USA State taxes

Old Feb 21st 2023, 6:41 am
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Default USA State taxes

Hi All,

Anyone know if the UK gives tax credit for USA state taxes ?

Thanks


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Old Feb 23rd 2023, 6:53 am
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Default Re: USA State taxes

I don’t know the answer but I doubt it. I am not aware of any tax treaties between the UK and any individual US States.

Maybe have a look through this document to see if you may be eligible.

https://www.gov.uk/hmrc-internal-man...ual/intm161010
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Old Feb 23rd 2023, 7:18 am
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Default Re: USA State taxes

Originally Posted by countrygirl33
Hi All, Anyone know if the UK gives tax credit for USA state taxes ? Thanks
Are you still in the US? If you haven't left for the UK yet, consider taking a few days to establish residency in a state with no income tax. I hear SD is particularly easy, and you can register as a resident with only a one night stay in an hotel. ..... Otherwise you will be stuck linked to the income tax apparatus of the state you lived in before you left the US.
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Old Feb 23rd 2023, 8:36 am
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Default Re: USA State taxes

Originally Posted by Pulaski
Are you still in the US? If you haven't left for the UK yet, consider taking a few days to establish residency in a state with no income tax. I hear SD is particularly easy, and you can register as a resident with only a one night stay in an hotel. ..... Otherwise you will be stuck linked to the income tax apparatus of the state you lived in before you left the US.
That may not help depending on the State and income she is concerned about. California will tax income paid by a California company no matter which State or country you reside in. Louisiana is similar, when I retired and moved to Texas back in 2010 I started to receive payments from a SERP non qualified pension plan from my ex-employer which is reported on a W2. I also started receiving payments from a qualified pension plan reported on a 1099-R. On that W2 income I pay Louisiana State taxes. Each year I file a Louisiana return as a non-resident to get a refund otherwise I would be subject to fines and they have the power to take their taxes from my SERP payments. It costs me about $300 taxes per year but I am very happy to have my supplemental pension.
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Old Feb 23rd 2023, 2:45 pm
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Default Re: USA State taxes

Thanks Pulaski and DL, I'm returning to the UK this weekend after being here 6 weeks to do my USA taxes. I will be living in the UK for 10 months of the year. I have consulted a UK tax person to do the UK tax , but I'm not sure how knowledgable they are in regard to the USA/UK filing . I read that it is against federal law to charge state taxes if a person moves out of state. My USA accountant says that is correct. However, I own a home in Cal that I'm putting up for rent and still keeping a car at my friend's fro when I return approx two months of year. My USA accountant says as my income is from California state pension and Federal pension that I should change the USA address on those to my UK address and stop the state withholding so that I can claim either non resident or 10 month part-time resident when I return to do taxes next year. It sounds like Durham Lad still has to pay Louisiana state tax even though lives in UK full time ? Does this all make sense ? I'm so confused with this . Manchester is the closest big city to me in the UK and I don't know of any qualified US/UK tax experts around there. I read online that HR Block handles dual citizen ex pats , but I wish I could get a recommendation from someone in a similar position who has used such a company or specific accountant .
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Old Feb 23rd 2023, 10:58 pm
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Default Re: USA State taxes

Originally Posted by countrygirl33
It sounds like Durham Lad still has to pay Louisiana state tax even though lives in UK full time ? Does this all make sense ? I'm so confused with this . Manchester is the closest big city to me in the UK and I don't know of any qualified US/UK tax experts around there. I read online that HR Block handles dual citizen ex pats , but I wish I could get a recommendation from someone in a similar position who has used such a company or specific accountant .
After years of battling with the Louisiana IRS I gave up and just pay the taxes, between $300-400/year. Because it is a SERP pension the IRS also insist that I pay payroll taxes (FICA and Medicare) so I pay that as well, but at least it means that my SS benefits go up and my WEP reduction also goes down, up to the point I have 30 years of FICA payments. I have decided that "this is the way" and have accepted it. I have heard that California is the hardest State to leave from a tax standpoint. When our son moved back to England from Texas in September 2017 he gave his employer his sister's address in California to send his W2 the following year. Worked fine, his sister took a photo of it and sent it to him so he could do his 2017 tax return. A couple of years later he received a letter from California IRS demanding he file a State return or prove that he was not resident in 2017 or that his company (a Texas bank) was not a California company plus send them a copy of his Federal return. He had do all this to get them off his back.

I don't know any dual qualified US-UK tax pros in the Manchester area to recommend. A couple of the biggest firms I see recommended are "Taxes For Expats" and "Greenback taxes" but I haven't used either myself.

https://www.taxesforexpats.com/

https://www.greenbacktaxservices.com/


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Old Feb 24th 2023, 4:35 am
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Default Re: USA State taxes

Originally Posted by durham_lad
.... I have heard that California is the hardest State to leave from a tax standpoint. When our son moved back to England from Texas in September 2017 he gave his employer his sister's address in California to send his W2 the following year. Worked fine, his sister took a photo of it and sent it to him so he could do his 2017 tax return. A couple of years later he received a letter from California IRS demanding he file a State return or prove that he was not resident in 2017 or that his company (a Texas bank) was not a California company plus send them a copy of his Federal return. He had do all this to get them off his back. ....
The problem I was alluding to in my previous post, is that it can be harder to sever a tax-liability connection with a US state, especially California, than it is to sever a tax-liability connection to the IRS/ federal government, especially after you have left the US. In other words, it is much easier to transfer your taxable existance to another US state, than it is to cut off a connection to a state by leaving the US entirely, and you can end up with the taxing authority in the final US state that you live in having its claws in you long after you have stopped needing to pay the IRS anything. .... Hence the advice (which appears not to apply to Countrygirl as she owns a home in CA and that could well prove to be an insurmountable problem in her specific case), to establish residence in a state without income tax as a means to draw a clear line under your US tax liablilities at the state level.
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Old Feb 24th 2023, 6:06 am
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Default Re: USA State taxes

Originally Posted by Pulaski
The problem I was alluding to in my previous post, is that it can be harder to sever a tax-liability connection with a US state, especially California, than it is to sever a tax-liability connection to the IRS/ federal government, especially after you have left the US. In other words, it is much easier to transfer your taxable existance to another US state, than it is to cut off a connection to a state by leaving the US entirely, and you can end up with the taxing authority in the final US state that you live in having its claws in you long after you have stopped needing to pay the IRS anything. .... Hence the advice (which appears not to apply to Countrygirl as she owns a home in CA and that could well prove to be an insurmountable problem in her specific case), to establish residence in a state without income tax as a means to draw a clear line under your US tax liablilities at the state level.
I certainly agree with that advice.
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Old Feb 24th 2023, 7:25 am
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Default Re: USA State taxes

Pulaski ,and DL thanks for your thoughts . I will keep trying to follow-up and see what the best solution is for me. My US accountant seems to think that if I rent my home and show that I"m paying UK taxes and am not in the US for more than a couple of months , I should at least be exempt from state taxes fro 10 months of the year as a part-time resident . If anyone out there has used a US/UK expat tax company , I would appreciate info on your experience and the costs . I wish I could find one that has an office in the north of England so that I could speak to someone face to face. Thanks all for your thoughts
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Old Feb 24th 2023, 9:58 pm
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Default Re: USA State taxes

Originally Posted by countrygirl33
Hi All,

Anyone know if the UK gives tax credit for USA state taxes ?

Thanks

Buried in the HMRC Internal Manuals - I did find this information on the US taxes that are admissible for UK credit.

https://www.gov.uk/hmrc-internal-man...relief/dt19851

I have not had any luck finding a UK/US tax advisor. I contacted a number that have been mentioned on the site and all seem very expensive. I even paid one for a consultation but the bottom line was they could not actually give advice on both US and UK tax matters. I also found that they gave less information than I had been able to gather from posts here. I have now decided, for this year, to continue with my US CPA and instruct a UK accountant ( who does have some experience in US matters) to file our UK taxes. I will need to see how things progress this year before I could make any recommendations.

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Old Feb 25th 2023, 3:19 am
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Default Re: USA State taxes

Originally Posted by Russet
Buried in the HMRC Internal Manuals - I did find this information on the US taxes that are admissible for UK credit.

https://www.gov.uk/hmrc-internal-man...relief/dt19851

I have not had any luck finding a UK/US tax advisor. I contacted a number that have been mentioned on the site and all seem very expensive. I even paid one for a consultation but the bottom line was they could not actually give advice on both US and UK tax matters. I also found that they gave less information than I had been able to gather from posts here. I have now decided, for this year, to continue with my US CPA and instruct a UK accountant ( who does have some experience in US matters) to file our UK taxes. I will need to see how things progress this year before I could make any recommendations.
Thanks Russet for the link! Please can you look at the California section on the link and tell me if you think "personal tax" means my State taxes. I see for some states it says "general income tax" is admissible . I'm not sure what the difference is in regard to the state tax I pay on my pension income . Also, which one of the UK/US tax advisors did you get the consultation from if I may ask? I am doing the same as you at this point. I have paid a UK accountant to look at my last year US tax returns and was given credit for some of the US tax I paid . I am not sure if they gave me state tax credit as I came back to do my US taxes just now . My US accountant seems to think I just do the US as normal as the tax year is different in UK and then go back and let them figure it out to give me credit . Does this sound like what you are doing? I will be back in the UK in a few days to see what the UK accountant did in regard to the state taxes. Like you, since I'm using just a regular UK accountant, I'm not totally sure they are that knowledgable and might be missing something as I have ended up owing more tax in the UK when I thought it would be more of a wash. Hope this makes sense. Thanks
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Old Feb 25th 2023, 7:25 am
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Default Re: USA State taxes

Originally Posted by Pulaski
The problem I was alluding to in my previous post, is that it can be harder to sever a tax-liability connection with a US state, especially California, than it is to sever a tax-liability connection to the IRS/ federal government, especially after you have left the US. In other words, it is much easier to transfer your taxable existance to another US state, than it is to cut off a connection to a state by leaving the US entirely, and you can end up with the taxing authority in the final US state that you live in having its claws in you long after you have stopped needing to pay the IRS anything. .... Hence the advice (which appears not to apply to Countrygirl as she owns a home in CA and that could well prove to be an insurmountable problem in her specific case), to establish residence in a state without income tax as a means to draw a clear line under your US tax liablilities at the state level.
I am nervous about this, but to establish residency you need to be in the state for 183 days or have a mobile home or other type of moving "residence"; at least that is what I have been told. I am hoping with no taxable income and not being resident of the state, Virginia in my case, I will not have to file beyond the partial year I leave.
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Old Feb 25th 2023, 7:49 am
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Default Re: USA State taxes

Originally Posted by kateg60
I am nervous about this, but to establish residency you need to be in the state for 183 days or have a mobile home or other type of moving "residence"; at least that is what I have been told. ....
No, that is certainly not correct for SD, and I learned that from people who become "digital nomads"/ permanent RV'ers, who move perpetually from state to state, and don't want to be stuck paying state income tax in the last state where they had lived a more usual lifestyle, tied to a house or apartment. Literally one night in SD, in an hotel, is sufficient to register as a resident of SD.

I think that you're thinking about the reverse situation, where you remain in one state for 183+ days and become resident despite not registering as a resident, getting a state DL, etc.
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Old Feb 26th 2023, 2:27 am
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Default Re: USA State taxes

Originally Posted by countrygirl33
Thanks Russet for the link! Please can you look at the California section on the link and tell me if you think "personal tax" means my State taxes. I see for some states it says "general income tax" is admissible . I'm not sure what the difference is in regard to the state tax I pay on my pension income . Also, which one of the UK/US tax advisors did you get the consultation from if I may ask? I am doing the same as you at this point. I have paid a UK accountant to look at my last year US tax returns and was given credit for some of the US tax I paid . I am not sure if they gave me state tax credit as I came back to do my US taxes just now . My US accountant seems to think I just do the US as normal as the tax year is different in UK and then go back and let them figure it out to give me credit . Does this sound like what you are doing? I will be back in the UK in a few days to see what the UK accountant did in regard to the state taxes. Like you, since I'm using just a regular UK accountant, I'm not totally sure they are that knowledgable and might be missing something as I have ended up owing more tax in the UK when I thought it would be more of a wash. Hope this makes sense. Thanks
Hi Countrygirl I am sorry I can't help any further with the link - I found it with the plan of discussing it with our UK accountant. I will post an update if I find anymore information on the state taxes but it will not be until later this year. If you want to PM me I will let you know the advisors we spoke with but decided not to use. I think it sounds as though we are in a similar situation to you with our UK accountant - they say we should just to file our US taxes as normal this year and then they will work out the credits. However , I do think that the tax rates will be higher in UK so I expect we will need to pay something too.

We were in CT and I believe (hope) they are not so strict. We also have no further ties there so hopefully it is just this year which should be the issue.

Last edited by Russet; Feb 26th 2023 at 2:33 am. Reason: additional information
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Old Mar 14th 2023, 10:37 am
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Default Re: USA State taxes

Originally Posted by countrygirl33
Thanks Pulaski and DL, I'm returning to the UK this weekend after being here 6 weeks to do my USA taxes. I will be living in the UK for 10 months of the year. I have consulted a UK tax person to do the UK tax , but I'm not sure how knowledgable they are in regard to the USA/UK filing . I read that it is against federal law to charge state taxes if a person moves out of state. My USA accountant says that is correct. However, I own a home in Cal that I'm putting up for rent and still keeping a car at my friend's fro when I return approx two months of year. My USA accountant says as my income is from California state pension and Federal pension that I should change the USA address on those to my UK address and stop the state withholding so that I can claim either non resident or 10 month part-time resident when I return to do taxes next year. It sounds like Durham Lad still has to pay Louisiana state tax even though lives in UK full time ? Does this all make sense ? I'm so confused with this . Manchester is the closest big city to me in the UK and I don't know of any qualified US/UK tax experts around there. I read online that HR Block handles dual citizen ex pats , but I wish I could get a recommendation from someone in a similar position who has used such a company or specific accountant .
I read at one point, California is the hardest state to leave from a tax standpoint. Back to the subject, the fact you are renting out your home, tells me, it will be treated as a "business" where you will have reportable rental income and deductible expenses and that means, a California tax return.
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