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E2 Visa and Tax

E2 Visa and Tax

Old Mar 31st 2008, 5:50 pm
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Default E2 Visa and Tax

Hi
I have tried a search on the forum but couldn't find a specific answer to my question.

I have an E-2 Treaty Investor Visa in the US, and my business is based in Utah.
With my visa, I now work full-time for my business, and hence need to do an income tax return before 15th April 2008.

I am a little confused as to where I stand, and my accountant doesn't have much experience with helping non-residents. He has given me the 1040NR-EZ form to sign and complete, but I am unsure as to how I pay my taxes.

I do not own a home in the UK, so aside from family ties in the UK, I really don't have many other ties. Do I just declare my income in the US and solely pay my tax here (in fact, I am due a tax refund) or do I collect all my taxes paid, and then send the money over to the UK, declare it there and let the Inland Revenue take the amount they want. I'm guessing the third option of paying taxes both here and in the UK is not needed.

I look forward to any advice

Lawrence
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Old Mar 31st 2008, 6:53 pm
  #2  
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Default Re: E2 Visa and Tax

Originally Posted by ljstevens View Post
Hi
I have tried a search on the forum but couldn't find a specific answer to my question.

I have an E-2 Treaty Investor Visa in the US, and my business is based in Utah.
With my visa, I now work full-time for my business, and hence need to do an income tax return before 15th April 2008.

I am a little confused as to where I stand, and my accountant doesn't have much experience with helping non-residents. He has given me the 1040NR-EZ form to sign and complete, but I am unsure as to how I pay my taxes.

I do not own a home in the UK, so aside from family ties in the UK, I really don't have many other ties. Do I just declare my income in the US and solely pay my tax here (in fact, I am due a tax refund) or do I collect all my taxes paid, and then send the money over to the UK, declare it there and let the Inland Revenue take the amount they want. I'm guessing the third option of paying taxes both here and in the UK is not needed.

I look forward to any advice

Lawrence
I would get anther accountant if all he is doing is giving you a form and tell you to fill it in..

I am certainly no expert, but perhaps can give you some pointers and I am sure if I am wrong someone will correct me.

Anyway this may be a start, although it is vast..

http://www.irs.gov/publications/p519/index.html

The first year is always the worst but check out whether you meet the Substantial Presence Test

http://www.irs.gov/publications/p519/ch01.html#d0e526

If you meet these requirements then you need to fill in a regular 1040 from the date you arrived - and would need to fill in a separate 1040NR for the start of the year.

I would imagine the foreign income you earned at the start of the year has already been paid, so you probably don't need to worry about that - you should be exempt from US tax there - although depends on how much you earn.

Your income since you became resident would then go on the regular 1040 - I would hope your accountant could help you with that one. This would income any foreign earned income you got during this time including bank interest, dividends, etc. If the foreign income you put on this has been taxed already you can normally claim a credit.
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Old Mar 31st 2008, 7:30 pm
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Default Re: E2 Visa and Tax

Hi
thanks for the reply.
I will look through the websites
My accountant has filled in all of the forms, but just didn't know how he should fill in the non-resident tax part, as he doesn't know info on the various UK/US tax treaty's

Also, on an E-2 visa, I am classified as a non-resident alien. And as I have only been here visa wise for 9 months, my length of stay has no influence as to my being classified as anything else.
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Old Mar 31st 2008, 7:40 pm
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Default Re: E2 Visa and Tax

Originally Posted by ljstevens View Post
Hi
thanks for the reply.
I will look through the websites
My accountant has filled in all of the forms, but just didn't know how he should fill in the non-resident tax part, as he doesn't know info on the various UK/US tax treaty's

Also, on an E-2 visa, I am classified as a non-resident alien. And as I have only been here visa wise for 9 months, my length of stay has no influence as to my being classified as anything else.
As far as the IRS is concerned you are a resident here

You should have file a P85 tax form in the UK ...

and get yourself a better accountant ...
http://www.americantaxhelp.com/faq.html
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Old Mar 31st 2008, 8:27 pm
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Default Re: E2 Visa and Tax

As Longy said, check out the substantial presence test.

Basically, if you were physically present in the US for more than half of 2007, then you are a "Resident Alien" for the purposes of the IRS.

[Unless you were:

An individual temporarily present in the United States as a foreign government-related individual.

A teacher or trainee temporarily present in the United States under a “J” or “Q” visa, who substantially complies with the requirements of the visa.

A student temporarily present in the United States under an “F,” “J,” “M,” or “Q” visa, who substantially complies with the requirements of the visa.

A professional athlete temporarily in the United States to compete in a charitable sports event.]
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Old Apr 9th 2008, 3:45 am
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Default Re: E2 Visa and Tax

Little advice, if a cpa will not prepare the return either should you. There are a number of things you have to consider especially if its your first year in the U.S.

For example, if you are married, you could make an election to be taxed as a resident for the full year and claim foreign tax credits to offset your U.S. liability. If you have kids, you need to file for ITINs and then you can claim them as a deduction.

Or if your single and you were present more than 183 days in the U.S., you would have to file a 1040 with a 1040NR statment. All U.S. source income would be reported on the 1040. It is very complicated. You are better paying a seasoned professional rather than taking a stab and running the risk of paying a lot more U.S. taxes than you have to.
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