Georgia Boy

Hi,

I and my wife are in the process of applying for our immigrant visas to move from the UK to the USA.

I am interested in getting some recommendations of good reliable tax advisors based in the USA.

I am specifically interested in the US tax implications of the following.

Selling my main residence in the U.K. and transferring the funds to the US to purchase a main residence in the US.

Transferring my savings (cash) from U.K. bank account to US bank account.

How to ensure that my company and state pensions paid in the U.K. will only be taxed once in the US going forward.

How much income tax will I pay in the US on said private and state pensions.

If this has been covered in other threads then apologies and I'd appreciate it if you could direct me there.

Pulaski

Yes, all the above are common questions, and unless your situation is complex, beyond what you have described, I doubt you'll actuall need a tax "advisor". You should be able to find there are several pension-related threads with a quick search, but here is a popular pensions thread.

I have taken the liberty of numbering your questions for each of reference

[1] If you have lived in your home for 24 of the most recent 60 months at the time of sale then there will be no Federal tax consequences to selling your home in the UK unless the gain on the home (from historic date of acquisition, not from entry to the US/ becoming tax resident) exceeds $500k, assuming you are "married filing taxes jointly."

[2] There is no tax consequence in either country of transfering your savings - note that ISAs and unit trusts and other pooled investments in the UK (outside the US) create both headaches and disadvantageous tax treatments in the US, so they should be liquidated

[3] Isn't difficult, from what I hear, having never done it myself - it's mostly a matter of notifyin the payer that you are not resident or taxable in the UK. .... There should be advice in the linked thread above.

[4] Taxes will be paid at the applicable federal and Georigia income tax rates. If you are paid gross you will be expected to pay quarterly taxes, at least for federal income tax.

angelman

Selling my main residence in the U.K. and transferring the funds to the US to purchase a main residence in the US.
- I agree with the above poster. Capital gains is the issue but US has similar rules about primary residences. Transferring the money is easy

Transferring my savings (cash) from U.K. bank account to US bank account.
- No problem with this either. I have transferred some fairly large sums (enough to buy a house for example) without incident. Remember transferring money is not so much about getting you to pay some kind of tax in US, it is about money laundering. This is why there are stringent laws about decalring transfers and foreign bank accounts and assets. The fabled $10,000 limit to a transfer it not a limit to the transfer, it is merely when a transfer gets reported to the US - again not for tax purposes but to track potential money laundering.
I am slowly transferring my remaining UK assets to USA to avoid tax headaches and the potential self destruction of UK economy post Brexit.
I use xetrade.com and also https://transferwise.com/us
Both are easy and quick to setup. You do a BACS transfer in the UK and give them your US bank account details and the money will be in your US account in a day or so. Transferwise is a little cheaper because although they charge a fee, their spread is better than xe. Xe allows you to set buy/sell limits though so when the exchange rate hits a mark it will trigger an automatic trade which is useful.


How to ensure that my company and state pensions paid in the U.K. will only be taxed once in the US going forward.
Check out the link above.. this is probably the biggest headache and something I am trying to figure outmyself!

How much income tax will I pay in the US on said private and state pensions.
You are asking about tax on pensions specifically not your income? Pensions in the USA are generally employer based around a 401k (which is similar to a SIPP I believe). There are limits as to how much you can contribute each month. The money goes into a 401k pretax. You pay tax when you withdraw at retirement. You can then open a further tax advantaged account called an IRA which is pretty similar to an ISA. There are a couple of flavours of this, traditional IRA and RothIRA. These are usually invested in stocks, mutual funds etc. You wouldn't pay income tax on these as these are funded with post tax income and you do not pay tax when you withdraw.

Ultimately if you are moving to USA, USA makes it a real pain to keep any assets or money abroad. I would keep a UK bank account running (though maybe keep your US residence and visa a little quiet). Make sure to declare any income in the UK when you go to file your US taxes, interest from bank accounts, rental property income, anything like that. USA is worldwide taxation and it sucks. It's not about the paying extra tax (due to tax agreement with UK, you shouldn't really pay double tax), it's more about the hassle of reporting everything. If you have more than $10k in a foreign bank account at any time in the year (even for one day) you must file an FBAR form. Again it's not about taxation, it's all about telling Uncle Sam where your money is so he can keep track of it and make sure you aren't doing something naughty with it. Of course the actual launderers etc. usually get away with it and it just makes life miserable for the rest of us.
Good luck!

Pulaski

This is correct, and I would add that you have nothing to worry about if you are honest and your money is clean - and therefore the worst things you can do are [1] to worry about this, and [2] do anything to try to "fly under the radar", because if there is one thing that will get an honest person in trouble with the AML laws and regulations, it is behaving in such a way as to try to avoid attracting attention to your money. For example splitting your transfers into numerous sub-$10k transfers is a terrible idea, as is being dishonest or evasive with the description and purpose for the transfer - if it came from the sale of investments, or your home, then say that. that said, if you want to split the transfer of the proceeds of the sale of your home into 2 or more transfers to hedge against FX rate volatlity, then that is OK - as per [1] above, don't worry about it.

And if you're worried about the implications of wire transfer reporting, remember there are hundreds of thousands of reports filed every day, so it is not like there is a team of FBI detectives following up on every report!

durham_lad

The only thing I would add is that to stop PAYE from being taken from my UK pensions I filed IRS form 8802 from within the USA. This has the IRS certify that you have been a tax paying US resident, however I was already living in the USA at the time.

https://www.irs.gov/individuals/inte...ation-requests

You can inform HMRC ahead of time that you are leaving by following these instructions and completing a P85

https://www.gov.uk/tax-right-retire-abroad-return-to-uk
https://www.gov.uk/government/public...-tax-right-p85

Your UK pensions will almost certainly be taxed as regular income with the IRS once living in the USA (not sure about what you call your state pension, if that is OAP then it is taxed in the US I believe). I have been receiving UK private pension(s) since 2007 and for my UK pensions I complete a substitute 1099-R which is the normal form that US pensions are reported on. I believe you can also just report it as "Other income" with a short description. The tax is the same regardless, I just prefer the substitute 1099-R as it gives more options to clearly state what the income is.

Georgia Boy

Thanks everyone for your excellent inputs and advice, it's been very helpful.

angelman

One other thing to note, which is not really relevant in your particular case but still useful info. If you have a sudden windfall in the UK or do something like I did which was to re-mortgage a UK property to release some capital, you want to make sure not to rush to transfer the money to USA immediately. I remortgaged a property in the UK and used that money to buy a house in the US. I had to wait 30 days for the money to be "hardened" which was to show the sudden influx of money to the US for the US downpayment was from a legitimate source and not from "la familia" or my buddies on Colombia. As long as you can show where money is coming from there are no issues at all. It goes without saying that you definitely don't want to split transfers up and transfer sums like $9,999 to evade reporting. That immediately raises red flags.
One other thing to be aware, as soon as a UK financial institution gets wind of the fact you are now a US tax payer and subject to the IRS they will want nothing to do with you as the burden on foreign banks dealing with US tax payers is considerable.

Pulaski

Please can you share any more about that - was it your bank in the US that imposed that restriction? That is not something I have heard of before, or seen reported here on BE.

I have often recommended letting your bank know ahead of time, about expected large credits coming from overseas, as banks don't like surprises, so perhaps that is what happened in your case?
Some do, some don't. Reported experiences vary widely.

tht

Mortgage underwriters do ask to seen where funds for a deposit have come from. If the deposit in the account is recent they want to see a trail to show it’s your own saving and not a loan etc. Not sure where the 30 days comes from, they usually look for at least 3 months bank statements. The best way to save on questions paperwork is to consolidate the deposit in 1 account more than 3 months before a mortgage application. Every deposit that comes in during the period reviews they are likely to ask for the statements to show the cash or assets sold belong to the mortgage applicant(‘s).

Pulaski

In deed they do! .... When I put my house on the market in London in 2001 my estate agent matched me up with a buyer from Iran, which led the sale stalling before the agent calling the deal off ..... and pairing me with a buyer from South Africa, that stalled for the same reason - unverifiable funds from overseas! After another extended delay I fired the agent and, having interviewed three agents before I left the UK, called my second choice of agent, refreshed his memory of my property, and told him that he could cross the road and pick up the keys and find me a buyer.

End-to-end, a process that should have taken 5-6 weeks, in what was a very hot area for home sales, took eight months.

Georgia Boy

Thanks for covering off all of my questions. I think you are right I think my situation is fairly straight forward.

On the subject of taxes my research seems to be showing that as a retiree in Georgia I will not pay any state taxes, nor will I pay the US equivalent of national insurance (FICA?). I will obviously still pay federal taxes but as a married couple of retirees the first $32,000 of retirement income will be tax free, only paying tax on the remainder. Does that sound right or have I missed something?

durham_lad

If you are a retiree then you won’t have any earned income so won’t be paying FICA or Medicare tax which is only deducted from earnings, not pensions. Generally speaking if it is reported on a W2 then FICA is taken, if it is reported on a 1099R then no FICA.