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UK/USA Tax filing advice for US resident with two employers

UK/USA Tax filing advice for US resident with two employers

Old May 19th 2017, 12:57 am
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Default UK/USA Tax filing advice for US resident with two employers

Hi!

I am new to the forum and may be covering previously well covered ground - so apologies for repetition...

I am a British citizen and a US green card holder/US resident and currently a dual employee. Employed at a US company and at a UK company (just to add, both companies are fully aware of this and are happy lol) with salary coming from both. My first 'odd' tax year will be Apr2016-Apr2017 in the UK and Jan17-Dec17 in the USA.

At the moment my UK salary is being taxed in the UK at source and my US salary is also being taxed at source in the US with normal standard deductions for residents of each country. I know that for the US tax year coming I will most likely owe taxes on my total income for the year to the IRS and so will need to claim back taxes paid in the UK which are now due in the USA.

So for the advice (which will be very welcome):
Any advice on the software to use to file my self assessment UK taxes would be very welcome now that I can no longer use the HMRC online tool (I had googled and found TaxCalc and Andica?).

What is best way to reclaim UK taxes previously paid (now due in full/part to the IRS)?

Going forward, I will continue to be employed at both companies, any advice on what I should do/who to consult (accountants) to set up my standard deductions etc.

Let me know if any other information would be useful.

Thank you all in advance for any advice, anecdotes on your previous experiences, and your time!

Best regards,
Mike
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Old May 19th 2017, 1:41 am
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Default Re: UK/USA Tax filing advice for US resident with two employers

Cannot advise on US side but for UK then I recommend Tax Calc.It's £30 this year - I've used it for years. It has the relevant pages for an overseas resident - SA109 - which is not available with the HMRC online version but you can submit it online. However, in order to reclaim UK tax you will have to meet the terms of the US/UK double Taxaqtion Treaty and, I believe, submit a DTT Individual form to HMRC.
Alternatively I believe you can continue to pay UK tax but offset it against US tax.
I'm sure someone much more knowledgeable will come along before too long!
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Old May 19th 2017, 1:51 am
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Default Re: UK/USA Tax filing advice for US resident with two employers

Thanks for the UK tax software recommendation. I had been looking through the list from the uk gov website. Maybe TaxCalc is the way to go

I have read the UK/US double taxation treaty (a while ago though - in preparation for my move/circumstances), just not read through all the forms I may need to submit to HMRC or the IRS yet...
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Old May 19th 2017, 10:38 am
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Default Re: UK/USA Tax filing advice for US resident with two employers

What kind of US visa do you have? Are you UK tax resident? Are you US tax resident?
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Old May 19th 2017, 11:33 am
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Default Re: UK/USA Tax filing advice for US resident with two employers

Originally Posted by Mike17 View Post
Going forward, I will continue to be employed at both companies, any advice on what I should do/who to consult (accountants) to set up my standard deductions etc.
This could be problematic.

Are you physically working in the USA? Does your UK company have a US office (i.e. entity) with which they can process the necessary paperwork for having an American-based employee? Or are you working as an independent contractor for them?

A foreign company with a presence in the USA (i.e. an employee) incurs a number of filing requirements such as US tax forms, tax withholding payments, responsibility for unemployment and employer's share of Medicare and Social Security taxes. Many small companies are unaware of these requirements but they are out there and long term can be problematic.

Depends a bit on your employment status, location and whatnot, but it's something to investigate.
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Old May 19th 2017, 12:29 pm
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Default Re: UK/USA Tax filing advice for US resident with two employers

Originally Posted by Cook_County View Post
What kind of US visa do you have?
Did you actually read what he wrote?

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Old May 19th 2017, 6:21 pm
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Default Re: UK/USA Tax filing advice for US resident with two employers

Originally Posted by penguinsix View Post
Are you physically working in the USA? Does your UK company have a US office (i.e. entity) with which they can process the necessary paperwork for having an American-based employee? Or are you working as an independent contractor for them
Thanks for the note. I live full time in the US (married to a US Citizen) and physically work in the USA for both companies. The U.K. company is in the process of setting up a legal business entity currently. For the time being I am working in the USA for the U.K. company - which I believe, as you also noted, means that the U.K. company already has a proxy/presence/entity in the USA with requirements for withholding and Medicaid etc. However, as some of the work (software development) I do for the U.K. company, even though that work is conducted physically in the USA, could technically be argued that it should be taxed in the U.K. - it leaves the door open for me to argue to be part taxed in UK but mostly my tax should go to the USA on total income. I could be completely wrong about the software dev work though...

I am hoping that Jan17-Dec17 will be the only odd year and perhaps in a couple months or by next year I can switch to being employed by the new US entity for the U.K. company while remaining an employee of the other US company.

You are also right about the U.K. company size, the U.K. company is small and was largely unaware of the requirements.

The US company is already taking appropriate withholdings and Medicaid, social security, based on the income I receive from them. Perhaps the US company could take out the appropriate witholdings, Medicaid, social security taking enough to cover the amounts that should come from the U.K. as well?At least until the U.K. company completes the creation of the US entity and moves my employment contract over from the U.K. company to the newly formed US company.

Thanks again for the advice. I had been wondering if it would be necessary to switch my U.K. employment contract over to the new US company when it was created or if I could remain on the U.K. employment contract. Perhaps it will be more straightforward to switch to the new US company when created.
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Old May 20th 2017, 2:49 am
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Default Re: UK/USA Tax filing advice for US resident with two employers

You are liable to tax in the US on your worldwide income and must pay FICA and Medicare on all your earned income while a US resident.

A UK company should not have employees resident in the US as they won't be complying with US regulations.....the most obvious being the employer's FICA and Medicare contributions. The UK company needs to employ you through a US subsidiary or you need to be a US sole proprietor and bill the UK company for your work. As far as the UK is concerned you'll have a hard time claiming back the PAYE tax and the NI. You need to be far less complacent about these things as you are breaking a lot of rules and the IRS will want the tax on your income from the UK company so you should be making estimated payments yourself.

You are in a bit of a Catch-22 situation and will probably end up double taxed so I would get out of it asap.

Last edited by nun; May 20th 2017 at 2:53 am.
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Old May 20th 2017, 9:59 am
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Default Re: UK/USA Tax filing advice for US resident with two employers

I would agree with nun's conclusion.

You will probably want to start billing the UK as a supplier of services and factoring all the tax and compliance costs into that.
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Old May 20th 2017, 10:44 am
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Default Re: UK/USA Tax filing advice for US resident with two employers

Originally Posted by tom169 View Post
I would agree with nun's conclusion.

You will probably want to start billing the UK as a supplier of services and factoring all the tax and compliance costs into that.
But if you have a contract of employment (as you almost certainly do) you are employed. The UK company will want legal advice on its own obligations under US Federal & State law; you might ask the company to share this advice with you. The potential penalties for failure to withhold in the US should be enough to scare the UK employer to pay for such advice...
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Old May 20th 2017, 2:20 pm
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Default Re: UK/USA Tax filing advice for US resident with two employers

Originally Posted by Cook_County View Post
But if you have a contract of employment (as you almost certainly do) you are employed. The UK company will want legal advice on its own obligations under US Federal & State law; you might ask the company to share this advice with you. The potential penalties for failure to withhold in the US should be enough to scare the UK employer to pay for such advice...
You wouldn't have a typical contract of employment (like what usually happens in the UK - here I don't have one at all).

You'd have a contract to deliver as a supplier.

You'd bill them for the services provided, just like any other service they'd pay for, and it would be up to you to then handle the withholdings and estimated payments to whoever in the US.
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Old May 20th 2017, 2:40 pm
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Default Re: UK/USA Tax filing advice for US resident with two employers

Thank you nun, Tom, and Cook for your advice. I know my U.K. employer has been slow to assist me with this, perhaps knowing the fines involved would speed up what needs to be completed.

Once the U.K. company has its US subsidiary set up everything will be sorted. In the mean time I need to find out how to make sure I am paying what I should be.

I think due to US law I can't be treated as an independent contractor/services provider due to the relationship and circumstances of how I complete work for the U.K. company.

In short, I want to make sure I am paying what is due on my whole income in the US. I can either do this out of pocket or by trying to reclaim taxes paid to the U.K. since Jan17. I found this form for doing that:

https://www.gov.uk/government/public...ndividual-2002

Does anyone have any recommendations I could point my U.K. employer towards for accountants/tax advisers to help them get set up properly and efficiently? U.K. or US based would be fine.

Thanks again to all for your advice!

Can't wait for this to be resolved.
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Old May 21st 2017, 1:54 am
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Default Re: UK/USA Tax filing advice for US resident with two employers

Originally Posted by Mike17 View Post

I think due to US law I can't be treated as an independent contractor/services provider due to the relationship and circumstances of how I complete work for the U.K. company.
You need to change those circumstances immediately. I would talk to your UK employer and see if they will employ you as a contractor. Then you can pay US income and payroll taxes yourself and should have zero UK tax to pay.
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