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UK limited company and becoming a US tax subject

UK limited company and becoming a US tax subject

Old Jul 19th 2023, 8:22 am
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Question UK limited company and becoming a US tax subject

Hi,

I've been in the UK for a number of years, working as an independent contractor of a UK limited company. I'm the sole director of that limited company, taking income from the company as a mix of salary and dividends. The limited company of course pays VAT and corporation tax to HMRC.

I'm emigrating to the US at the end of July on a CR1 visa, so when I am admitted to the US I become subject to US tax and will receive a green card. I'm looking into how to handle the limited company when filing US taxes. Broadly speaking I am aware of the option to declare the company as a disregarded entity, and also that there are at least income tax and US self employment tax to think about.

I will wind down and liquidate the UK company in the next few months, but I'm not in a position to do so before I arrive in the US as I still have some invoices outstanding on 30 day payment terms - so for my first US tax filing at least, I will have to deal with it.

I will speak with an accountant in the US about this but I'm just interested in any recent experiences if anyone on the forum has been in a similar position, i.e. become a US tax resident whilst still holding an interest in a UK limited company.

Thanks!

Michael

Last edited by raggedyak; Jul 19th 2023 at 8:51 am. Reason: Typo
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Old Jul 19th 2023, 4:24 pm
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Default Re: UK limited company and becoming a US tax subject

Your US citizen spouse will already have filed IRS Form 5471 for the year in which you were married. What was your spouse's experience on the complexity of the filing? This article may assist: Real Life: Get Married, File Form 5471 (hodgen.com)
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Old Jul 20th 2023, 2:53 pm
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Default Re: UK limited company and becoming a US tax subject

Originally Posted by Cook_County
Your US citizen spouse will already have filed IRS Form 5471 for the year in which you were married. What was your spouse's experience on the complexity of the filing? This article may assist:
Huh. I didn't know about this potential issue and neither did she. Thanks for the heads up.

I'm not convinced it applies to us though as I have been a non-resident alien since we married, and the sole director of the limited company since I opened it last year (I didn't have it when we married). In other words it's 100% controlled by a non-resident alien. It appears from this article (same site) that this excludes her from consideration of ownership as her spouse (me) is a non-resident alien with full control of the company. I can't yet post a link as I haven't posted 5 times yet and so the forum won't let me, but the article is titled U.S. Citizens Married to Noncitizens Who Own Foreign Corporations. Key quote - "“Federal tax law says that you are treated as the owner of any corporate stock owned by your spouse”. Fortunately, there is an escape. A U.S. person is not treated as if she owns stock that is directly owned by a nonresident alien."

She's also been filing married/separate so we have not yet made any declaration of the company income to US tax authorities i.e. we haven't had to look at how to categorise the income as it's purely been within the UK.

That said, I am surprised by this so will double check it with an accountant when I get there to make sure there are no other traps.


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