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UK and USA – two tax returns? And National Insurance in the UK

UK and USA – two tax returns? And National Insurance in the UK

Old Mar 18th 2014, 7:24 pm
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Default UK and USA – two tax returns? And National Insurance in the UK

Hi, I got my green card not long ago. Well, it's approved, but have yet to receive it. I have however received the Social Security card so I guess that means I am authorized to work in the US? Just wondering what I need to do in future about tax returns and national insurance in the UK. I would like to keep my options open as we may move to the UK later. Who knows. So I understand I have to keep paying national insurance in the UK. And is it right that I will need to do two tax returns each year? One in the US and one in the UK. What are other people in this situation doing??

Thank you so much.
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Old Mar 18th 2014, 7:36 pm
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Default Re: UK and USA – two tax returns? And National Insurance in the UK

If you're resident in the US then you won't be liable to UK income tax. You can opt to continuing paying National Insurance contributions in order to keep paying into your state pension you want although it is not by any means mandatory.

http://www.hmrc.gov.uk/ni/volcontr/basics.htm
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Old Mar 18th 2014, 7:54 pm
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Default Re: UK and USA – two tax returns? And National Insurance in the UK

How did you get your Green Card? Did you enter on an immigrant visa? In that case your "endorsed" (stamped) visa in your passport is your temporary Green Card, good for a year, and should be sufficient evidence of your authorization to work.

You can elect to make voluntary NI contributions: Class 2 if you're working, Class 3 if not. Both are relatively inexpensive, especially Class 2 if you qualify, and are well worth paying as they will entitle you to claim a full UK Old Age Pension once you have enough years' contributions.

Whether you have to file returns in both countries will depend on your circumstances. If you were just receiving a standard PAYE income in the UK then file a P-85 next month once the UK tax year ends and you shouldn't need to bother with HMRC again. If you have other income in the UK (investments, rents etc) that will continue you may have to file returns in both countries but the tax treaty should prevent you from being double taxed.

In terms of continuing to have to file US returns should you later return to the UK you will definitely have to do so for the rest of your life if you have become a US citizen. If you don't become a USC then you may have to file US returns after returning for a number of years depending on how long you were a US resident for.

Another thing to look into is the additional US filing requirements should you have UK bank and other financial accounts over a certain amount ($10,000 for FBAR filing, and I think it's something like $50,000 for FATCA). In general these are only reporting requirements and shouldn't attract a tax liability.

Last edited by rpjs; Mar 18th 2014 at 8:37 pm. Reason: punctuation and spelling
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Old Mar 18th 2014, 8:42 pm
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Default Re: UK and USA – two tax returns? And National Insurance in the UK

"If you don't become a USC then you may have to file US returns after returning for a number of years "

Could you elaborate?
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Old Mar 18th 2014, 8:49 pm
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Default Re: UK and USA – two tax returns? And National Insurance in the UK

Originally Posted by hotscot View Post
"If you don't become a USC then you may have to file US returns after returning for a number of years "

Could you elaborate?
I'm not 100% sure of the details, and I dare say someone will be along in a minute to fill them out, but IIRC once you've been an LPR for a set period, even if you abandon your LPR status and leave the US the IRS require you to file a non-resident tax return for (I think) about six years or so. Of course, the degree to which the IRS can enforce this on former LPRs who have no intention of returning is another matter, but when you consider the executive branch's far-reaching use of drones outside US territory in recent years, better safe than sorry.

of course
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Old Mar 18th 2014, 10:56 pm
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Default Re: UK and USA – two tax returns? And National Insurance in the UK

Originally Posted by rpjs View Post
I'm not 100% sure of the details, and I dare say someone will be along in a minute to fill them out, but IIRC once you've been an LPR for a set period, even if you abandon your LPR status and leave the US the IRS require you to file a non-resident tax return for (I think) about six years or so.
Since June 17, 2008, there's no ongoing tax filing requirement (unless there is U.S. source income). However, there is a capital gains tax on deemed disposals and an inheritance tax on future bequests to U.S. beneficiaries (although it's not clear if the latter is being enforced). This applies both to former citizens, and former "long term" green card holders who meet the criteria to be "covered expatriates":
http://www.irs.gov/Individuals/Inter...patriation-Tax
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Old Mar 30th 2014, 12:32 pm
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Default Re: UK and USA – two tax returns? And National Insurance in the UK

Hi all, thank you for these replies, and I apologize for my rather delayed reply. I've made notes about the above, and will look into it more in due course.
All the best!
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Old Mar 31st 2014, 2:23 pm
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Default Re: UK and USA – two tax returns? And National Insurance in the UK

Have a look at this wiki, incredibly helpful:
http://britishexpats.com/wiki/Taxes_..._IRS_in_London
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