trubliphone

Hello.

I am a US citizen married to a UK citizen. We have two young children, both with dual nationality. I have recently applied for UK citizenship and expect to receive it shortly. I work for a large UK company. My wife runs her own business as a "sole trader". We all live in England.

For personal reasons we are planning to move to the US (California). I have been looking for work there but haven't had much luck. My company is prepared for me to continue working for them while telecommuting from California. But I can't support a family of 4 in Southern California on my current income. This is mostly because we would have to pay for our own private US health insurance; my National Insurance contributions don't count for much over there. So, my boss suggested becoming a contractor for them - they are able to pay contractors more than employees (although, of course, I would lose my employee benefits).

If I choose to pursue this, the simplest thing would be for my wife to hire me as an employee and for my current company to contract the work out to her company. This would require her to change the status of her company from "sole trader" to whatever the next step up is.

There are lots of questions I have about this arrangement and I thought that the folks on this forum might be able to offer advice.

1) My wife runs a UK business - can it be based abroad?

2) My wife does not have a green card, though she will be applying for one before we move. Is that an issue?

3) I am not currently a citizen, though I have "Indefinite Leave to Remain" (despite the fact that I'm not remaining). Is this an issue for my wife employing me?

4) At some point she would want to have US clients. Does this require her to setup the company as a US business too?

5) Where would we file taxes? Would we be eligible for US benefits or UK benefits (I'm thinking of things like the Child Tax Credit here) or both or neither? We'd be residents of the US but working "for" the UK.

6) Are all UK companies obligated to deduct NI contributions from their employees' pay?

7) Who are the best people to ask for definitive answers to these questions? Lawyers? Financial advisers? Government officials? And from the US or the UK?

Thanks for your help.

newXgate

Responses to some of your questions :

Yes, if you want her to be legal in the US. AFAIK she would need her green card to be approved before she leaves for the USA.

I am assuming here for the purposes of discussion that you both intend to live permanently in the USA and are not planning to split your time between the two.

Based on this assumption, you/your wife would be resident in, and running a business in, the United States. The fact that you are servicing clients overseas (in this instant, the UK) is totally irrelevant to your liability for tax and social security in the US. You would be eligible for US benefits, such as they are, based on your contributions and the fact that you are a US citizen. Your wife would be eligible for whatever benefits are available for permanent residents (eg social security after qualifying payments).

Regarding UK benefits your wife can elect to continue to pay NI contributions I believe, this is optional however. I am pretty certain that you yourself would not be eligible for any benefits whatsoever from the UK if you are resident in the USA.

for the green card - immigration lawyer from US or from UK if they specialize in US immigration.

A good US based financial/tax consultant would be essential to planning how you are going to set up your contracting stateside.

If you are working as an overseas contractor for your UK based company you might want to consult a UK lawyer to help you set up the contract.

How close are you to UK citizenship? Consider waiting until you get it if you are close (assuming of course you want it), in order to simplify movement between the countries.

One last thought - does your current company have US based subsidiaries ?

newXgate

Ok, I missed the implication of this in my response. It seems you want to set up a UK based entity to pay you a salary as your employee, while you are physically working the US - is this correct ?

Not sure what you are hoping to gain from doing this. You personally would be liable to pay US tax on your salary income from this company and so would your wife on any income she derived from it, if she is resident in the USA. Plus there would be potential for UK corporate taxes. Anyway, this is out of my league and hopefully others with more expertise can chime in.

penguinsix

Ok, before you leave you should talk to an accountant that specializes in US-UK tax and other matters. My advice (strong advice) is to seek this counsel in LONON before you leave. There are a number of professionals in the UK that deal with issues between the US and UK, whereas the few that do so in the USA are spread out and more difficult to find. I would check the US expats in the UK site for recommendations.

http://talk.uk-yankee.com/

There are a myriad of issues with 'working in the UK living in the US'. One of the first issues is that of Social Security, Medicare, Unemployment compensation that is the responsibility of the company. For a UK entity to engage an employee in the USA would technically mean they would a) have to do the withholding of US taxes and b) pay the extra taxes required for having an employee in the US.

For example, your salary is $10,000. The company that pays you actually has to pay $11,000 a year for you. $10k in your salary, and $1k in taxes and other contributions. If the company does not pay this, then you have to pay it (self-employment tax). Having a UK company a) opens you up to paying the SE tax yourself or b) opens up the UK company to having a US tax issue (witholding, paying, and a lot of other paperwork).

Going over your list, I really have to throw up my hands and refer you back to the first recommendation--find a professional in the UK who has experience in these matters. I would NOT follow the advice of a messageboard on this--it is far too complicated even for most of us who go through these things (I 'work' for a UK company but set up a US shell entity to handle the paperwork in the US and insulated the UK company from US paperwork). And even I don't know what I'm doing half the time.

Good luck.

Noorah101

All your work related questions aside, this one about the green card is important. She won't be applying for a green card before you move. She will be applying for an Immigrant Visa, and that is done by you (the USC) submitting an I-130 to the correct place at the US Embassy in London. It takes about 4 to 6 months for things to process, at the end she'll attend an interview and receive an Immigrant Visa. She has 6 months to use this visa for her entry to the USA. She becomes a US PR upon entry using her Immigrant Visa, with the right to live and work in the USA from Day 1. She can apply for US citizenship a few years later.

Part of the Immigrant Visa process is the fact that you (the USC) will need to complete an Affidavit of Support for your wife. Go to www.uscis.gov, Immigration Forms, and look up I-864 and I-864P. I-864 is the Affidavit of Support you will need to qualify for, and I-864P gives you the income guidelines you'll need to follow. You'll be looking at the 125% column, for a family of 4. If you use income (it can be combined income between you and your wife), it must continue from the same source as it did in the UK. If you don't earn enough in income to qualify, you can use assets such as your house, property, or savings (assets must be 3x the amount you would have needed in income). If you don't have enough that way, you can use a joint sponsor (any USC or PR age 18 or over, living in the USA).

Just wanted to point out that the immigration side of things is something you'll really need to look into and be prepared for, besides all your work-related questions.

Best Wishes,
Rene