mrsmaccmoo

Apologies, I know there are 100s of postings on taxation.... but I am really struggling with even the most basic terminology. Could anyone recommend a very simple introductory book/ website/ resource that provides an overview of how US taxes work, with definitions of the various terminologies used?

My husband has an O-1 visa and we are in the process of being moved by his new employer to the US.... part of the relocation was a start-up payment to cover the costs of electrical things and all the other 'bits' we will need to get rid of in the UK and buy again in the US..... having just received that payment, we were horrified to see an enormous amount had been deducted in tax and medicaid (even though he has company healthcare). We are hoping we can somehow claim this back, but the more we investigate, the more complicated it all becomes. We're also now worried that we may end up being taxed on any capital gain from our UK house sale.

We are really struggling to know where to begin with everything tax-related and although the company have been very supportive, it seems almost impossible to get any answers from anyone (other than "well, it depends...."). Any suggestions very welcome, thanks in advance.

civilservant

Everyone pays medicaid and Social Security taxes, weather you expect to receive them or not.

NatashaB

The amount would have needed to have been 'grossed-up' if you didn't want to lose the tax on it - ie, the company paid you the amount plus tax, so that when the deduction was taken you received the agreed amount. I believe you can deduct some moving expenses when you file your tax return for the year. Are the company going to pay for your tax return to be done by a professional? There's a guy called Pete Newton that people often recommend on here.

Bob

Take it you didn't get the company to stump for the tax in the first/last year?

You're probably best paying for someone to do it...there are plenty of glossaries online on the terms used.

Capital gains, plenty of threads going over that recently.

And yes, a lot of the answers will be "it depends".

Pulaski

As long as you sell your house in the UK within three years (assuming that you lived in it for the two years before you emigrate(d), and the gain does not exceed $500,000 (assuming you file your taxes jointly with your husband, which is usually the best way to do it) you won't be taxed on it.

theOAP

Isn't that a bit personal? I know the IRS wants to know everything, but I thought there were some limits.

Cook_County

But you could be taxed on any foreign currency gain on the repayment of a Sterling mortgage; although you might have excess foreign tax credits to cover that.

Bob

But what about the UK, with the recent changes to the capital gains tax there?

FatFrank

Oh dear, in I'm worried too. What recent capital gains changes there?

I understood that the 3 years was the time that the UK HMRC gave you to sell your house tax-free once you leave the country, and if you miss this window you have to be "free and clear" of the UK for 5 years to subsequently avoid UK CGT. Hence us selling our UK house this year after making my last NI contribution in the 2008-9 UK tax year......I hope this hasn't changed.....eeeek!

Bob

These changes were end of last year for this tax year I thought...a way for HMRC to get capital gains taxes made for non-residences but it doesn't apply to us so I never really followed the details.

durham_lad

I would agree that it is a good idea to have your taxes done professionally this first year you are over. The payroll taxes you mention for Social Security and Medicare, you won't be able to get back as they essentially are "investments" for when you retire. Social Security is equivalent to the UK OAP where 40 quarters of payments gets you a pension, and Medicare is government sponsored/controlled health insurance that starts at age 65, and you also need to have paid into it for 40 quarters to qualify.

We only came over on a 2 year visa and stayed 26 years, and counting, but the IRS doesn't allow "temporary" workers to get out of paying payroll taxes.

JAJ

Actually, if there is a Social Security agreement in place, an employee posted to the United States by an foreign employer may be able to claim exemption from Social Security and Medicare tax for a period of time, usually 5 years. If that person remains covered by home country equivalent.

durham_lad

I did not know that

And is this the case with the UK? If so the OP may have a chance to reclaim some taxes.

JAJ

There is a Social Security Agreement with the U.K.
http://www.socialsecurity.gov/intern...phlets/uk.html

This probably isn't going to help the original poster, since it is presumably not the same employer. Most of those (in the U.S.) who benefit from this provision of the Social Security Agreement are on L visas, although it's not mandatory to have a particular visa.

Assuming the original posters have to pay Social Security tax, any contributions may count towards a U.K. pension in future. Again, due to the Social Security Agreement.

FatFrank

Found it. FT article:

"From April 2015, homeowners who are non-resident in the UK for tax purposes will become liable for CGT on any increase in property values after that date. British residents currently pay up to 28 per cent CGT on gains above £10,600, depending on their income."

And, FYI;
"At present, owner-occupiers who become landlords can claim private residence relief on a sale of the property within 36 months. From April 2014, this exempt period will be halved to 18 months, “to reduce the incentive for those with multiple homes to exploit the rules”.

Phew, glad I'm selling up!