Tax Advice

Old Aug 13th 2017, 4:16 pm
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Default Tax Advice

Hi,

I was hoping for advice or recommendations please?

We are hoping to leave the UK before the 5th Oct for GA, but just thought about the tax implications of living part of the year in the UK and part in the US. How would it work on income taxes that have already been paid in the UK and the three months in the US?

If we leave on or before the 4th Oct, we would have only been in the UK for 182 days for the current tax year, which would mean I would escape the 183 days to be classed as a UK resident. Would it be financially benefit if I could leave before the 183 days, or will it not really matter?

I will be getting an accountant to do my first years tax return, but I was hoping to get the heads up of any issues or expectations before we arrive.

Thanks
Claire
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Old Aug 13th 2017, 4:41 pm
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Default Re: Tax Advice

That's interesting. The UK doesn't do taxes on a January 1 through December 31 basis. I know in the US although you need to file by April 15 for the previous year, you taxes are based on money earned from January 1 through December 31. As is physical presence, I believe.
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Old Aug 14th 2017, 10:09 am
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Originally Posted by Rete View Post
That's interesting. The UK doesn't do taxes on a January 1 through December 31 basis. I know in the US although you need to file by April 15 for the previous year, you taxes are based on money earned from January 1 through December 31. As is physical presence, I believe.
Ok, so in theory my earnings in the UK won't effect my US tax return for Oct-Dec 17, and visa versa?
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Old Aug 14th 2017, 1:17 pm
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Default Re: Tax Advice

Are you going to elect to file jointly for the whole of 2017?
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Old Aug 14th 2017, 1:24 pm
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Originally Posted by Cook_County View Post
Are you going to elect to file jointly for the whole of 2017?
Not sure, I will not be working until at least the start of 2018, as I will be waiting for the EAD to come through.

We would file whichever is more tax efficient :-)
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Old Aug 14th 2017, 1:36 pm
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Originally Posted by bearclaire1 View Post
Not sure, I will not be working until at least the start of 2018, as I will be waiting for the EAD to come through.

We would file whichever is more tax efficient :-)
Correct; so you will want to ask your accountant for some pre-US immigration tax planning advice; especially if you own a UK home and have a UK mortgage.
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Old Aug 14th 2017, 1:39 pm
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Originally Posted by Cook_County View Post
Correct; so you will want to ask your accountant for some pre-US immigration tax planning advice; especially if you own a UK home and have a UK mortgage.
Yes I Will ask, although we do not own any property in the UK so we should be fairly simple!
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Old Aug 14th 2017, 8:36 pm
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This question depends on your Visa type. You mention we, so are both you and you SO moving to the U.S. or is your other half in the U.S.?

Regardless to answer your question, it is often advantageous to be a dual resident especially if you are planning to leave in October as you will be entitled to a reclaim of U.K. tax by filing P85 and you will be able to have a very low or no reportable income in the U.S.

You mention you will start work in the U.S. in early 2018 is that correct? if so does your other half start work earlier or is currently living in the U.S.?

I cannot provide much guidance with what you have put down but there is a lot of tax planning that goes into leaving the U.K. such as the taxation treatment on U.K. Isa's which you will want to reorganize before you leave and become a U.S. taxpayer.
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Old Aug 14th 2017, 8:55 pm
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Default Re: Tax Advice

Also to determine if you are a U.K. resident 183 days is the automatic test of residence meaning if you are present in the U.K. for at least this time then you are automatically a U.K. resident for that tax year.

there are also a number of tests that apply where an individual does not meet the automatic test. You have probably already met the number of days according to the sufficient ties test. See below link p9 onwards

https://www.gov.uk/government/upload...nal_078500.pdf
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Old Aug 14th 2017, 11:58 pm
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Originally Posted by Dominic0012 View Post
This question depends on your Visa type. You mention we, so are both you and you SO moving to the U.S. or is your other half in the U.S.?

Regardless to answer your question, it is often advantageous to be a dual resident especially if you are planning to leave in October as you will be entitled to a reclaim of U.K. tax by filing P85 and you will be able to have a very low or no reportable income in the U.S.

You mention you will start work in the U.S. in early 2018 is that correct? if so does your other half start work earlier or is currently living in the U.S.?

I cannot provide much guidance with what you have put down but there is a lot of tax planning that goes into leaving the U.K. such as the taxation treatment on U.K. Isa's which you will want to reorganize before you leave and become a U.S. taxpayer.
Thanks for replying.

Husband will be on a L1b and myself and son will be in the L2. I will be applying for the EAD as soon as I can, so time wise it will be after Christmas I will start working hopefully . Husband will be working as soon as we arrive. Oct -Dec will just be his income in the US.

In the UK I work full time and will be finishing end of Sept if everything works out. Hoping we both should get a tax rebate once we notify HMRC that we have left.

We do not own property or investments. So hoping this makes it easier for tax issues? Neither of us do self assessments and everything is just done through PAYE.

Thanks
Claire
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Old Aug 15th 2017, 7:22 am
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Default Re: Tax Advice

You and your husband could elect to file jointly for the entire year if this produces a lower overall result. Make sure you keep the data needed to file your FBARs.
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Old Aug 15th 2017, 2:15 pm
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My understanding is that you cannot elect to file MFJ when neither of the parties are a USC or a green card. See below for reference.

Dual Status and Resident Alien Taxes | H&R Block – HRBlock Talk

Regardless Bearclaire this is not an area of concern for you particularly as you will not have an income and you have a dependent and are a dependent on your husband for the 3 months.

If you leave in October you will be able to get the full U.K. Personal exemption for both you and your partner of 11.5K so you will need to put in a claim using P85 when you leave.

In addition for your U.S. tax liability your husband should file married filing separately as a dual status alien. He can claim you and your son as a dependent so that gives you 3 personal exemptions of $4050 so you have $12,150 which is exempt.

If your husband makes more than $12,150 for the three months you could take full advantage of the retirement savings contribution credit if his income is over the $12150.

this is essentially a 50% matching contribution to a retirement account up to $2000 (aka free money which you would otherwise pay in tax)

https://www.irs.gov/retirement-plans...-savers-credit

If your husband is making a significant income you could look into a H.S.A. if your employer offers an HDHP. You need a health plan or else you will have to pay the obamacare penalty so it is worth examining your husbands employment package.

You should be able to plan it to get a tax refund in the U.K. and pay no tax in the U.S. for the 2017-2018

let me know if you have any more questions or need more help.
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Old Aug 15th 2017, 3:00 pm
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Default Re: Tax Advice

Originally Posted by Dominic0012 View Post
My understanding is that you cannot elect to file MFJ when neither of the parties are a USC or a green card. See below for reference.

Dual Status and Resident Alien Taxes | H&R Block – HRBlock Talk

Regardless Bearclaire this is not an area of concern for you particularly as you will not have an income and you have a dependent and are a dependent on your husband for the 3 months.

If you leave in October you will be able to get the full U.K. Personal exemption for both you and your partner of 11.5K so you will need to put in a claim using P85 when you leave.

In addition for your U.S. tax liability your husband should file married filing separately as a dual status alien. He can claim you and your son as a dependent so that gives you 3 personal exemptions of $4050 so you have $12,150 which is exempt.

If your husband makes more than $12,150 for the three months you could take full advantage of the retirement savings contribution credit if his income is over the $12150.

this is essentially a 50% matching contribution to a retirement account up to $2000 (aka free money which you would otherwise pay in tax)

https://www.irs.gov/retirement-plans...-savers-credit

If your husband is making a significant income you could look into a H.S.A. if your employer offers an HDHP. You need a health plan or else you will have to pay the obamacare penalty so it is worth examining your husbands employment package.

You should be able to plan it to get a tax refund in the U.K. and pay no tax in the U.S. for the 2017-2018

let me know if you have any more questions or need more help.

Thank you Dominic, I really appreciate this. You seem very knowledgeable. Are you talking form personal experience or a professional tax accountant?

The company does have a HSA plan which we can pay in a max of $6,750 a year tax free I believe. We were planning on having $6,000 in our savings account at any one time to cover the annual deductible, but pay in monthly $200 to cover Co pay for Dr/medication etc.

But if we could benefit on the tax savings we could just put $1,125 from each paycheck into the HSA till end of Dec 17. So we have the next years deductible covered. I am still trying to get my head around the healthcare over there.

Hubby will be earning more than the $12,150 in those three months.
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