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Question on USA/UK tax treaty

Question on USA/UK tax treaty

Old Jul 27th 2020, 2:10 pm
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Default Re: Question on USA/UK tax treaty

Most provisions of the Federal Tax Code apply on the basis of residency, not citizenship. Certainly the US/UK Tax Treaty refers to the concept of tax residency in that it outlines when a person is tax resident of one country and not the other. I would find it peculiar if not all of your foreign sourced income has been subject to Federal Tax all along since you would have been deemed a tax resident of the U.S. from the day you moved here. The US/UK DTA then applies to reduce double taxation (hence why it is called a 'Double Taxation Treaty') on your UK sourced income. Should any tax be paid in the UK you would generally be entitled to a tax credit on your U.S. tax on that amount. The intent of DTA is to reduce double taxation, not reduce taxation altogether.
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