Els87

Hi all,

Apologies this has probably been covered a few times but legislation changes and each case can be unique.

My wife is in the US with me on an E2 Spouse visa with an EAD. She has been offered a job for a UK company, for remote working services, paid in Sterling.

Firstly, is this legal? Secondly, what is the best way to declare this in the US? She is likely going to be a UK employee, but lives full time in the US and will pay UK tax on that income.

Is it better to be paid gross in the UK (into a UK bank account) and complete a UK self assessment and pay the tax in the US?

Thanks

Noorah101

It is legal. I don't know about the tax situation, sorry.

Rene

Rete

Since she is a resident in the US (although without a formal green card), she can file a joint tax return with you or she can file alone.

If she pays tax on her salary in the UK and the salary is under a certain amount, then she won't owe taxes in the US. At least this is my take on it.

Pulaski

If she is living and working in the US, for a UK employer she really shouldn't be on the UK payroll at all, and will need to complete a UK tax return each year to reclaim income tax deducted for which she was not liable. AFAIK the NI is not reclaimable, but at least will go towards her UK state pension. Contrary to popular rumour, you can't, or at least shouldn't, just voluntarily pay tax in one country and then just deduct the tax paid erroneously from the tax due in another country.

In the US she will be de facto self employed, so will be liable for US federal and state (and city?) income taxes, plus personal and employer's (self-employment) "payroll taxes", i.e. SS contributions, unemployment etc.

Ideally she would be an independent contractor working for the UK company, and would then bill her time/ services grossed up to include the US employer's payroll taxes.

So yes, this is the correct approach.

And to clarify, where she is paid, and in which currency, is irrelevant to the calculation of tax liablity. She should keep a note of the USD/GBP exchange rate for each day she is paid, so she can calculate the USD taxes due. .... She could use the average rate allowed by the IRS instead, and assuming that she keeps all her records on a spreadsheet, she should be able to calculate quickly and easily whether it is cheaper to use the actual rates or the annual average (one or the other for the whole year, not cherry-picking each month) - at her option she can use which ever produces a lower tax bill.

Rete