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General Taxation Guidance

General Taxation Guidance

Old Feb 16th 2011, 9:19 am
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Default General Taxation Guidance

My employer is relocating my wife and family to North Carolina on an L-1B visa in May and I've got some general questions I was hoping someone can help me with.

We've got some ISAs (both cash and shares ISAs), plus I've got some unit trusts invested outside the ISA umbrella. We're planning to cash all these in before our final move, so presumably the US taxman will not be interested in me declaring these items on my first US tax return, is that correct?

We've booked a 2 week house hunting trip the first 2 weeks of March, this will be our first trip under our L-1 visas, and I've read elsewhere that if you're in the USA for more than 10 days that the US taxman considers that your start date for US tax purposes. Is this correct?

If that is so, what is the situation regarding income earned with my employer whilst in the UK between March and May, does this need declaring on my first US tax return?

I'd also like to know if there is any tax implication if we sell our house in the UK after we have moved to the USA. If our UK house has not sold by May then we will continue with our move to the USA, our UK house will remain empty until it is sold. Would there be any US tax implications doing this or is it best to defer our move to the USA until the house has sold.

In addition, the fact we're in the USA for over 10 days the start of March would that have bearing on our UK house sale for US tax implications?

Thanks for your help.
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Old Feb 17th 2011, 5:11 pm
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Default Re: General Taxation Guidance

Just a quick reply at part of it. We moved to the US after the sale of our home.

First, you'll need to know what you may or not be liable for tax-wise. Start here with general information. http://www.irs.gov/taxtopics/tc851.html

Then read publication 519 from irs.gov.

In Scotland, for example, the agreement is considered 'sold' however in the USA, the "closing date"(when funds exchange hands) is the date to be considered 'sold.' This is where you may need a taxman - as capital gains on a primary residence are in place here in the USA (with exemptions, so read up on that too.) I understand that in England/Wales, etc., it is like the US-style, but unsure. I only know from Scotland in terms of when a property is considered "sold."

You can look up sale of home on irs.gov as well as the capital gains publication.

ETA: we tried our hardest to finish the sale prior to coming to the USA, but it didn't pan out that way. If we sold (meaning received our funds) prior to residency in USA, we'd simply avoid the capital gains calculation as we actually did exceed the exemption rules (see the IRS rules on that), hence liable for capital gains taxation.

Last edited by Bomjeito; Feb 17th 2011 at 5:15 pm.
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Old Feb 17th 2011, 8:02 pm
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Default Re: General Taxation Guidance

Thanks for the reply.

At this point I'm trying to figure out if the sale of my house in UK will be considered a capital gain by the IRS. I've read quite a few threads on this subject but I'm still not sure what my tax situation is.

It sounds like if I sell my house after I have moved to the US then this will need declaring to the IRS, if I sell my house before the move to the US then it doesn't need declaring. Can anyone confirm that?
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Old Feb 17th 2011, 8:31 pm
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Default Re: General Taxation Guidance

Originally Posted by Dean11 View Post
Thanks for the reply.

At this point I'm trying to figure out if the sale of my house in UK will be considered a capital gain by the IRS. I've read quite a few threads on this subject but I'm still not sure what my tax situation is.

It sounds like if I sell my house after I have moved to the US then this will need declaring to the IRS, if I sell my house before the move to the US then it doesn't need declaring. Can anyone confirm that?
Your immigration status may matter, and the amount of time you have been in the US in the given year.
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Old Feb 17th 2011, 8:48 pm
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Default Re: General Taxation Guidance

I did find this link to a previous thread.

This seems to suggest that if I am physically present in the USA for less than 183 days this year then I would only be liable for US-based income, not UK-based income such as a house sale.

Based on that information it would make sense to not move over until mid-July onwards, although I'm not sure what effect activating my visa in March will have. Hopefully nothing since the 183 day rule seems to apply only to physical presence in the USA. If I come over for a 2 week trip and then return to the UK for 2-3 months that time should not count towards the 183 days.

Sounds like I need to seek expert tax advice.
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Old Feb 17th 2011, 10:29 pm
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Default Re: General Taxation Guidance

Originally Posted by Dean11 View Post

Sounds like I need to seek expert tax advice.
It's usually a good idea for the first year. Will you be a Permanent Resident or are you moving over as a non-immigrant?
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Old Feb 18th 2011, 8:00 am
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Default Re: General Taxation Guidance

I will be moving over as a non-immigrant on an L-1 visa.
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