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Tax - UK/US dual status residency, self employment, totalization agreement

Tax - UK/US dual status residency, self employment, totalization agreement

Old Feb 8th 2024, 1:00 am
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Question Tax - UK/US dual status residency, self employment, totalization agreement

Another tax topic...

Background: I moved to the US from the UK in mid 2023. Prior to moving, I worked as an IT contractor through a UK limited company where I was the sole director. I will likely file as dual-status, but the UK limited company received payment of some invoices after I arrived in the US - unfortunately it was not possible to obtain payment of the invoices prior to emigrating. (Invoices were for work done prior to emigrating.) I will likely elect to treat the limited company as a foreign disregarded entity. If so, all company income will be treated as my personal income, less UK corporation taxes paid. (I took a salary from the limited company so I was liable for national insurance payments in the UK.)

It appears that the income received after I arrived in the US is subject to US self-employment taxation.

I am looking into whether I am eligible for relief from US self-employment tax due to the totalization agreement between the UK and the US. However, it is not clear if the totalization agreement still applies once I became a resident of the US, and I can't find much information about dual residency.

Worst case I will bite the bullet and pay the US self employment tax on the income received after I arrived here, but needless to say this is a last resort!

Does anyone have any experience of navigating this topic?

Thanks.
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Old Feb 9th 2024, 3:01 am
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Default Re: Tax - UK/US dual status residency, self employment, totalization agreement

I am not an expert but my understanding is that income is taxable when you receive it so you will be liable to US taxation on those amount since you were resident in the US when you received the payments. You should be able to exclude that income from your UK taxes though under the double taxation agreement.




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