oleole2010

I will try to keep this as straight forward as possible as to not get complicated.

- From UK
- Currently living in the US.
- US Resident for tax purposes.
- Director of New UK Limited Company.

I have just created a UK Limited Company (several reasons including the fact we will not be the US for too many years).

- The Idea is to Pay Corporation Tax in the UK and then take a monthly salary.

- Do I have to pay corporation tax on UK Business in the USA, therefore paying twice?
-Or do I just pay taxes on my personal earnings from the UK to the US (Which is what I do now).

How complicated is this to undertake each year?
Are there other options open?
Any advice appreciated.

Noorah101

What visa are you on?

Rene

oleole2010

J2 - Spouse of J1.

MidAtlantic

I don't know the answers to your questions, but I suggest that you seek the advice of a competent specialist. What I really think is that you should have sought that advice before forming the company!

penguinsix

Ugh. I mean double ugh.

A US taxpayer with an overseas corporation requires a special IRS form that is generally considered to be a real pain in the butt, IRS 5471. It is not recommended as DIY project, but one that a trained accountant undertake (and not your strip mall kind of accountant, but someone with cross-border experience). I would strongly recommend seeking out an expat specialist tax attorney on this one. It's really a bit over the top and the penalties for failure to file or misfiling are SEVERE.

Rete

Do hope you have an EAD:

You can open a company, but cannot work for it even without pay, unless you have your j2 EAD. Your spouse cannot work in any form or shape for the company, your spouse can be on the board and be passive investor and both of you can receive passivYoue income form the investment.Jul 18, 2017

You are liable to include all world wide income on your US tax form. The UK businesses taxes for the company itself is different. Penguinsix advised you correctly to seek professional help.

oleole2010

Thanks for the information and advice Pengiunsix and Rete. This has cleared things up for me on the steps I need to take.
I will now begin the search for a CPA with this experience.
Profits in the company will not be high so I guess I need to think about whether it is easier to stay self-employed and filing taxes as I have been doing.

PetrifiedExPat

Does the OP have authorization to work?

oleole2010

OP has authorization to work. Any suggestions with cross border corporation tax filing aside from the good responses above?

Cook_County

A UK limited without a timely check the box election would be perverse - unless someone really really, really likes paying tax. The compliance costs will inevitably be high even with the right elections. Why is this the right entity structure?

Beraider

Just the cost of filing the return with a profit of zero will be in the thousands of $

oleole2010

Ok so I spend time between the UK and US (mainly USA).
The options I guess are:
- Self Employment in the UK. Pay UK Taxes and US - (The work is completed in the UK).
- Director UK Business - Pay Corporation Tax UK and US Personal Income Tax on the salary I receive.

The idea is to pay the correct taxes in both the UK and US. I am after a solution or structured way to do this.
My question is what do British Expats when they have businesses in the UK?

Sylvan

I am pretty much on the same page with you;

- Recently moved to US (permanently)
- Own 50% of shares of a UK Ltd business since many years.
- Work actively for the business and receive both salary and dividends.
- Self-employed, obviously.

But differently from you, I do not do back and forth to the UK, and limit my days spent in the UK to the minimum, making me a non-resident for tax purposes.

I recently got professional advise from a tax adviser in the UK, and here is the information gathered;

- You will still pay UK corp. tax, regardless.
- I do not pay any personal tax due to becoming a non-resident (salary or dividends)
- I will only be obliged to pay dividend tax (to UK) if I return back to UK during the next 5 years (permanently)
- As I recently moved to the US, my tax situation is on a split-year status, meaning I will pay taxes for the months I lived in the UK and US for this current tax year.

If you stay as a sole proprietor in the US, no corp. tax payments required, but you will pay income tax.

Because you say you live in both countries, you will need to apply for tax credit due to the double taxation treaty between the two countries.

This is the information I was given. I cannot personally guarantee if they are 100% correct/accurate, but it came from someone who is doing it for 30+ years.

oleole2010

Thanks Slyvan, I appreciate you explaining your experience.

My question is - will you have to pay Corporation Tax on your UK Ltd business again here in the US? Or is the business tax solely to the UK but any salary you take, you will pay tax on in the US?

Am I correct into believing the following:

1. UK Limited Business makes profit.
2. Pay Corporation Tax in UK
3. Director (US resident for tax purposes) takes salary
a. Pay UK income tax on Salary
b. Pay US Income Tax on Salary
4. Any dividends Director receives pay UK and US Tax

Thanks

tom169

If you're a US tax resident I'm not sure why 3a would apply. Same for 4 on UK tax.

​​​​Plenty of expat accountants in London for US/UK. Probably worth a consult.