JupiterAndBeyond

Hello,

I'm at the beginning of the K1 process, I intend to move to the US and marry my Fiancee when the paperwork pops out the other end from the USCIS. I announced this to my employers and although a little shocked they agreed to accommodate my need to work from the USA. I work for a British company that has an American subsidiary that is effectively a placeholder for our American operations, it pays US suppliers, owns some infrastructure, has a "virtual office" i.e. an address and phone number BUT employs no people in the US. Everything is run and managed from the UK.

The subsidiary is not setup to employ staff so can I still be employed by the UK parent company and retain my benefits and service contract but get paid in the UK? How would tax work? Could they pay me gross in dollars at an agreed exchange rate and I do the tax myself? (Like a contractor for example)

Is there any benefit in the US subsidiary employing me directly rather than the UK company?

The principal aim of this exercise is to maintain my existing benefits such as holiday, notice period and of course salary.

Any bright ideas? Thanks in advance!

penguinsix

If you are paid as a contractor, you get less than if you were an employee.

In the US your employer is required to pay Social Security and Medicare payments along withholding a portion of your income for income tax purposes. There is an amount called the 'employer contribution' that is required of the employer to be paid directly to the US government. So say your salary is $100,000 US. The actual cost to the employer is $106,000 US or so, but $6,000 of that is skimmed off the top and sent straight to the government as the 'employer's share'.

Now, if you don't have an "employer" over here, guess who pays the employer's share? You do. It's called self-employment tax. So again in our $100,000 situation, you are, from the start, knocked down $6,000 or so to pay the self-employment tax. Kind of sucks from the start.

To be honest, if there is a placeholder company and a virtual office and now someone "working" in the US, the company may be headed toward some requirements to establish a US subsidiary and start doing the withholding and employee payments. This gets into a sticky area as many UK companies would like to avoid dealing with the US IRS if at all possible (simply for the paperwork hassle alone).

While you are in the UK (i.e NOT in the US) talk to a US-UK tax person. There are plenty in London and you can find recommendations on the US expats in the UK messageboard (talk.uk-yankee.com). You are much more likely to find someone over there who has dealt with cross-border accounting and tax issues than you are in whatever small town you find yourself when you move over here.

JupiterAndBeyond

Thanks - the $6K figure you cite, is that an example or a real figure i.e. 6%?

Bob

It's about that, as you pay the other half too, but what taxes are liable depend on where you reside, there's Federal, no getting away from it, but you've also got any possible state/county/city taxes on top.

Your biggest issue would be medical insurance too.

Oh, as a contractor, you've got to file quarterly rather than annually too.