NJ_Expat

Hi,

Hopefully someone can help with this - I've been given so much advice from so many people about my taxes, that I am extremely confused as to what I need to do. Thanks in advance for reading and for any replies.

I moved to the US (New Jersey) back in mid-2017 and am now a green card holder (I married a US national) and have continued to work remotely for my UK employer since moving. For 2017/2018 I was told that I needed to pay US taxes on my income, even though it was entirely earned and paid from a UK employer (with no US offices / branches), which I did via a US accountant. This has obviously resulted in me paying double tax on my earnings, which continues to happen to date.

No doubt very stupid of me, but I only sent my P85 to HMRC recently, and was also advised that I should complete a self-assessment return in the UK, which I have almost finished. Since then, someone else has told me that with the P85 being sent, I won't need to do this, which has made me very worried that I have now made a serious error in starting my own return online.

If anyone could let me know how I should proceed from here, so that I can claim back any taxes paid in the UK since living in the US (and also to stop paying UK tax in the future), that would be extremely appreciated.

Many thanks for any help you can give!

civilservant

There is a tax treaty between the UK/US to stop this very thing. If you have a tax professional retained, fire them. If you don't, get one. You will probably need to file amended returns for all previous years.

Cook_County

What has your employer done about Federal & NJ tax withholding? Your employer has presumably taken advice on its obligations. Will your employer also pay for you to have professional advice?

NJ_Expat

Thanks for the reply - yes I have only hired a US accountant at this stage. I was hoping it may be something I could file and correct myself, but I guess I will have to look into some UK based accountants who specialise in ex-pat services.

NJ_Expat

My employer has done nothing at all - we are a small company and use an external provider for our accounting / payroll needs, and nothing was ever mentioned to me about changing what happens with my tax withholding. For the first (partial) year of tax I paid in the US (2017), I had to take care of everything myself. 99% sure they wouldn't pay for me to get professional advice as they see it as doing me a huge favour in allowing me to move abroad to work remotely full time (before this I was mainly office based), and therefore do not want any further costs or impact on them due to my decision to relocate.

Since moving to the US I have been paid into my UK bank account, with all tax / NI etc removed, as if I was still a UK resident, and have then had to transfer this myself across to the US.

Thanks again for any help you can give.

civilservant

Uh..... they don't have a choice. You are not a contracter, you are an employee. They are required to deduct the appropriate US payroll taxes. They are, I believe, risking a fine.

NJ_Expat

OK, that's very interesting - I wasn't aware of that at all. I shall definitely investigate further and see what they say. Thanks very much for bringing this to my attention!

Hotscot

Sounds messy...please let us know how you resolve matters.

NoOfficialComment

You have a similar scenario to me (or at least what I'd originally planned when I moved)...only I hired a US accountant from the start to avoid any hassle. The key change that has made everything easy for me, is that I relinquished being a formal 'employee' of the company I work remotely for in the UK and moved to being a self-employed consultant. So none of what I earn from that UK company is declarable on my UK self assessment and is taxed solely in the US on a schedule C basis. Bear in mind I have other companies in both countries I invoice for varying, all be it much smaller, income amounts so as to not make HMRC consider me to be 'acting' as a full time employee for a single company. The only reason I now have to complete a UK S.A form is rental property income.

NJ_Expat

Yes, I have considered doing that, just worried about my employer trying to take away my annual leave, sick pay etc if I switch to being a contractor.

Spoke to a few UK accountants earlier and their pricing ranged from £400-£700 to complete my return and file the other papers relating to my resident status etc., so I am thinking that I might just go it alone. I've already filled out almost all of the online self assessment return and now have to attach the supporting documents. Hopefully I've done it correctly and everything works out ok.

Hotscot

Sounds like you need a US tax professional, and you'll need to file US tax returns for 2017 and 2018.
And you indicate that your hiring someone to inform HMRC that you are no longer resident in the UK and claim back the tax that you paid?

It is a bit messy but you should get through it ok.

(Here's a tip...if someone screws up their US taxes and end's up owing money to the IRS/State, there's a possibility of being fined and/or other penalties.
However, at least with the IRS they have a first time get out of jail card, not extensively promoted, where you can ask for forgiveness because you messed up.)

tom169

Honestly, might be worth just looking for a new job here. A lot of professions pay more for the same role.

Noorah101

If you switch to being a contractor (which, in my opinion, would be the best thing to do), then yes, you'll lose vacation and sick pay because you'll be self-employed. But then you also get the freedom of taking vacation and sick time when you want (depending on your client's needs). You just won't be getting paid for those days off.

Being a contractor will make your taxes far easier to deal with.

Rene

Hotscot

And you'll have many deductions to lower your tax bill.

Cook_County

Potential civil penalties for the employer for failing to withhold quickly run into the millions of dollars. If you are not a US citizen, potential criminal penalties for you run into deportation. Suggest to your employer they take advice.