philseward

Hello all,

My L1-A visa was approved in February 2009, and I formal transferred from my UK company to the US company on 2nd March 2009, at which point I began to receive salary and benefits ditrectly from the US company and my salary/benefits from the UK company formally ceased on Feb 28th.

I am now preparing my first US Federal and CA tax return for 2009 and have a couple of questions -

Q1 - would I need to declare my income earned in the UK from Jan 1st to Feb 28th as Foreign Income, although I already paid tax in the UK on this income? Or do i just declare my US-earned income as it appears on my W2 (from Mar 2nd)

Q2 - Can I claim ongoing costs for maintaining my home in the UK as a deductible? I dont rent my home out so I receive no income, but still have related mortgage payments and expenses as I need to maintain a residence in the UK.

Thanks for any advice.

avanutria

I'm not a tax expert but if it were me I'd declare the Uk income as Foreign Earned Income, and you get an allowance so you shouldn't end up taxed on that in the US.

The other one might require a meeting with a tax professional.

penguinbar

There is a form on US tax returns for foreign earned income.You need to decalre it on your US taxes. The US and UK have a double tax treaty so you will not be taxed twice. You do declare your overseas property on your US tax return. My husband still has a house in Scotland and we declared it on our tax returns. You are able to deduct certain expenses and mortgage interest. It should work in your favor.You will most probably receive an NRL1 form from HMRC since you are a non resident landlord. We used Pete Newton here in NYC(who we found here on BE) for our accountant since he is familiar with both international and US taxes.He was great. I started a thread on hereasking questions about claiming foreign rental income on US tax returns. Capeblue was a lot of help there and explained it as well. I would find an accountant familiar with doing international and US tax returns in your area.

goldenstate31

ask your accountant

ian-mstm

Yes.


You won't be taxed twice. Basically, you declare it at the beginning of the return and then later on subtract out any amount you've already paid taxes on. You will only be taxed on income which has not already been taxed.


No... you must declare your worldwide income.

Ian

sangiano

You might want to investigate whether Dual Status Taxation could apply to you and whether it would be beneficial to take advantage of it.

http://www.irs.gov/businesses/small/...=96433,00.html

It is probably best to to find a an accountant or CPA, versed in this area, to deal with the first year return in this situation.

ian-mstm

It doesn't... he wasn't.

Ian

S Folinsky

Find a tax advisor who knows something about tax returns of people in your situation. In the US that is either a lawyer practicing a tax law or a "CPA" [Certified Public Accountant which is roughly equivalent to a UK "Chartered Accountant"].

BTW, I think some of supposed answers here are just uninformed guesses. I'm not really knowledgeable in the area -- but some of the answers here strike me as being wrong. In my opinion, your questions are NOT suitable for tax preparers such as H&R Block. I have a feeling that this first year will be a relatively expensive one for preparer fees but it will be easier from now on.

lifehouse51

I think the first thing you should do is determine whether you're a Resident Alien or Non-Resident Alien for the purpose of taxation. You're a resident alien if you have a green card or meet the substantial presence in the U.S. test (Can't remember the specifics). If you're a non-resident alien, you file a different tax return from a resident alien, and you're ONLY taxed on income associated with a U.S. company/bank (Hence no need to declare the UK income). If you're a resident alien for tax purpose, then you're supposed to declare your worldwide income, including the UK one.

To further complicate things, for your first year in the U.S., you can file as a Dual-status Alien. The part of the year when you're a non-resident alien, you only declare U.S. income, and the part of the year you're a resident alien, you declare worldwide income. I don't know the specifics of who are qualified, but it's usually used for the first year someone arrives at the U.S. (Or the year they left U.S. permanently).

With that said, you can still file Form 2555 (Foreign Income), where you give specifics of dates where your tax home is outside of the U.S., then you are allowed a certain amount of income that can be deducted from taxation. You can potentially deduct all your foreign income. The other alternative is to claim Foreign Tax Credits instead. I chose the first method because I didn't earn enough and able to deduct everything.

penguinbar

Even though my husband was a non resident alien when we did our first tax return together last year he filed as a resident alien. If you are a non resident alien and would like to file as a resident alien for the year for tax purposes there is a form to sign allows you to do that. By the way my answers were not uninformed guesses. We just filed our return with our accountant who specialises in overseas returns and informed us of this info. As I also mentioned I would find an accountant that specialises in this matter. A CPA or EPA. H&R Block is a disaster with even simple returns. Avoid them like the plague!

sangiano

I don't see any information from the OP that would definitively rule it out.

Since the document states "The most common dual-status tax years are the years of arrival and departure." it MAY be applicable.

To give definitive answers such as yours is just to guess at the OP full circumstances.

Peter Newton

Assuming the OP fails the substantial presence test for 2009, the residency start date is generally the first day of presence in the US during the year (the first 10 days of residence can be excluded if you can satisfy the closer connection to foreign country test). In that case the OP is a dual status alien for the year.

Peter Newton

Thanks for the feedback and it's a pleasure working with you!