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Tax question about earning all wages from Ireland, being a new US permanent resident

Tax question about earning all wages from Ireland, being a new US permanent resident

Old May 17th 2012, 10:08 pm
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Default Tax question about earning all wages from Ireland, being a new US permanent resident

Hey everyone,

I have searched for the answer to this question, but not been able to find it yet (apologies if it is answered elsewhere).

I have just received my greencard (CR6 category) and am now a permanent resident. I am still a director of a company back in Ireland, and since I have been in the States over the last few months, I have been continuing to pay Irish taxes as I would have done while living and working in Ireland, before making the move with my wife.

Obviously, I need to pay taxes locally now, in South Carolina. However, the company do not have a presence locally and my wage from Ireland will be my only source of income. Can anyone advise as to what I should do next and what tax status I should declare now?

Do I need to set myself up as being self employed in the States and just send an invoice to our company in Ireland for my full wage each month, and declare taxes myself locally?

Any advise or a point in the right direction, where I could read more, would be really appreciated.

Thanks for all your help.
Brendan

Last edited by Brendan_SC; May 17th 2012 at 10:12 pm. Reason: more specific title
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Old May 17th 2012, 10:44 pm
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Default Re: Tax question about earning all wages from Ireland, being a new US permanent resid

Originally Posted by Brendan_SC View Post
Obviously, I need to pay taxes locally now, in South Carolina. However, the company do not have a presence locally and my wage from Ireland will be my only source of income. Can anyone advise as to what I should do next and what tax status I should declare now?

Do I need to set myself up as being self employed in the States and just send an invoice to our company in Ireland for my full wage each month, and declare taxes myself locally?
You can do either.

Tax treaty, which I presume is the same for Ireland as the rest of the UK, means you should not be taxed twice.

If you go the self employed route, you've got to file US taxes quarterly and pay the employer portion of tax on top of the employee portion.
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Old May 17th 2012, 11:12 pm
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Default Re: Tax question about earning all wages from Ireland, being a new US permanent resid

Any help would be greatly appreciated guys. I decided to call the IRS to see if they could help me either.... not a good idea... I am currently on hold waiting to get transferred to my 5th department, 2 hours and 6 minutes later.

Basically, my situation is: I am a permanent resident, earning money as an employee of a foreign entity. What should i do to pay taxes in the USA.
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Old May 17th 2012, 11:40 pm
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Default Re: Tax question about earning all wages from Ireland, being a new US permanent resid

Ugh this is a pain, for everyone.

The company either has to start withholding your US taxes and start paying things like unemployment insurance, or you have to start acting as an independent contractor and bill the company, thus making you liable for paying the employers share of unemployment and other taxes. Can be quite a pain and a financial hit on you. The company could also set up a USA shell operation and funnel the money to that, allowing them to pay you and to pay taxes and whatnot.

You also need to watch out--if you own a certain percentage of a foreign company and are a director or something you might have a disclosure form. To fill out. 5471 or something like that.

If just you I would have the company pay you a bit extra for your self-employment taxes. Basically the easiest least paperwork way.

Welcome to the USA. Don't forget about FBAR.

Last edited by penguinsix; May 18th 2012 at 1:18 am. Reason: stupid ipad typos
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Old May 18th 2012, 12:54 am
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Default Re: Tax question about earning all wages from Ireland, being a new US permanent resid

Although there is a tax treaty with Ireland, you are working in the US and therefore you need to pay US taxes and get a refund from Ireland using US tax credits.

As stated earlier, if you are an independent contractor, you will have to pay self employment tax (employer as well as employee share) plus you will likely lose a lot of benefits such as vacation, holidays, health insurance, and many other possible benefits. Therefore if you become an independent contractor, ask for a very large pay raise.
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Old May 18th 2012, 1:35 am
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Default Re: Tax question about earning all wages from Ireland, being a new US permanent resid

Thanks for the responses guys. After 2.5 hours of IRS call, I got nowhere and had to hang up as I needed to leave. Ah well, there is always tomorrow!

In general, I think getting some professional tax and accounting advice would be a good start to things here for me. Would you recommend that, or is it a system that is easy enough to pick up, if you are willing to spend the time?
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Old May 18th 2012, 3:13 am
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Default Re: Tax question about earning all wages from Ireland, being a new US permanent resid

You definitely need professional advice. And honestly, you are gonna have to search around here in the US to find someone who is experienced in some of these cross-border issues as they are not the day-to-day bread and butter type work that most American accountants deal with. You may look for someone with some experience in expats, or even for some advice from accountants back in the UK who deal with expats.

There is a rather big issue for your company as to whether you being an employee in the US means they are "doing business in the US". It might be a determination they don't want to make, as it would mean considerable reporting requirements to the US government. You also need to be careful about state law requirements in that many states require a business to be registered, even as a "foreign company" if they have an employee in that state.

There are also very onerous reporting requirements for US taxpayers as it relates to foreign transactions. Not only are you on the hook for FBAR and FATCA filings for your bank accounts (heck, even your Irish paypal account) but also IRS 5471 if you are a major player in the company).

Basically, this is professional level accountant stuff to sort out. It's not very simple.

fwiw I have gone through this. If I had to do it again, I would have just done it as an independent contractor and had the company in the UK pay me a bit extra to cover my FICA contributions (which they were willing to do). It was just a paperwork nightmare the other way (setting up a US subsidiary, etc).
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Old May 18th 2012, 3:15 am
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Default Re: Tax question about earning all wages from Ireland, being a new US permanent resid

It is definitely worth getting professional advice initially about the possible ways that you can handle this and their relative advances and disadvantages.

Once you have things set up you may well find that you can do whatever ongoing paperwork is required (if that is what you want to do).

One of the members here, Pete Newton, is a tax professional who is accustomed to dealing with US / UK expat tax issues - I have not used his services myself but everyone that I have heard of who did seems to be very satisfied with his services so you might want to consider contacting him.
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Old May 18th 2012, 4:12 am
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Default Re: Tax question about earning all wages from Ireland, being a new US permanent resid

Originally Posted by Michael View Post
As stated earlier, if you are an independent contractor, you will have to pay self employment tax (employer as well as employee share) plus you will likely lose a lot of benefits such as vacation, holidays, health insurance, and many other possible benefits. Therefore if you become an independent contractor, ask for a very large pay raise.
Lose the ability to claim unemployment if you lose your job too.
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