Taxes - British Expat with US Green Card Contracting for a UK Company
 

Hello,

Assuming I get through the final stages of the visa application (via my wife), my family are looking to move over to the U.S. in the next couple of months (I have my embassy interview later this week). :)

For the past few years I've been an IT contractor in London, and the company I'm currently at have said I can continue with what I am doing, but working from home in the U.S. This is obviously great news - but the only "catch" is that they still want to pay me in GBP and not USD. My questions...

- Based on the UK resident test for tax purposes, it makes sense I pay taxes in the U.S. vs. the U.K (i.e. I will be living abroad for >180 or so days) and actually "residing" in the U.S.
- Does it makes sense I create a GBP account in the U.S. under my LLC name (with S-Corp status);
- Or... do I create a business USD account and simply get the agency to transfer in USD (but the transfer fees will sting - typically ~5%)

Any suggestions or advice?

Thanks

Re: Taxes - British Expat with US Green Card Contracting for a UK Company
 

Why not have it paid into an account in the UK and you transfer it using a currency broker.

That way you can transfer when the exchange rate is in your favour, and a currency broker will have a better exchange rate and lower, or no fees, than a high street bank.

Re: Taxes - British Expat with US Green Card Contracting for a UK Company
 

Exactly what I was about to say!

Re: Taxes - British Expat with US Green Card Contracting for a UK Company
 

You'd be an LPR so by definition wherever you live as an LPR you are resident in the US for tax purposes. That's what "permanent resident" means. Have a read of IRS publication 519.

You can use an S-corp but it might be easier to just be self-employed. You're not really going to gain much from limited liability in that situation and you already work for them so you're not going to gain anything by having "limited" in your business name either.

You can invoice them in any currency you want, you just have to convert it into USD on your tax return and financial statements.

Having been in a similar situation in the past I'm here to tell you it's usually better to try and get them to pay you in your local currency because obviously they bear the exchange rate risk.

It works out far cheaper to move the money over in one bulk payment as well if you have to be paid in Sterling.

The main snag to being self-employed in the US is that payroll taxes are really high so you're paying 15.3% just in FICA which is fantastically higher than what it is here or in the UK. Plus you've got the whole healthcare conundrum because you're self-insured.

And those two reasons are why I live in Canada.