Tax Advice (UK->Dubai->USA)
#1
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Joined: Aug 2012
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Tax Advice (UK->Dubai->USA)
Looking for some information on my tax situation if anyone is 'In the know' as I've been moving around a bit for the last year. Basically, since last April I've done the following:
Whilst I've been moving I've still been paid into my UK bank account and have paid my UK taxes.
What I really want to know is if it'll be possible for me to claim back the tax I paid during my time in Dubai seeing as I now have confirmation I'll be out of the UK for 2+ years from the point at which I first left? It was always my intention to become 'non-resident' for tax purposes, but until a few weeks ago I didn't have 100% confirmation this would be the case.
Hopefully fairly clear what I'm trying to work out. Any help would be much appreciated.
- April 2011 to September 2011 -> Worked in the UK (Paid in the UK)
- September 2011 to February 2012 -> Worked in Dubai, UAE (Paid in the UK)
- February 2012 - September 2012 -> Working in the USA (Paid in the UK)
- September 2012 onwards -> Working in the USA for minimum of 2 years (Paid in USA)
Whilst I've been moving I've still been paid into my UK bank account and have paid my UK taxes.
What I really want to know is if it'll be possible for me to claim back the tax I paid during my time in Dubai seeing as I now have confirmation I'll be out of the UK for 2+ years from the point at which I first left? It was always my intention to become 'non-resident' for tax purposes, but until a few weeks ago I didn't have 100% confirmation this would be the case.
Hopefully fairly clear what I'm trying to work out. Any help would be much appreciated.
#2
Re: Tax Advice (UK->Dubai->USA)
Looking for some information on my tax situation if anyone is 'In the know' as I've been moving around a bit for the last year. Basically, since last April I've done the following:
Whilst I've been moving I've still been paid into my UK bank account and have paid my UK taxes.
What I really want to know is if it'll be possible for me to claim back the tax I paid during my time in Dubai seeing as I now have confirmation I'll be out of the UK for 2+ years from the point at which I first left? It was always my intention to become 'non-resident' for tax purposes, but until a few weeks ago I didn't have 100% confirmation this would be the case.
Hopefully fairly clear what I'm trying to work out. Any help would be much appreciated.
- April 2011 to September 2011 -> Worked in the UK (Paid in the UK)
- September 2011 to February 2012 -> Worked in Dubai, UAE (Paid in the UK)
- February 2012 - September 2012 -> Working in the USA (Paid in the UK)
- September 2012 onwards -> Working in the USA for minimum of 2 years (Paid in USA)
Whilst I've been moving I've still been paid into my UK bank account and have paid my UK taxes.
What I really want to know is if it'll be possible for me to claim back the tax I paid during my time in Dubai seeing as I now have confirmation I'll be out of the UK for 2+ years from the point at which I first left? It was always my intention to become 'non-resident' for tax purposes, but until a few weeks ago I didn't have 100% confirmation this would be the case.
Hopefully fairly clear what I'm trying to work out. Any help would be much appreciated.
Last edited by Michael; Aug 15th 2012 at 3:47 am.
#3
Re: Tax Advice (UK->Dubai->USA)
I can't comment on Dubai laws, but for the US if you are working in the US it makes no difference where you are 'paid' with a few minor exceptions (like journalist visas). If you are here full-time physically working you will owe taxes in the US from that time. You will also need the proper visa to be working here from Feb 2012->onward.
This can cause problems as the people paying you in the UK are probably not performing the necessary withholdings and unemployment / social security contributions in the USA on your behalf. That means you will get socked with them via the Self-Employment tax (even if technically you are working for someone else).
Is the person paying you Feb-Sept the same as paying you Sept 2012 onwards, or are they different employers?
This can cause problems as the people paying you in the UK are probably not performing the necessary withholdings and unemployment / social security contributions in the USA on your behalf. That means you will get socked with them via the Self-Employment tax (even if technically you are working for someone else).
Is the person paying you Feb-Sept the same as paying you Sept 2012 onwards, or are they different employers?
#4
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Joined: Mar 2008
Location: Santa Cruz, CA
Posts: 4,913
Re: Tax Advice (UK->Dubai->USA)
You are probably better off consulting a tax professional in the UK regarding the subtleties of UK taxation for non residents and the Dubai tax issues.
If, by the end of the year, you will have been physically present in the US for more than 6 months during 2012 (and it sounds as if you might already have passed that point) then you will meet the IRS "substantial presence" test and will be regarded as a "resident alien" for tax purposes, which means and you will have to file US tax returns reporting your entire worldwide income for 2012. Any UK taxes paid can be offset against whatever your US tax liability turns out to be.
If, by the end of the year, you will have been physically present in the US for more than 6 months during 2012 (and it sounds as if you might already have passed that point) then you will meet the IRS "substantial presence" test and will be regarded as a "resident alien" for tax purposes, which means and you will have to file US tax returns reporting your entire worldwide income for 2012. Any UK taxes paid can be offset against whatever your US tax liability turns out to be.
#5
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Joined: Apr 2011
Location: Ohio
Posts: 1,834
Re: Tax Advice (UK->Dubai->USA)
After quite some time and quite a few cross-border conversations involving the Swiss and US offices of our Big 4 accounting firm and the relevant tax authorities, it was concluded that we could leave it that that tax was paid to the Swiss govt, and that the tax return would take a Treaty position to explain it to the US govt.
Let's hope they're right! Otherwise we'll be penalised for late filing; as it stands, the IRS owes us for 2011.
#6
Re: Tax Advice (UK->Dubai->USA)
Interesting. Hubby's just filed his 2011 US tax return as a non-resident; it included a period from mid-Oct to end Nov when we'd moved over, he was working for the US office but still being paid via the Swiss office (same multinational company) as his SSN hadn't come through yet. The Swiss authorities were paid tax at source during these 6 or 7 weeks.
After quite some time and quite a few cross-border conversations involving the Swiss and US offices of our Big 4 accounting firm and the relevant tax authorities, it was concluded that we could leave it that that tax was paid to the Swiss govt, and that the tax return would take a Treaty position to explain it to the US govt.
Let's hope they're right! Otherwise we'll be penalised for late filing; as it stands, the IRS owes us for 2011.
After quite some time and quite a few cross-border conversations involving the Swiss and US offices of our Big 4 accounting firm and the relevant tax authorities, it was concluded that we could leave it that that tax was paid to the Swiss govt, and that the tax return would take a Treaty position to explain it to the US govt.
Let's hope they're right! Otherwise we'll be penalised for late filing; as it stands, the IRS owes us for 2011.
As far as a SSN, that is not needed since most payroll software can handle that. A fake number is used and when the real number is received, the company just sends the money to the IRS,
Last edited by Michael; Aug 18th 2012 at 2:00 am.
#7
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Joined: Apr 2011
Location: Ohio
Posts: 1,834
Re: Tax Advice (UK->Dubai->USA)
Perhaps it was because he was non-resident for tax, then (didn't spend enough days to meet Substantial Presence). As he was not US tax resident for 2011, as far as the IRS is concerned he fell under Switzerland for his residency for the full year, and Switzerland therefore gets the first dibs. It would probably be a different story for people who move part way through the year but are filing as US tax resident.
#8
Re: Tax Advice (UK->Dubai->USA)
Perhaps it was because he was non-resident for tax, then (didn't spend enough days to meet Substantial Presence). As he was not US tax resident for 2011, as far as the IRS is concerned he fell under Switzerland for his residency for the full year, and Switzerland therefore gets the first dibs. It would probably be a different story for people who move part way through the year but are filing as US tax resident.
Probably nothing will come of it since the time was short and the IRS has more important things to do than try to determine if a taxpayer was in compliance since the IRS probably didn't receive any documentation indicating that he worked in the US during that time. It is highly unlikely that the IRS will go through POE entry records to try to catch someone that may owe a small amount of money.
I once worked for a Japanese company that seemed to bend the rules quite often and nothing ever happened.