeking to renew Green Card.

Another person I knew applied and got re-entry permit, but then had issue trying for a second one.
Hi. You mean the lawyer said don't worry, so the person did not return every six months? And what did immigration ask exactly? If they had been back every six months? I'm confused as I would think they would not look on someone routinely returning every six months very favourably. I was also wondering about the second re-entry permit that I would need and sought advice from a lawyer. Also, my green card will expire while I am still here. It's all a headache.
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Old Jan 25th 2023, 8:54 pm
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by Expatrian View Post
But I’d be looking to follow the rules to avoid jeopardizing a green card.
The thing is, some of the "rules" don't exist. I mean, there are rules of what to do in "normal" situations and what not to do. But then there are no clear rules stated for what is and what is not allowed in the case of, for example, getting a work contract overseas and needing some time away. A lot becomes a bit ambiguous. Sometimes, a work opportunity is more important than the green card, but that doesn't mean one wants to throw away the green card. I mean, if they said the rule was to give up your green card and then go through the whole marriage visa process again later, then at least that is clear. Instead, there is this two-year "re-entry permit", which apparently some people have trouble renewing if they actually need three or four years away. So you are simultaneously a resident and a non-resident for the duration of the re-entry permit. But they expect you to file a resident tax return. Who can afford to pay tax in two countries? The system is not design to be transparent.
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Old Jan 25th 2023, 9:01 pm
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by RTowns View Post
Hi, thanks for this. It's NJ. However I'm not sure I understand your point about state taxes and a company registered in that state?

I receive a non-qualified pension from the Louisiana company I used to work for. I moved to Texas when I retired in 2010 and have been in England since 2016 but still have to pay State taxes every year on that income, paying as a non-resident of Louisiana. California has the same rules. Some States can be impossible to escape from. Texas is fine. No idea about NJ.
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Old Jan 26th 2023, 5:53 am
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Default Re: UK + US tax issues: “Foreign earned income exclusion” etc.

Originally Posted by RTowns View Post
Hi. You mean the lawyer said don't worry, so the person did not return every six months? And what did immigration ask exactly? If they had been back every six months? I'm confused as I would think they would not look on someone routinely returning every six months very favourably. I was also wondering about the second re-entry permit that I would need and sought advice from a lawyer. Also, my green card will expire while I am still here. It's all a headache.
It is a 'check' the box issue, i.e. one factor among others - and one of issues for maintaining resident status is time abroad, whether over 6 months, or over a year,and whether immigration considers one is maintaining permanent residence.What was annoying same lawyer when person was considering getting a second re-entry permit.the lawyer asked " well have you been back every six months".



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