British Expats

British Expats (https://britishexpats.com/forum/)
-   USA (https://britishexpats.com/forum/usa-57/)
-   -   Non-resident Alien US tax question (https://britishexpats.com/forum/usa-57/non-resident-alien-us-tax-question-937027/)

asnozz Feb 8th 2021 7:17 pm

Non-resident Alien US tax question
 
Hi all,

I've trying to find information of this and have been really struggling, hopefully a few kind people can help me out with my confusion...

I'm a non-resident alien living in Texas on a L1A visa. I have a few accounts in the UK (a cash ISA and a MoneyFarm general investment account). I haven't contributed to the ISA since moving to the US, but have kept up with the general investment account.

Do I need to report these accounts when I file through a service like TurboTax? They're both just over 50k GBP, but I was wondering whether the tax treaty between the UK and US allows me to ignore the foreign accounts selection. Are they covered by a UK tax return? Obviously the general investment account has grown along with the stock market, but I haven't sold assets and any dividends have been a few hundred pounds per year.

Most information I have found seems to relate to 'resident' aliens, green card holders, or US citizens. So it is as clear as mud.

destone Feb 8th 2021 7:22 pm

Re: Non-resident Alien US tax question
 

Originally Posted by asnozz (Post 12969559)
Hi all,

I've trying to find information of this and have been really struggling, hopefully a few kind people can help me out with my confusion...

I'm a non-resident alien living in Texas on a L1A visa. I have a few accounts in the UK (a cash ISA and a MoneyFarm general investment account). I haven't contributed to the ISA since moving to the US, but have kept up with the general investment account.

Do I need to report these accounts when I file through a service like TurboTax? They're both just over 50k GBP, but I was wondering whether the tax treaty between the UK and US allows me to ignore the foreign accounts selection. Are they covered by a UK tax return? Obviously the general investment account has grown along with the stock market, but I haven't sold assets and any dividends have been a few hundred pounds per year.

Most information I have found seems to relate to 'resident' aliens, green card holders, or US citizens. So it is as clear as mud.

I think you qualify as a “resident” alien as an L-1 employee.

Furthermore, do you mention these accounts in your HMRC Self Assessment? Or have you told HMRC that you permanently left the UK?



tht Feb 8th 2021 7:27 pm

Re: Non-resident Alien US tax question
 

Originally Posted by destone (Post 12969564)
I think you qualify as a “resident” alien as an L-1 employee.

Furthermore, do you mention these accounts in your HMRC Self Assessment? Or have you told HMRC that you permanently left the UK?

The OP’s tax residency is defined by the IRS rules, not the visa they are on in most cases, there are some corner cases, the best place to go to figure that out is here:
https://www.irs.gov/individuals/inte...-presence-test


Most UK filers don’t do SA, unless they are self employed or are a legal director of a company, so assuming the OP does may be misleading.

For the OP, most DTA are designed to avoid you paying “double” tax on income, not to allow your to not disclose things. Also note these generally only apply at the Federal level not state or city, although Canada may be an exception.

OP look at the HMRC P85:
https://www.gov.uk/tax-right-retire-abroad-return-to-uk
Also search the threads here for Class 2 NIC for National Insurnace and make sure you file an FBAR with the US Fincen.

asnozz Feb 8th 2021 7:29 pm

Re: Non-resident Alien US tax question
 

Originally Posted by destone (Post 12969564)
I think you qualify as a “resident” alien as an L-1 employee.

Furthermore, do you mention these accounts in your HMRC Self Assessment? Or have you told HMRC that you permanently left the UK?

Thanks for the response. Good point, I got mixed up by the resident status terminology and thought it was linked to a visa that leads to immigration. You're correct, I am a resident as I have been in the country more than 31 days (I live here).

Concerning HMRC, no not as yet. I mistakenly thought I didn't need to. That is the next thing I am planning to rectify :)

SanDiegogirl Feb 8th 2021 7:37 pm

Re: Non-resident Alien US tax question
 
You are obliged to declare all foreign bank accounts/investment accounts etc etc when completing a US tax filing.

asnozz Feb 8th 2021 7:39 pm

Re: Non-resident Alien US tax question
 

Originally Posted by SanDiegogirl (Post 12969574)
You are obliged to declare all foreign bank accounts/investment accounts etc etc when completing a US tax filing.

Thank you. I assume this is done by submitting a W-9 form to the UK institution and then adding the returned 1099-MISC (?) on to Turbo Tax?


tht Feb 8th 2021 7:43 pm

Re: Non-resident Alien US tax question
 

Originally Posted by asnozz (Post 12969575)
Thank you. I assume this is done by submitting a W-9 form to the UK institution and then adding the returned 1099-MISC (?) on to Turbo Tax?

see my post below for more info on other things, you are unlikely to get a 1099 from a U.K. institution, and some may want to close your accounts for be a “US person”.

asnozz Feb 8th 2021 7:50 pm

Re: Non-resident Alien US tax question
 

Originally Posted by tht (Post 12969577)
see my post below for more info on other things, you are unlikely to get a 1099 from a U.K. institution, and some may want to close your accounts for be a “US person”.

Thanks tht, a good point. Moneyfarm does request a W-9, so I'll see how they respond. Concerning my cash ISA (HSBC), I'll give them a ring during their business day.

I'm hesitant to close my UK accounts until I'm on a path towards a green card (I am currently working towards this).

SanDiegogirl Feb 8th 2021 7:59 pm

Re: Non-resident Alien US tax question
 

Originally Posted by asnozz (Post 12969575)
Thank you. I assume this is done by submitting a W-9 form to the UK institution and then adding the returned 1099-MISC (?) on to Turbo Tax?


?? never submitted a W9 to any UK investment company nor a 1099. Just given details on the Foreign Investment section of Turbo Tax

durham_lad Feb 8th 2021 8:21 pm

Re: Non-resident Alien US tax question
 

Originally Posted by SanDiegogirl (Post 12969582)
?? never submitted a W9 to any UK investment company nor a 1099. Just given details on the Foreign Investment section of Turbo Tax

That was the case for us all the time while living in the USA. On return to the UK in 2016 and changing our address was when my wife and I were asked to complete W9s. We never receive 1099s from our UK accounts including my UK private pensions. (We are USCs so are required to file an IRS return as well as an HMRC SA return as we have foreign income)

tht Feb 8th 2021 8:23 pm

Re: Non-resident Alien US tax question
 

Originally Posted by asnozz (Post 12969580)
Thanks tht, a good point. Moneyfarm does request a W-9, so I'll see how they respond. Concerning my cash ISA (HSBC), I'll give them a ring during their business day.

I'm hesitant to close my UK accounts until I'm on a path towards a green card (I am currently working towards this).

HSBC is familiar with “expats” and has services for them... but don’t assume it will be your choice to close an account, some institutions may be more proactive in not having “us persons” as customers...

durham_lad Feb 8th 2021 8:27 pm

Re: Non-resident Alien US tax question
 

Originally Posted by tht (Post 12969589)
HSBC is familiar with “expats” and has services for them... but don’t assume it will be your choice to close an account, some institutions may be more proactive in not having “us persons” as customers...

Exactly. We kept our UK HSBC accounts for the 29 years we lived in the USA. They are quite used to having customers with overseas addresses.

Glasgow Girl Feb 8th 2021 8:39 pm

Re: Non-resident Alien US tax question
 
The short answer is that the tax treaty does not remove your obligation to fully comply with all US tax laws including declaring foreign accounts and income. Nor does the fact that you may have submitted a UK tax return for the same accounts and income. You will need to submit an FBAR for your accounts since they are in excess of $10K, and declare and pay tax on all income and dividends. If you have paid UK tax on the same interest and dividends you will get a tax credit for that which will reduce or perhaps eliminate your US tax on that income. But whether there is any net tax due you must still declare the accounts and income. The penalties for not doing so can be severe.

hutchison Feb 11th 2021 4:02 pm

Re: Non-resident Alien US tax question
 

Originally Posted by asnozz (Post 12969568)
Thanks for the response. Good point, I got mixed up by the resident status terminology and thought it was linked to a visa that leads to immigration. You're correct, I am a resident as I have been in the country more than 31 days (I live here).

Concerning HMRC, no not as yet. I mistakenly thought I didn't need to. That is the next thing I am planning to rectify :)

31 days of a year does not qualify you as a tax resident (resident alien) if that is all you have been here this year (2021), you do not need to report foreign accounts for 2020 (Fbar submission through Fincen), this is separate to normal taxes filing. normal taxes = turbo tax or tax preparer. for the record turbo tax does not file a fbar for you they just advise if you need to by you having checked the 'i had/have more than 10kusd foreign account box in 20** ' you will get a message / prompt advising you to file Fbar.

if by the end of this U.S tax year 2021 you had been here more than half the year (according to presence)= 'resident alien', then you would file Fbar for that year as has been mentioned, its easiest so file Fbar on Jan 1st or soon after after that year,

resdient alien = gc OR tax resident.

A nonresident alien is not obligated to file either an FBAR or a Form 8938


Cook_County Feb 15th 2021 7:48 am

Re: Non-resident Alien US tax question
 
The MoneyFarm investments will all be PFICs requiring numerous IRS Forms 8621 to be prepared and filed each year. I suspect that TurboTax does NOT include or prepare Form 8621 at all.


All times are GMT. The time now is 12:55 pm.

Powered by vBulletin: ©2000 - 2021, Jelsoft Enterprises Ltd.
Copyright © 2021 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.