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Tax Question

Tax Question

Old May 26th 2011, 4:06 pm
  #1  
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Default Tax Question

Hello,

i've just sent of my n-400 in the post and after some general browsing i'm leaning that if i moved back to england with dual citizenship i'm going to be raped by 2 taxes?? one to the US and one to England? lmao!

Thank you.
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Old May 26th 2011, 4:20 pm
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Default Re: Tax Question

Theres an agreement between US/UK you only pay US taxes living in UK if you earn a heck of a lot of money. Not that many people end up paying from what Ive read on here.

http://www.irs.gov/businesses/intern...169552,00.html
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Old May 26th 2011, 4:27 pm
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Default Re: Tax Question

Thanks for that! saved me cancelling my cheque.

would you know which US offices i would need to notify if i did decide to move back home?

Thanks.
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Old May 26th 2011, 4:32 pm
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Default Re: Tax Question

If you're a US citizen living abroad you get a very large personal allowance (currently around $90,000) on your foreign earned income that you don't have to pay US income tax on. Also if your income were to exceed that amount, the US-UK tax treaty allows you to deduct any UK tax paid and only pay any US tax that would have been higher, which usually doesn't happen as UK marginal tax rates are generally higher than their US equivalents. You do need to file a US tax return if living abroad unless your income is very low (like a couple of grand or so).
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Old May 26th 2011, 4:35 pm
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Default Re: Tax Question

Originally Posted by Jamma72 View Post
Thanks for that! saved me cancelling my cheque.

would you know which US offices i would need to notify if i did decide to move back home?

Thanks.
You'd be on the hook for filing as a LPR anyway.
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Old May 26th 2011, 4:39 pm
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Default Re: Tax Question

Originally Posted by Jamma72 View Post
... i'm going to be raped by 2 taxes?
If I may, could you please - in future - choose your words more carefully? Thanks!

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Old May 26th 2011, 4:44 pm
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Default Re: Tax Question

so if i'm below 90k a year in the UK, i would still have to keep filing but wouldn't have to pay the US anything?

i've actually just found this which explains it in somewhat laymans terms...
http://www.christianphansen.com/USTaxes.html
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Old May 26th 2011, 5:36 pm
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Default Re: Tax Question

Originally Posted by Jamma72 View Post
would you know which US offices i would need to notify if i did decide to move back home?

Thanks.
After you become a USC, you don't need to notify anyone that you've moved.

You will need to continue filing a US tax return if you earn worldwide income over the required amount (www.irs.gov tells you that amount). But it doesn't mean you need to PAY anything in US tax, just that you need to file the US tax return each year, claiming your worldwide earned income. You would still need to do this as a US PR anyway, being a USC doesn't change that requirement.

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Old May 26th 2011, 8:00 pm
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Default Re: Tax Question

I’d like to add the following comment for a (US person) British Expat considering returning and ultimately retiring in the UK. It may well be far too early for the OP to consider, and somewhat off topic, but there maybe others intending on returning to the UK some day.



You’ll be able to offset US taxes because of the higher UK tax bands or Form 2555, but not always. If you live solely on pension income, you cannot use (IRS) Form 2555 (Foreign Earned Income Exclusion) to offset UK tax paid (it’s not ‘earned’ income). There are Form 1116 (Foreign Tax Credit) and the UK/US taxation agreement, but applying them can be challenging.



For a pensioner living in the UK, the first priority is establishing the correct tax situation with HMRC (which is often dictated by the arising basis). Once that is correct, the situation with the IRS will follow. The treaty could be important to both, or unimportant to either. Form 1116 may offset all US taxes due, or it may not. It depends on the particular type of pension income, its source, the amounts, type of payment, and HMRC (amongst other considerations). Each pensioner has a different set of circumstances. There are no straight forward answers.



Retiring in the UK as a pensioner with a US tax obligation involves exemptions, resourced income, tax credits, or the application of the treaty. In some situations (solely UK sourced pension income below £13,950 or $21,406 at an exchange rate of 1.54), it’s possible for a UK pensioner with a US tax obligation (if the treaty cannot be applied), to owe US tax since they will have no, or insufficient, credits on Form 1116 to offset the US tax due. If they receive additional interest from an ISA, the situation will be worse. If US sourced income becomes involved, the calculations (and forms) become more complex.



As always, I’m not a professional tax person, it’s just my opinion, and it could well be incorrect. By way of introduction, I’m a US citizen, resident in the UK for 30 years, with a British spouse. And if you really want to know why…...that’s for another thread.

Last edited by theOAP; May 26th 2011 at 8:01 pm. Reason: type size, and I couldn't do anything about it. Sorry.
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Old May 26th 2011, 8:14 pm
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Default Re: Tax Question

"Last edited by theOAP : Today at 1:01 pm. Reason: type size, and I couldn't do anything about it. Sorry."



But it's appropriate!
Let me know if you want it changed, but I can almost read it without my glasses!
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Old May 26th 2011, 8:30 pm
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Default Re: Tax Question

I'm so sorry, but I can't remember what it is you're referring to.

And yes, if you're able, please correct it.
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