polar_bear

Hi there,

If a British Citizen obtains US Citizenship and then relocates back to the UK, as I understand it he has to declare his income to the IRS unless he renounces his US citizenship.

However, certain countries (including the UK) have a tax treaty with the US which means anything you've already paid tax on in your host country, you don't have to pay tax to the US (i.e. you don't get 'double-taxed').

What would happen if you made a large amount of money gambling, e.g. a lottery win or success on the horses, online poker etc? As things stand this is not taxable in the UK (even if it is your full-time sole income), does that mean you can declare it to the Americans and not pay tax on it? Or will the IRS tax it because you haven't paid tax on it in the UK?

Many thanks in advance if you can answer this conundrum!

Bluegrass Lass

I am not a tax expert, but I'll weigh in with my understanding. Gambling/lottery income is taxable in the US. The first (I think) $86k of income is suppossedly not double taxed due to the US/UK treaty. However, I do not know if you have to show that you paid UK tax on that first $86k. If you did not pay UK tax on that gambling income, and that is the whole of your income, I would think you could find yourself having to pay US taxes. You should look into contacting a UK/US tax accountant to get a definitive answer.

Also, in some instances, the US gov't can force you to pay taxes on your worldwide income for several years after renouncing citizenship. In other words, renouncing US citizenship may not absolve you of the requirement to file or pay taxes to the US gov't.

meauxna

That's my understanding as well.

celticgrid

On a related topic, I believe the US consider the Premium Bonds system as "gambling", so even income from that source, albeit a UK Govt one, would be taxable as far as the IRS was concerned.

Bluegrass Lass

Because it's called tax evasion?

Bob

because when the IRS find out, you'll be in a whole world of pain...they really are quite vindictive about going after people.

Peter Newton

Also, the IRS and HMRC regularly exchange information: never assume the IRS won't find out about income arising in the UK.

Jerseygirl

I thought USCs were prohibited from playing lotteries overseas...that also includes premium bonds.

celticgrid

I think...

The prohibition is on use of the US Mail to carry on correspondence with Premium Bonds. As far as I know there's no ban on actually gambling, such as buying them if you are in the UK, as long as any winnings are declared as taxable income. This applies not only to USCs but LPRs etc. Even just visitors.

The Premium Bond place (!) will not let you have a US address, but don't question nationality at time of purchase.

hallri

but what if you're not a US citizen?
I'm here living here on a work visa, so same rule while I'm a resident of America?

thanks

tony126

Unless you are a politician.

Bob

Same rules apply, especially if you have any plans on staying here long term.

Manc

surely gambling is taxable in the UK,

whenever I went into Ladbrokes it was always tax paid on the stake or they'd take the tax out of your winnings....

or has it changed in the past ten years?

srefre

Yes, it has changed, I think it was in 2002 (but don't quote me on that) betting duty was removed from the punters point of view. However for the bookie the tax was changed so that it was just charged on the bookies profits.

What were you doing in Ladbrokes?
Only company that wasn't a customer of the products I worked on when in the industry (and normally crap margins)!

Manc

making a bet.