equivalency tax
#16
Re: equivalency tax
Are you sure you are not mixing-up "Tax Equivalency" with "Tax Equalization"? The latter is used by many companies who send their folks overseas and want to ensure they are no better or worse off from a tax perspective than they would be in the home country. If there is a tax liability then the company pays the bill.
If your assignment is temporary then you can continue to pay NI to ensure you will maintain enough contributins to qualify for a full UK state pension - I think!
If your assignment is temporary then you can continue to pay NI to ensure you will maintain enough contributins to qualify for a full UK state pension - I think!
#17
Forum Regular
Joined: Sep 2005
Location: Andover, MA
Posts: 250
Re: equivalency tax
Bottom line: as far as both the UK and US are concerned, liability for income tax is based on country of physical residence. National Insurance / Social Security is a little more flexible, but for income tax, if you live here, you owe the IRS a tax form.
The "filling in forms when you leave" idea is what is generally known as the "sailing permit". The form is 1040-C: basically involves completing a tax form. From what I've read, the requirement still theoretically exists but was last enforced around the time people used to sail home.
If you're looking to live here permanently, it would be worth straightening this out (and you might even end up with a refund...)
#18
Re: equivalency tax
Hi Michael, work for a small company with a director who does the accounts. He doesn't really know about US tax and basically i've been a guinea pig in this saga by the looks of things.
I just married a US girl and am heading home until my EAD document comes through (Still not started filing for change of status) Will this tax issue be a problem with re entry to the US or my EAD application?
I just married a US girl and am heading home until my EAD document comes through (Still not started filing for change of status) Will this tax issue be a problem with re entry to the US or my EAD application?
A friend of mine from the UK set up a subsidiary in the US in the 1970s. For 4 years (no statute of limitations when you don't file returns) he didn't pay any US taxes. All of a sudden the IRS started the process of freezing his bank accounts. Immediately he flew back to the UK and threatened to not return to the US unless the company straightened out the problem (his case was different than yours in that he didn't pay either UK or US tax).
#19
Re: equivalency tax
I believe the American expression is "Good luck with that"! The liability to pay tax is a personal liability, and is not directly connected to any withholding that an employer does.
Bottom line: as far as both the UK and US are concerned, liability for income tax is based on country of physical residence. National Insurance / Social Security is a little more flexible, but for income tax, if you live here, you owe the IRS a tax form.
The "filling in forms when you leave" idea is what is generally known as the "sailing permit". The form is 1040-C: basically involves completing a tax form. From what I've read, the requirement still theoretically exists but was last enforced around the time people used to sail home.
If you're looking to live here permanently, it would be worth straightening this out (and you might even end up with a refund...)
Bottom line: as far as both the UK and US are concerned, liability for income tax is based on country of physical residence. National Insurance / Social Security is a little more flexible, but for income tax, if you live here, you owe the IRS a tax form.
The "filling in forms when you leave" idea is what is generally known as the "sailing permit". The form is 1040-C: basically involves completing a tax form. From what I've read, the requirement still theoretically exists but was last enforced around the time people used to sail home.
If you're looking to live here permanently, it would be worth straightening this out (and you might even end up with a refund...)
Last edited by Michael; Jun 2nd 2009 at 8:39 pm.