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-   -   US tax filing with US and UK income confusion (https://britishexpats.com/forum/usa-57/us-tax-filing-us-uk-income-confusion-923458/)

ethreal123 Mar 22nd 2019 7:05 pm

US tax filing with US and UK income confusion
 
Hi Folks
Please help me to understand my US tax filing for the current year for my complicated situation. I started UK job mid last year and did hold on to US job (reduce hours) to finish on-going projects for rest of the last year.
My UK salary has been taxed by hmrc. Since there is double treaty clause between US-UK, is there need to mention UK income at all when filing US taxes. Just making sure that I follow UK and US tax rules correctly and not to screw up with other thinigs in the future (coming back to US, travel to US, new job in usa etc etc.)
thanks for help.
Cheers

TheKingOfHearts Mar 22nd 2019 7:16 pm

Re: US tax filing with US and UK income confusion
 
Yes, regardless of the treaty you must declare your foreign earned income for the tax year on your return. That being said; based on the country of your foreign earnings, you'll most likely be awarded a "credit" based on the tax paid to HMRC. If you're using a filing tool like TuroTax, they'll walk you through this. But to be clear it does need to be entered, even if you've already paid tax on it elsewhere in the world.

ethreal123 Mar 22nd 2019 7:27 pm

Re: US tax filing with US and UK income confusion
 

Originally Posted by TheKingOfHearts (Post 12658591)
Yes, regardless of the treaty you must declare your foreign earned income for the tax year on your return. That being said; based on the country of your foreign earnings, you'll most likely be awarded a "credit" based on the tax paid to HMRC. If you're using a filing tool like TuroTax, they'll walk you through this. But to be clear it does need to be entered, even if you've already paid tax on it elsewhere in the world.

Thanks for the quick reply. I will file through tax accountant.
I will be in touch for additional questions, if any.

thanks again.

ethreal123 Mar 22nd 2019 9:27 pm

Re: US tax filing with US and UK income confusion
 

Originally Posted by TheKingOfHearts (Post 12658591)
Yes, regardless of the treaty you must declare your foreign earned income for the tax year on your return. That being said; based on the country of your foreign earnings, you'll most likely be awarded a "credit" based on the tax paid to HMRC. If you're using a filing tool like TuroTax, they'll walk you through this. But to be clear it does need to be entered, even if you've already paid tax on it elsewhere in the world.

My tax accountant says that there is no need to report UK income again due to the double tax avoidance agreement between US-UK. I am confused now.

Noorah101 Mar 22nd 2019 11:03 pm

Re: US tax filing with US and UK income confusion
 
Your tax accountant is wrong. Get a second opinion.

Rene

Hotscot Mar 22nd 2019 11:26 pm

Re: US tax filing with US and UK income confusion
 
Report all income, worldwide.
Then apply deductions/credits.

ethreal123 Mar 22nd 2019 11:34 pm

Re: US tax filing with US and UK income confusion
 
thanks guys for the reply. Can you please provide me specific sections of tax laws or IRS guidelines to argue with my accountant.

celticgrid Mar 23rd 2019 12:13 am

Re: US tax filing with US and UK income confusion
 

Originally Posted by ethreal123 (Post 12658725)
thanks guys for the reply. Can you please provide me specific sections of tax laws or IRS guidelines to argue with my accountant.

Instead of arguing with the current one, consider finding a new one.

Hotscot Mar 23rd 2019 12:39 am

Re: US tax filing with US and UK income confusion
 
https://www.irs.gov/businesses/incom...oad-is-taxable

Just to be clear...you were a US tax resident in 2018?

durham_lad Mar 23rd 2019 1:50 am

Re: US tax filing with US and UK income confusion
 

Originally Posted by Hotscot (Post 12658746)
https://www.irs.gov/businesses/incom...oad-is-taxable

Just to be clear...you were a US tax resident in 2018?

This is a vital piece of info, and if the OP is a USC then he is taxed on his worldwide income regardless of where he lives.

ethreal123 Mar 23rd 2019 2:18 am

Re: US tax filing with US and UK income confusion
 
yes I am US tax resident for year 2018, but I am not US citizen. I am on a J1 visa, this is a temporary exchange visa.

ethreal123 Mar 23rd 2019 2:24 am

Re: US tax filing with US and UK income confusion
 

Originally Posted by Hotscot (Post 12658746)
https://www.irs.gov/businesses/incom...oad-is-taxable

Just to be clear...you were a US tax resident in 2018?

thanks for the link. this is what it says: If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S.
I am neither of these two.

Hotscot Mar 23rd 2019 3:10 am

Re: US tax filing with US and UK income confusion
 
Yes but you may be a tax resident for IRS purposes.

https://www.irs.gov/individuals/inte...-presence-test

Cook_County Mar 23rd 2019 4:57 pm

Re: US tax filing with US and UK income confusion
 
As a J-1 visa holder the days in the United States are not counted for the purpose of the substantial presence test. As a non-resident alien you are only subject to US tax on US source income. If you are a UK resident, the UK will tax you on worldwide income.

ethreal123 Mar 23rd 2019 5:50 pm

Re: US tax filing with US and UK income confusion
 

Originally Posted by Cook_County (Post 12658964)
As a J-1 visa holder the days in the United States are not counted for the purpose of the substantial presence test. As a non-resident alien you are only subject to US tax on US source income. If you are a UK resident, the UK will tax you on worldwide income.

thanks for reply. I am getting different feedback from different sources including my accountant. I think it will be safer to show worldwide income on US returns, as by definition I was tax resident in US for 2018. I have decided to file this way.

cheers


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