Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

Earning GBP whilst living in the USA

Earning GBP whilst living in the USA

Old Sep 4th 2020, 4:38 pm
  #1  
Forum Regular
Thread Starter
 
Joined: Jun 2009
Posts: 95
FUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond repute
Default Earning GBP whilst living in the USA

Hi All,

I have recently returned to the USA (I am a US Permanent Resident) and am working from the USA remotely for my UK based employer. They are paying me a GBP Salary and I am being taxed at source through PAYE.

As a US resident I am aware of my yearly tax filing obligations and reporting of all my US and foreign based income. I told my US tax accountant of my situation and they informed me that I would be taxed on my GBP sourced income by the IRS as I currently reside in the USA. I found this a little odd because I thought the UK-USA double taxation treaty would have meant that since I am paying monthly tax to the HMRC, I would not be taxed on this income by the IRS.

Has anyone else been in a similar situation to me or aware of how this works in practise? (my accountant could very well be correct)
FUB05 is offline  
Old Sep 4th 2020, 4:42 pm
  #2  
SUPER MODERATOR
 
christmasoompa's Avatar
 
Joined: Oct 2007
Location: In a darkened room somewhere.............
Posts: 29,965
christmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

Why are you paying income tax in the UK if you're not resident/working there? Am I missing something?
christmasoompa is offline  
Old Sep 4th 2020, 4:55 pm
  #3  
BE Forum Addict
 
tom169's Avatar
 
Joined: Mar 2015
Location: NC, USA (ex Yorkshire)
Posts: 4,150
tom169 has a reputation beyond reputetom169 has a reputation beyond reputetom169 has a reputation beyond reputetom169 has a reputation beyond reputetom169 has a reputation beyond reputetom169 has a reputation beyond reputetom169 has a reputation beyond reputetom169 has a reputation beyond reputetom169 has a reputation beyond reputetom169 has a reputation beyond reputetom169 has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

You need to get this straightened out with your employer. You shouldn't be PAYE.
tom169 is offline  
Old Sep 4th 2020, 5:02 pm
  #4  
Forum Regular
 
Joined: Nov 2019
Posts: 134
steph0scope has a reputation beyond reputesteph0scope has a reputation beyond reputesteph0scope has a reputation beyond reputesteph0scope has a reputation beyond reputesteph0scope has a reputation beyond reputesteph0scope has a reputation beyond reputesteph0scope has a reputation beyond reputesteph0scope has a reputation beyond reputesteph0scope has a reputation beyond reputesteph0scope has a reputation beyond reputesteph0scope has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

I believe what would be the best way is to be treated as a contractor for the UK company and you invoice them for your “services” and then file taxes here accordingly.
steph0scope is offline  
Old Sep 4th 2020, 5:16 pm
  #5  
 
Lion in Winter's Avatar
 
Joined: Aug 2003
Location: City of Broad Shoulders
Posts: 57,102
Lion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

Originally Posted by steph0scope View Post
I believe what would be the best way is to be treated as a contractor for the UK company and you invoice them for your “services” and then file taxes here accordingly.

This is exactly what my accountant has just advised me to do. I have had to set up as a business (very simple, sole proprietor), will be paid as a contractor, and will pay quarterly estimated taxes on the income so that when I file the annual tax return I won't owe on that income. Effectively, you are paying as you go. The plus side is that I have now set up a home office and there are various deductions associated with that. Downside is that I have to pay for my own health insurance (as opposed to being in a group with a US employer).
Lion in Winter is offline  
Old Sep 4th 2020, 6:15 pm
  #6  
Forum Regular
Thread Starter
 
Joined: Jun 2009
Posts: 95
FUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

Originally Posted by christmasoompa View Post
Why are you paying income tax in the UK if you're not resident/working there? Am I missing something?
It should only be temporary while they look to have me on boarded as a permanent member of staff via there US subsidiary. As a US Resident I needed to return sooner rather than later so to not invalidate my residency.
FUB05 is offline  
Old Sep 4th 2020, 6:30 pm
  #7  
Forum Regular
Thread Starter
 
Joined: Jun 2009
Posts: 95
FUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

Originally Posted by Lion in Winter View Post
This is exactly what my accountant has just advised me to do. I have had to set up as a business (very simple, sole proprietor), will be paid as a contractor, and will pay quarterly estimated taxes on the income so that when I file the annual tax return I won't owe on that income. Effectively, you are paying as you go. The plus side is that I have now set up a home office and there are various deductions associated with that. Downside is that I have to pay for my own health insurance (as opposed to being in a group with a US employer).
I am actually a contractor for my employer at the moment but am going via an umbrella company and not a Ltd. So I invoice weekly and receive my payments via the umbrella company with all taxed removed (ie PAYE). I was previously Ltd but due to the whole IR35 proposed changes contractors at my company were forced to go down the Umbrella route.
FUB05 is offline  
Old Sep 4th 2020, 9:16 pm
  #8  
BE Forum Addict
 
steveq's Avatar
 
Joined: Feb 2013
Location: State College Pa.
Posts: 1,518
steveq has a reputation beyond reputesteveq has a reputation beyond reputesteveq has a reputation beyond reputesteveq has a reputation beyond reputesteveq has a reputation beyond reputesteveq has a reputation beyond reputesteveq has a reputation beyond reputesteveq has a reputation beyond reputesteveq has a reputation beyond reputesteveq has a reputation beyond reputesteveq has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

So you should get a nice refund next year, and pay USG instead.
steveq is offline  
Old Sep 6th 2020, 5:39 pm
  #9  
Lt (R)
 
Pulaski's Avatar
 
Joined: Dec 2001
Location: Dixie, ex UK
Posts: 49,350
Pulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond reputePulaski has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

If you are living and working in the USA, but working for a UK employer you really shouldn't be on the UK payroll at all, and will need to complete a UK tax return each year to reclaim income tax deducted for which you were not liable. AFAIK the NI is not reclaimable, but that could, perhaps, go towards a UK state pension (subject to a minimum ten years of contributions), and then you will need to pay US state and federal income and payroll taxes (SS contributions, unemployment insurance, etc.) as from the US taxing authorities you are de facto self employed.

Contrary to popular rumour, you cannot, or at least
shouldn't, just voluntarily pay tax in one country and then just deduct the tax paid erroneously from the tax due in another country.
Pulaski is online now  
Old Sep 7th 2020, 2:39 am
  #10  
tht
DE-UK-NZ-IE-US... the TYP
 
Joined: Mar 2010
Posts: 1,349
tht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

Originally Posted by Pulaski View Post
If you are living and working in the USA, but working for a UK employer you really shouldn't be on the UK payroll at all, and will need to complete a UK tax return each year to reclaim income tax deducted for which you were not liable. AFAIK the NI is not reclaimable, but that could, perhaps, go towards a UK state pension (subject to a minimum ten years of contributions), and then you will need to pay US state and federal income and payroll taxes (SS contributions, unemployment insurance, etc.) as from the US taxing authorities you are de facto self employed.

Contrary to popular rumour, you cannot, or at least
shouldn't, just voluntarily pay tax in one country and then just deduct the tax paid erroneously from the tax due in another country.
As you elude to it is my understanding that you can only claim the credit / deduction if the tax’s are imposed on you, “choosing” to pay them elsewhere won’t qualify:

Qualifying Foreign Taxes

You can claim a credit only for foreign taxes that are imposed on you by a foreign country or U.S. possession. Generally, only income, war profits and excess profits taxes qualify for the credit.

https://www.irs.gov/individuals/inte...ign-tax-credit

tht is offline  
Old Sep 7th 2020, 7:32 am
  #11  
SUPER MODERATOR
 
christmasoompa's Avatar
 
Joined: Oct 2007
Location: In a darkened room somewhere.............
Posts: 29,965
christmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond reputechristmasoompa has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

Originally Posted by FUB05 View Post
It should only be temporary while they look to have me on boarded as a permanent member of staff via there US subsidiary. As a US Resident I needed to return sooner rather than later so to not invalidate my residency.
Temporary or not, you're not tax resident in the UK. You can't choose where you pay income tax. I wish you could, I'd choose to pay it in Monaco.

Last edited by christmasoompa; Sep 7th 2020 at 7:37 am.
christmasoompa is offline  
Old Sep 7th 2020, 2:11 pm
  #12  
Forum Regular
Thread Starter
 
Joined: Jun 2009
Posts: 95
FUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond reputeFUB05 has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

Originally Posted by Lion in Winter View Post
This is exactly what my accountant has just advised me to do. I have had to set up as a business (very simple, sole proprietor), will be paid as a contractor, and will pay quarterly estimated taxes on the income so that when I file the annual tax return I won't owe on that income. Effectively, you are paying as you go. The plus side is that I have now set up a home office and there are various deductions associated with that. Downside is that I have to pay for my own health insurance (as opposed to being in a group with a US employer).
Out of interest was your business setup as a UK registered Ltd company or was it a US domiciled company? I ask because my end client (the bank I effectively work for here in the UK) uses a 3rd party agency to administer contracts for all of its contractors. As mentioned in a previous post I currently work under an umbrella company but have been informed I would be allowed to move back to my Ltd company structure here in the UK. However the contract engaged between the bank and all its clients is for work only performed in the United Kingdom which negates me being able to work as a Ltd company contractor remotely for a UK based client.
FUB05 is offline  
Old Sep 7th 2020, 4:11 pm
  #13  
tht
DE-UK-NZ-IE-US... the TYP
 
Joined: Mar 2010
Posts: 1,349
tht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond reputetht has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

Originally Posted by christmasoompa View Post
Temporary or not, you're not tax resident in the UK. You can't choose where you pay income tax. I wish you could, I'd choose to pay it in Monaco.
Just because the OP is tax resident in the US does not mean he can’t be tax resident in the UK or another country at the same time... you have to look at each countries rules separately. A while back I actually did not qualify by the rules (because of a lot of international travel) as tax resident anywhere, the UK rules would have captured me if my father had been British because the “domicile or origin” is in the rules. That said I picked the country I was establishing residence in to file knowing I would meet the criteria the next year.

Note to OP, depending if you pay state and city tax what you are doing could end up costing you a lot. Remember any tax (not NI) you are required to pay in the UK can only be used as a credit/deduction against federal tax, so you could end up with a Foren tax credit you can’t use and a large local tax bill (I think Canada has an arrangement between states and provinces) you have to pay out of your net earnings from the UK. A double tax agreement generally is designed to make sure your not double paying national tax (so you are always going to end up paying the the difference if one is higher than your credit from the other anyway).
tht is offline  
Old Sep 12th 2020, 5:39 pm
  #14  
 
Lion in Winter's Avatar
 
Joined: Aug 2003
Location: City of Broad Shoulders
Posts: 57,102
Lion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond reputeLion in Winter has a reputation beyond repute
Default Re: Earning GBP whilst living in the USA

Originally Posted by FUB05 View Post
Out of interest was your business setup as a UK registered Ltd company or was it a US domiciled company? I ask because my end client (the bank I effectively work for here in the UK) uses a 3rd party agency to administer contracts for all of its contractors. As mentioned in a previous post I currently work under an umbrella company but have been informed I would be allowed to move back to my Ltd company structure here in the UK. However the contract engaged between the bank and all its clients is for work only performed in the United Kingdom which negates me being able to work as a Ltd company contractor remotely for a UK based client.
Nothing so complicated, and never set up in the UK. I was laid off from my US job, where I live, this summer due to covid. I received an offer to work on contract from an existing UK organisation. I am a dual UK US citizen, but 100% US resident. To enable them to pay me and meet my tax obligations here I will have to file my US taxes as a business, and the simplest way to do that is as a sole proprietor. You situation is more complex and I'm afraid I don't know anything about it.
Lion in Winter is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2018 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.