tmmalik

1. US residency status
--me and my wife both UK Citizen, moved and become US resident since June 2022(Green card ) -so will be above 183 Days
-- Got Job in US in sept 2022 ,was working for UK employer till 10th October remotely .so 1 month both Jobs

2. UK bank accounts and investment accounts
-- we both have ISA in UK (all individual Stocks)
---I have SIPP with HL
--Had some NSI cash Prize bonds -majority cashed out before becoming resident -few still left


3. Bits where need help /advise
a) what i understood after reading on forum and getting advise that better to Keep SIPP in UK but how it will be treated for us tax purposes and which form i need to fill
b)Our Both ISA ,all contributions were made before moving ,in heavy loses ,after reading forum ,it seems if i still dispose them within 2022 ,i dont need to inform IRS about that ? Right ?
c)didnt claim my UK tax refund yet
d)whats best approach to file first US Return in current circumstances

e) Any other tricky bits I need to be aware of? as i still have 2 weeks ,if its better to do any action within this calendar year

I would very much appreciate any guidance from the readers here, and if you have contacts of UK-US tax advisors

thank you!

Glasgow Girl

You cannot transfer any pension of any kind to the US so you need to leave the SIPP in the UK. You do need to declare it on an FBAR assuming that your aggregate foreign assets meet the financial thresholds, and also on Form 8938 with your tax return again assuming your aggregate foreign assets meet the financial thresholds. Some people will tell you that you need to complete Form 3520 for a SIPP as it is considered to be a Foreign Trust, but the IRS has never provided definitive guidance on this, and to the best of my knowledge no one has ever been penalized for not doing so. It is a very complex form. Some people fill it in out of an abundance of caution, many do not. There is no taxable event until you take a distribution so until then it is just reported on the aforementioned forms. When you do take a distribution it will be taxed as ordinary income.

The IRS does not recognize ISAs, so as far as they are concerned the contents are just regular taxable securities. Because (in your case) they are individual stocks and not funds of any kind they are taxed as normal US Capital Gains upon which you will pay tax or take a loss upon sale. Profit/loss will be calculated from purchase date until sale regardless of when you moved over here. Since you would be in a loss situation you would be allowed to take a loss on your tax return this year up to $3,000 and roll the rest over to future years. But in any case you need to declare any sales, dividends, etc, received since you became subject to US taxes. I don’t think you are technically allowed to hold the prize bonds as a US resident so I would just get rid of them.

As for filing your first US return, make sure you understand Split Year treatment which as I recall means that everything you earned worldwide since your became subject to US taxes is now taxable in the US. Make sure you declare everything you need to on an FBAR, and Form 8938 including any personal and company pensions, life insurance, savings, investments, etc. Getting that wrong is a nightmare to fix after the fact.

tmmalik

Thanks
will sell my NSI Bonds .
so if ISA with having individual stocks ,its treated same like i am trading with any other stock with US broker .then i dont need to rush to sell ?and i will be charged with standard CGT for profit if there is any .

for split year tax filing ,all my income from uk employment will be treated as foreign income and first 105K is exempt ,so its better to pay US tax rather then UK and apply for uk tax refund ,am i right ?

tmmalik

Thanks
will sell my NSI Bonds .
so if ISA with having individual stocks ,its treated same like i am trading with any other stock with US broker .then i dont need to rush to sell ?and i will be charged with standard CGT for profit if there is any .

for split year tax filing ,all my income from uk employment will be treated as foreign income and first 105K is exempt ,so its better to pay US tax rather then UK and apply for uk tax refund ,am i right ?

tht

One important thing to remember is that the UK tax year runs April 6th to April 5th vs the US which ends 12/31. So you need to keep all records and exact payment dates to split out UK income etc in to the correct US tax year, so a P60 will not be much use without the breakdown. If you get told a bonus that n December 30, but it credits to you bank account 2nd Jan it is declared 1 year later for US taxes.

Also depending which state and city you live in could impact your taxes, while you can get a credit for UK tax’s paid if they are required against Federal tax you can’t for state and city, not a big deal if you move to FL, but it gets very expensive in NYC for example.

Glasgow Girl

Correct on your individual shares.

For split year treatment I thought all income received worldwide after you become subject to US taxation is taxable by the IRS. But others on this forum are more familiar with first year taxes than me, perhaps they will chime in. If correct then all income received from your UK employer since you received your green card will be subject to IRS taxes. But in any case you have to pay taxes on that income somewhere, and I think it will be to the UK initially then you will have to calculate what you owe the IRS on the income received since you got your green card, get a credit for the UK tax paid on that income and pay the balance to the IRS if there is any (no refund if IRS tax is less than UK).

tht

Your previous post in 2013 was to say you became a UKC, did you give up/loose your prior citizenship? I think some countries like India don’t allow dual citizenship. If not are there tax implications from that Citizenship you also need to consider?

tmmalik

thanks for that ,that 10 year old post was about my wife ,she can keep multiple citizenship (she is not from country where you need to give-up citizenship) but good point ,thanks

anyone can point me about good resources for first year taxes ?

tmmalik

Hi ,finally going through filling process but seems painful, tried H&R Block but not helpful(not populating all forms), not getting any appointment from Accountant.so trying to do at my own ,so need help from community.
1-should i just download all required forms from IRS as i need to submit paper return 1040 ,1040NR due to split year treatment? or try any other application like turbotax ?
2-My 7 month of UK salary has employer pension contribution ,i have more contribution than employer (which i moved to my SIPP at the end and closed my employer pension Account) ,how to deal with that ?
3-3 uk bank account ,one wise (used to transfer funds)
4- one uk stock sale proceeds (in loss )
5- me and my wife has w2 ,single entity LLC
6-which forms i need in my circumstances ?
8938 to report my SIPP, attach schedule 3 for self employment (single entity) which other forms i need to fill ?
7-submitted p85 for uk tax refund ,no reply for 2 months ,seems need to file uk tax return by end of this week ?

S Folinsky

BTW, depending on where you live you may have an extension in place for both filing and tax payments. These extensions are tied into disaster declarations. Living as I do in Al’s Angeles County, our recent rains (and concomitant flooding and land slides) caused not one, but two extensions.

Glasgow Girl

In your case I would file for an extension until the end of October. That is easily done, not at all unusual, and will give you time to get with a CPA. They should have a lot more availability after the tax deadline.

I suspect that none of the online packages will support split year treatment which will likely be your best option. I could be wrong but because it is such a niche market it is unlikely they will have put the effort into supporting that. Doing it yourself, on paper, and for the first time will likely result in errors which will kick it out for manual review, and potentially audit. You don’t want that.

The cost of a CPA will be money well spent this year, and likely you can do it yourself in subsequent years.

S Folinsky

As you are aware, the standard extension applies to filing of the return only. You are still required to make your best guesstimate if any further tax is due (not everyone gets a refund). The disaster extensions in place apply to payments and estimated payments in 2023). Something that might apply to OP.