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Help required from tax accountant/lawyer please!

Help required from tax accountant/lawyer please!

Old Oct 22nd 2010, 2:18 pm
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Default Help required from tax accountant/lawyer please!

Hello,

I'm trying to get my head around some possible tax issues so if there's anyone on here that has the expertise and can advise me, I'd really appreciate it.

I am going on Tuesday for my visa interview for the CR1 - Conditional Lawful Permanent Visa (my wife is a USC living here in the UK with me).

The original plan had been to emigrate to the US in January but we recently found out that my wife is pregnant and due to the complexities of the US health system, it seems sensible to have the baby in the UK.

However, we will have to activate the visa within 6 months of receipt so we intend to go there in January for 2 weeks to activate it and do a bit of a recce. We will then return to the UK, have the baby and then hopefully emigrate in July.

Now, when we 'activate' the visa, how could it financially effect the following:-

1) I will continue working for my current employer until June 2011. During this time, I will be paying income tax to the British government. When I leave my employer, I will be entitled to around £22,000 ($35,000) in redundancy which as it is less than £30,000, I do not have to pay any tax on in the UK.

2) It is highly likely that I will sell my house between February and July 2011 (whilst living in the UK but having activated the visa).

In essence, my question is I want to ensure I am not going to have to pay tax or declare any of the above to the US authorities. Am I going to face any problems? And if so, how do I get round them?
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Old Oct 22nd 2010, 2:32 pm
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Default Re: Help required from tax accountant/lawyer please!

Originally Posted by jamiedan View Post
2) It is highly likely that I will sell my house between February and July 2011 (whilst living in the UK but having activated the visa).
Don't know about the first bit, but once you are a PR you are held liable for capital gains tax in the US on property sold elsewhere. I'm not sure there's a way around that.

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Old Oct 22nd 2010, 2:37 pm
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Default Re: Help required from tax accountant/lawyer please!

At your interview, you can explain the situation and ask that the visa not be printed until a later date - say, February '11 - that gives you 6 months to enter the country.
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Old Oct 22nd 2010, 2:57 pm
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Default Re: Help required from tax accountant/lawyer please!

Originally Posted by ian-mstm View Post
Don't know about the first bit, but once you are a PR you are held liable for capital gains tax in the US on property sold elsewhere. I'm not sure there's a way around that.
I'm currently trying to research this myself, but my understanding is that there is some sort of capital gains tax exemption when you are selling your primary residence, much like in the UK but the period in which you have to sell the house is shorter.

As to the first point, I believe that as soon as the OP becomes an LPR he's liable for US income tax on his worldwide income but I also think the IRS is taking taxes paid abroad into account.
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Old Oct 22nd 2010, 3:48 pm
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Default Re: Help required from tax accountant/lawyer please!

Don't know why you would require an attorney but we do have a member here that we value highly who is an ex-pat accountant that you might want to PM. His name is Peter Newton.



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Old Oct 22nd 2010, 5:39 pm
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Default Re: Help required from tax accountant/lawyer please!

Originally Posted by jamiedan View Post

In essence, my question is I want to ensure I am not going to have to pay tax or declare any of the above to the US authorities. Am I going to face any problems? And if so, how do I get round them?
If it's not taxable why do you care about declaring it to the US?
US Permanent Residents fall under almost all of the same *reporting* requirements as US citizens.

I recall that in the year you gain PR, that status 'counts' for the entire calendar year. (IE 'land' in November and it's still the entirety of that calendar year)
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Old Oct 22nd 2010, 5:50 pm
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Default Re: Help required from tax accountant/lawyer please!

Don't know why you would require an attorney but we do have a member here that we value highly who is an ex-pat accountant that you might want to PM. His name is Peter Newton.
Thank you Rete, I have e-mailed Pete so hopefully he can give me some definitive advice before my interview on Tuesday.
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Old Oct 22nd 2010, 6:07 pm
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Default Re: Help required from tax accountant/lawyer please!

This is a link to the UK/USA Tax Convention. It details what is taxed where and exemption from double taxation. Treat it as a guide and in fact it may prompt you to ask questions of a tax professional you might not have thought of.

http://www.ustreas.gov/offices/tax-p...y/uktreaty.pdf
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Old Oct 25th 2010, 2:16 pm
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Default Re: Help required from tax accountant/lawyer please!

Thanks Rete for forwarding my information

James- I've emailed you back, but I'll post a general response here for the benefit of others.

Generally speaking, once you become a US permanent resident, you also become resident in the US for tax purposes, and therefore on the hook for US tax on your worldwide income from all sources. Just traveling here to "activate" your green card counts, even if you then immediately leave.

However, if your main home is in another country, and you have income from a job there, you may be eligible to claim the foreign earned income exclusion (currently $91,500 for 2010) and thus avoid US tax on amounts up to that maximum.

It's important to recognize that you're required to file a US tax return each year to claim the exclusion- even if you end up owing no US tax.
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Old Oct 25th 2010, 4:21 pm
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Default Re: Help required from tax accountant/lawyer please!

Originally Posted by jamiedan View Post
Thank you Rete, I have e-mailed Pete so hopefully he can give me some definitive advice before my interview on Tuesday.

Pete does my taxes. I highly recommend him!
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Old Oct 26th 2010, 9:43 pm
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Default Re: Help required from tax accountant/lawyer please!

Pete gave me some invaluable advice...essentially I have nothing to worry about tax wise.

I went for the Visa Interview at the London Embassy today and all went well...visa approved, should have it in a week.

Thanks for everyone's advice.
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