UK/US Taxes

Old Mar 22nd 2012, 9:07 pm
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Default UK/US Taxes

Hello all,

I'm currently working freelance in the UK whilst waiting for my visa to join my wife in the US. I will do a tax return for 2011/2012 as well as 2012 to whenever I leave I assume. Im more concerned about what is expected of me when I arrive in the states. I obviously need to sort out an accountant but will the US tax need to see previous years tax returns from the UK or will that not matter to them? I suppose they won't be interested in 2011/2012 and before. I've mostly been doing freelance stuff along side my full time job until a few months ago, although I always pay my taxes I have kept pretty crappy records of everything.

Thanks in advance.
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Old Mar 22nd 2012, 9:42 pm
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Default Re: UK/US Taxes

Tax year is start of to end of year, which you file the following year, between Jan and April 15th.

You'll need to do a better job of tax records for the US as a contractor has to file quarterly.

It'll not be a lot of fun the first year, but there are plenty of other threads that can give you a eye on things to look out for that'll offer better advice than I could.
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Old Mar 22nd 2012, 9:49 pm
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Default Re: UK/US Taxes

I'll second that. I was a contractor when I worked in the UK, and it was relatively straightforward tax-wise. The US is a total nightmare by comparison. Even if you're in regular employment over here, it's far from straightforward, especially if you're used to PAYE. Definitely get your affairs in order before you leave, and get your paperwork more organised when you arrive here. Pay close attention to any investments/endowments/pensions/ISAs/etc you have over there, this year's new reporting requirements make them a potentially very expensive minefield. I think in one of the other threads, someone recommended liquidating them, and from what I'm seeing this year, that might be good advice, especially if you plan to stay in the US long term.
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Old Mar 22nd 2012, 10:01 pm
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Default Re: UK/US Taxes

Thanks guys. Well, I have no investments or any sort so i'll be okay with that I guess. What I was really getting at is, the business year ends here in April for which I will soon complete a tax return for that year, then I start the year 2012/2013 business year, some of which i'll be in the US. Would The UK tax office require me to finish up and complete a tax return for whatever months I will be here or does it carry over to when I have to complete a tax return there? ( i read something about a duel taxation agreement). Will the US only be interested in my tax affairs from april 2012 onwards?? This gives me time to get my stuff in order as I really don't want to get myself in trouble over there!

I do plan to continue working for UK clients as soon as I'm over there so sorting out a decent accountant is top priority. Thanks!
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Old Mar 22nd 2012, 10:08 pm
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Default Re: UK/US Taxes

Originally Posted by amancalledsun View Post
Thanks guys. Well, I have no investments or any sort so i'll be okay with that I guess. What I was really getting at is, the business year ends here in April for which I will soon complete a tax return for that year, then I start the year 2012/2013 business year, some of which i'll be in the US. Would The UK tax office require me to finish up and complete a tax return for whatever months I will be here or does it carry over to when I have to complete a tax return there? ( i read something about a duel taxation agreement). Will the US only be interested in my tax affairs from april 2012 onwards?? This gives me time to get my stuff in order as I really don't want to get myself in trouble over there!

I do plan to continue working for UK clients as soon as I'm over there so sorting out a decent accountant is top priority. Thanks!
Don't forget it also requires reporting of assets, not just investments.

I don't know the deal with the UK taxes, but the US doesn't care that the tax year doesn't line up, which is why things get complicated. You file from beginning to end of year, as I mentioned.

If you have paid tax in one jurisdiction, you can claim the tax treaty on the tax form so as not to pay tax again, up to a certain amount, which tends to be more than most people would have to worry about actually having double tax.
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Old Mar 29th 2012, 12:14 pm
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Question Re: UK/US Taxes

Just reading over various postings that look of interest. I am moving to US later this year with spouse. (H1B and H4)

I notice someone mentions ISA's in this post. I was intending to leave my ISA's in place in the UK, with interest going into my UK bank account. I will not have enough income to pay tax in either UK or US as I won't be working.

Do I have to declare these on a tax return in the US? and if so, when, where, how taxation work? Any related info would be helpful. Thanks
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Old Mar 29th 2012, 12:50 pm
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Default Re: UK/US Taxes

Originally Posted by newlifeinparadise View Post
Just reading over various postings that look of interest. I am moving to US later this year with spouse. (H1B and H4)

I notice someone mentions ISA's in this post. I was intending to leave my ISA's in place in the UK, with interest going into my UK bank account. I will not have enough income to pay tax in either UK or US as I won't be working.

Do I have to declare these on a tax return in the US? and if so, when, where, how taxation work? Any related info would be helpful. Thanks
Yes you have to declare ISA on the FBAR form AND the interest as it is not sheltered from the tax man in the USA
Although you will have the equivalent of UK tax free allowance depending how you and spouse file.
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Old Mar 29th 2012, 12:58 pm
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Default Re: UK/US Taxes

Originally Posted by amancalledsun View Post
Thanks guys. Well, I have no investments or any sort so i'll be okay with that I guess. What I was really getting at is, the business year ends here in April for which I will soon complete a tax return for that year, then I start the year 2012/2013 business year, some of which i'll be in the US. Would The UK tax office require me to finish up and complete a tax return for whatever months I will be here or does it carry over to when I have to complete a tax return there? ( i read something about a duel taxation agreement). Will the US only be interested in my tax affairs from april 2012 onwards?? This gives me time to get my stuff in order as I really don't want to get myself in trouble over there!

I do plan to continue working for UK clients as soon as I'm over there so sorting out a decent accountant is top priority. Thanks!
You will need to do a UK tax return April 2012 to April 2013 and a USA tax return Jan to Dec 2012.
The best thing you can do is start getting records in monthly order now, it will make your life so much easier here!
You will need P85 from inland revenue to inform them you are leaving uk. Form us-individual 2002 stops the uk deducting tax on certain types of income if you have to pay it in usa or you can claim a credit on your usa tax return
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Old Mar 29th 2012, 1:04 pm
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Default Re: UK/US Taxes

Originally Posted by texasjan View Post
You will need to do a UK tax return April 2012 to April 2013 and a USA tax return Jan to Dec 2012.
The best thing you can do is start getting records in monthly order now, it will make your life so much easier here!
You will need P85 from inland revenue to inform them you are leaving uk. Form us-individual 2002 stops the uk deducting tax on certain types of income if you have to pay it in usa or you can claim a credit on your usa tax return
This is brilliant, cheers mate
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Old Mar 29th 2012, 3:59 pm
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Question Re: UK/US Taxes

Originally Posted by texasjan View Post
Yes you have to declare ISA on the FBAR form AND the interest as it is not sheltered from the tax man in the USA
Although you will have the equivalent of UK tax free allowance depending how you and spouse file.
Thanks for this. Do you have a suggestion as to how we should file? I haven't been able to understand the tax filing system as yet. How do we get a UK tax free allowance? are we both entitled to that?

I will have zero income but significant savings in the UK. My husband will have his US salary and he will also be letting our flat in the UK out but making only around £2000 per year in profit (which is in his name currently)

We have been given a recommendation for an accountant so will obviously get all info checked but it's nice to get an idea of how things work and nice talking to people in similar situations.
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Old Mar 30th 2012, 4:31 pm
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Default Re: UK/US Taxes

Originally Posted by newlifeinparadise View Post
Thanks for this. Do you have a suggestion as to how we should file?
Married, filing jointly or separately. Run the numbers to see which will work better off for you, though normally it is to file jointly.
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Old Mar 30th 2012, 4:45 pm
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Default Re: UK/US Taxes

Originally Posted by newlifeinparadise View Post

I notice someone mentions ISA's in this post. I was intending to leave my ISA's in place in the UK, with interest going into my UK bank account. I will not have enough income to pay tax in either UK or US as I won't be working.
What type of ISA do you have?

If you are moving to the US ISAs loose a lot of their appeal because they are US taxable and some come with quite complex tax filing requirements.
As a US resident I found it easier just to close out UK accounts and invest in the US.

Last edited by nun; Mar 30th 2012 at 4:48 pm.
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Old Mar 30th 2012, 4:50 pm
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Default Re: UK/US Taxes

so you have to declare premium bonds too.
is that taxable in th us?
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Old Mar 30th 2012, 5:18 pm
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Default Re: UK/US Taxes

Originally Posted by tipex View Post
so you have to declare premium bonds too.
is that taxable in th us?
Remember as a US citizen or resident the US taxes your worldwide income, unless there is some treaty exemption. so Yep, premium bond winnings too. I'd probably put it on the 1040 as "Gambling Winnings".

Last edited by nun; Mar 30th 2012 at 5:29 pm.
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Old Mar 31st 2012, 8:51 am
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Default Re: UK/US Taxes

Originally Posted by nun View Post
What type of ISA do you have?

If you are moving to the US ISAs loose a lot of their appeal because they are US taxable and some come with quite complex tax filing requirements.
As a US resident I found it easier just to close out UK accounts and invest in the US.
It's a cash ISA.

As we are going on the H visa - it's only three years, we don't know what will happen in the longer term.

I wouldn't be keen to cash out my ISA and convert to dollars and then re-invest - think I'd lose out significantly there.

Also wouldn't have a clue where to invest. In the UK, the best buy tables at the moment given an instant access rate ISA of around 3.5%. I don't know if there is anything comparable in the US?

Also, in the UK it's regulated and there is a compensation scheme covering up to £85k per institution I think - does something comparable exist in the US? (I have a feeling the answer is no!)
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