Re: Taxation question
 

Aye I'm starting to think more and more I might just get Turbo Tax and have it do it all for me! :lol:

Re: Taxation question
 

It's simple enough to use. It's cheap enough that I'll pay it to save me the time and effort.

The only annoyance for this past year is that I had to file by mail inorder to include a statement that I want to be treated as a tax resident all year.

Re: Taxation question
 

You'll file a Federal tax return and a PA state return. The Federal will be a 1040 with a Schedule C for your business profits and a Schedule SE to work out the self employment tax you pay....that will be 15.3% of your profits......then you have to pay income tax on those too. The PA tax will be in addition to that. You'll be able to deduct things like healthcare costs and solo401k contributions can greatly reduce the income tax you pay.

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And I'm correct in thinking that the self employment tax encompasses the Social Security tax and the Medicaid tax, but because I'm self employed - I'm paying both the employer and the employee contribution? But as stated earlier, on the 1040 you can deduct the employer contributions of the self employment tax?

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That's correct except that its Medicare...not Medicaid.

FYI also look into making voluntary NI contributions

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Voluntary NI? To the UK?

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Yes - you can still pay in and get a UK state pension, and it's pretty good value. If you're young enough it is possible to pay additional NI and get a full UK state pension AND get enough US Social Security credits to get full US SS and escape WEP, .... which is what I think I can pull off. :)

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Hah that does sound like a pretty sweet deal, I'm gonna look into that!

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How many years of contribution in the UK would it require to make it worthwhile starting?

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Well you need to accrue 35 years, so a good starting point would be to get a report of how many years you already have. You can create an on-line account fairly easily if you have your British passport to hand (they verify your identity against data in your passport). There should be some "free" years between age 16 and you starting work.

Then every one year of contributions (Class 2, £145/yr, for 2017, Class 3 £715/yr for 2018 and thereafter) your pension will increase by 1/35th of the UK pension.

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Holy cow, 10 minutes of Excel later and it makes perfect sense to do this even at the higher Class 3. :blink:

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I know you know this, but we should point out that a UK state pension paid for with voluntary NI is not WEP'able.

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Yep, 32 years of Class 2 voluntary NI is the best financial move I've ever made.

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WEP? Is it something I should be concerned about? Sorry, i'm a dummy with this.

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OK, so after some further digging it looks like if you don't have 30 years substantial earnings in the USA then SS will be reduced if I claim UK state pension?

On the face of it that seems OK as if I stay living here and retire here then I will have 30 years.