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Paid in UK, living in US

Paid in UK, living in US

Old Mar 14th 2016, 2:18 pm
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Default Paid in UK, living in US, Filing Taxes?!

Hi
I would appreciate some help on this one please if anyone knows the answers?

I am a Brit, living and working in US under E2 Visa. But I am being paid in UK pounds by the employer who is British and into my UK bank. This has been since March 2015. (I will switch to be on a US payroll next month probably) I am paying UK taxes and NI currently.

I have however been told that I should be a NT code in UK as I am not living there and enjoying any UK benefits? I have been told I may get a tax refund?

I need to file my US tax return soon as I was an employee with a US firm till March 2015.

If I get a tax refund in UK, I will want to disclose it to the IRS as I don't want to break any rules but how do I fill in the tax return here because there is no where I see where I can report I have or I am being paid in UK although I am living in US and working here! But I am not a US citizen. There is a part for Foreign salary but that I am sure is for US citizens only.

Anyone any ideas please how to sort this?

Last edited by sgriff69; Mar 14th 2016 at 2:47 pm.
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Old Mar 14th 2016, 3:59 pm
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Default Re: Paid in UK, living in US

I think bot UK and US taxes are dependant on residency and not on citizenship. I am not sure if the US would count you as being resident from March 2015, maybe someone more knowledgeable can answer that.
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Old Mar 14th 2016, 4:10 pm
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Default Re: Paid in UK, living in US

Originally Posted by mrken30
I think bot UK and US taxes are dependant on residency and not on citizenship. I am not sure if the US would count you as being resident from March 2015, maybe someone more knowledgeable can answer that.
No.

The UK taxes on the basis of residency. The US taxes on the basis of citizenship and residency. It is the only country in the world to do this, with the possible exception of Eritrea.

I'll reply to the OP next, but I wanted to correct this first.
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Old Mar 14th 2016, 4:14 pm
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Default Re: Paid in UK, living in US

You are liable for US taxes on all your income while resident in the US. Prepare yourself for a big tax bill, plus penalties. You are also liable for US payroll deductions equivalent to UK NI.

You are in quite a mess and I recommend that you contact a CPA immediately to get advice as you only have one month to sort out the mess before you risk further penalties for late filing (late filing is easy to get permission for, and might be necessary for you) and payment.

You should get all your UK income tax refunded, and it is quite likely your US tax bill, before penalties, will be less than your US tax bill. I don't think you can get NI refunded, but I might be wrong, but you are still liable for the US federal and state level payroll taxes, incl social security contributions, state unemployment scheme, etc.

Last edited by Pulaski; Mar 14th 2016 at 4:22 pm.
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Old Mar 14th 2016, 4:18 pm
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Default Re: Paid in UK, living in US

Originally Posted by Owen778
No.

The UK taxes on the basis of residency. The US taxes on the basis of citizenship and residency. .....
You mean "or", not "and" - you are taxed by the IRS if either (or both) apply, but it is not necessary for both to apply for the IRS to tax you.
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Old Mar 14th 2016, 4:29 pm
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Default Re: Paid in UK, living in US

Ouch!

OK, the basics are that you should have been paying US taxes every quarter, and not UK taxes. You will get a UK tax refund. Unfortunately, you will have to pay taxes to the IRS and have to pay a penalty for late payment.

Originally Posted by sgriff69
Hi
I would appreciate some help on this one please if anyone knows the answers?

I am a Brit, living and working in US under E2 Visa. But I am being paid in UK pounds by the employer who is British and into my UK bank. This has been since March 2015. (I will switch to be on a US payroll next month probably) I am paying UK taxes and NI currently.

I have however been told that I should be a NT code in UK as I am not living there and enjoying any UK benefits? I have been told I may get a tax refund?
This is correct.

I need to file my US tax return soon as I was an employee with a US firm till March 2015.
Yes, you have to file your US tax return. You are tax resident in the US, so need to be paying US taxes anyway. Your second sentence asks more questions, though: How long have you been in the US, and have you been paying US taxes and filing a US tax return with the IRS?

If I get a tax refund in UK, I will want to disclose it to the IRS as I don't want to break any rules but how do I fill in the tax return here because there is no where I see where I can report I have or I am being paid in UK although I am living in US and working here! But I am not a US citizen. There is a part for Foreign salary but that I am sure is for US citizens only.
You have to convert your UK salary in pounds to dollars, as all income has to be reported in dollars. You have to use a reasonable exchange rate to do so - you can either use the exchange rate you actually received when converting, if you converted immediately on payment, or you can use the average yearly rate that the IRS quotes. The link is here: https://www.irs.gov/Individuals/Inte...Exchange-Rates

You do not need to disclose the UK tax refund to the IRS, because it's just you getting your money back that you shouldn't have paid in the first place. After all, they will be taxing you on your gross income, while will include that UK money that shouldn't have been withheld.

That will do for the time being. I'm afraid it sounds like you have a lot to catch up with. Good luck, and come back to us once you have more questions, which I'm sure you will. You may want to use tax software to help - Turbotax is the most popular, but also the most expensive and some disagree with their corporate ethics. I use TaxAct, and I'm happy with it. You may alternatively want to pay a professional to help you understand the process better.
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Old Mar 14th 2016, 4:32 pm
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Default Re: Paid in UK, living in US

Originally Posted by Pulaski
You mean "or", not "and" - you are taxed by the IRS if either (or both) apply, but it is not necessary for both to apply for the IRS to tax you.
Maybe? I meant my statement to mean that they both tax on the basis of residency and they tax on the basis of citizenship, but I guess you could take it to mean that they only tax people who are resident and citizens.
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Old Mar 14th 2016, 4:34 pm
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Default Re: Paid in UK, living in US

Originally Posted by Pulaski
You are liable for US taxes on all your income while resident in the US. Prepare yourself for a big tax bill, plus penalties. You are also liable for US payroll deductions equivalent to UK NI.

You are in quite a mess and I recommend that you contact a CPA immediately to get advice as you only have one month to sort out the mess before you risk further penalties for late filing (late filing is easy to get permission for, and might be necessary for you) and payment.

You should get all your UK income tax refunded, and it is quite likely your US tax bill, before penalties, will be less than your US tax bill. I don't think you can get NI refunded, but I might be wrong, but you are still liable for the US federal and state level payroll taxes, incl social security contributions, state unemployment scheme, etc.
Some good points there I missed, including state taxes and also things that should normally be covered by the employer, like social security etc.
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Old Mar 14th 2016, 4:43 pm
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Default Re: Paid in UK, living in US

Originally Posted by Owen778
Some good points there I missed, including state taxes and also things that should normally be covered by the employer, like social security etc.
Yeah, bottom line: there are a lot of bits and pieces to sorting this situation out, calculating and making the right payments, filing the right forms and dealing with arrears and penalties, and setting up the right arrangements going forwards, so I would strongly recommend seeking professional assistance.
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Old Mar 14th 2016, 4:45 pm
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Default Re: Paid in UK, living in US

It's unfortunate it is now so difficult to speak to the IRS, when I moved here they were very helpful in resolving some of my tax questions
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Old Mar 14th 2016, 7:42 pm
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Default Re: Paid in UK, living in US

Thank you all for your input and advise. I appreciate it.

I have contacted a professional for more advise which is going to cost me but I will have peace of mind.
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Old Mar 14th 2016, 7:44 pm
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Default Re: Paid in UK, living in US

Thanks for your help on this.
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Old Mar 14th 2016, 7:46 pm
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Default Re: Paid in UK, living in US

Originally Posted by sgriff69
Thanks for your help on this.
You're welcome.

You have made a wise decision.
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Old Mar 14th 2016, 10:04 pm
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Default Re: Paid in UK, living in US

If you can convince the SSA that you will be working in the US for less than 5 years and are paid by your UK company then the SSA Totalization agreement might allow you to pay NI in the UK and avoid FICA. However, there is no way to avoid paying US income tax. You should claim a refund on all UK income tax and use it to pay your US income tax and any penalties.
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Old Mar 15th 2016, 12:29 am
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Default Re: Paid in UK, living in US

Please also note you may have an FBAR reporting requirement, depending on your status in the USA. If you have any bank accounts (or combination of accounts) that has >$10,000 USD equivalent in it at any time during the year (even for a minute) then you must file an FBAR. As you talk to your CPA also bring this up.
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