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US tax filing with US and UK income confusion

US tax filing with US and UK income confusion

Old Mar 22nd 2019, 7:05 pm
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Default 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
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Old Mar 22nd 2019, 7:16 pm
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Default 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.
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Old Mar 22nd 2019, 7:27 pm
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Default Re: US tax filing with US and UK income confusion

Originally Posted by TheKingOfHearts View Post
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.
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Old Mar 22nd 2019, 9:27 pm
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Default Re: US tax filing with US and UK income confusion

Originally Posted by TheKingOfHearts View Post
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.
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Old Mar 22nd 2019, 11:03 pm
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Default Re: US tax filing with US and UK income confusion

Your tax accountant is wrong. Get a second opinion.

Rene
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Old Mar 22nd 2019, 11:26 pm
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Default Re: US tax filing with US and UK income confusion

Report all income, worldwide.
Then apply deductions/credits.
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Old Mar 22nd 2019, 11:34 pm
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Default 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.
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Old Mar 23rd 2019, 12:13 am
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Default Re: US tax filing with US and UK income confusion

Originally Posted by ethreal123 View Post
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.
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Old Mar 23rd 2019, 12:39 am
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Default 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?

Last edited by Hotscot; Mar 23rd 2019 at 12:42 am.
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Old Mar 23rd 2019, 1:50 am
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Default Re: US tax filing with US and UK income confusion

Originally Posted by Hotscot View Post
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.
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Old Mar 23rd 2019, 2:18 am
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Default 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.
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Old Mar 23rd 2019, 2:24 am
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Default Re: US tax filing with US and UK income confusion

Originally Posted by Hotscot View Post
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.
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Old Mar 23rd 2019, 3:10 am
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Default 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
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Old Mar 23rd 2019, 4:57 pm
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Default 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.
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Old Mar 23rd 2019, 5:50 pm
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Default Re: US tax filing with US and UK income confusion

Originally Posted by Cook_County View Post
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

Last edited by ethreal123; Mar 23rd 2019 at 5:56 pm. Reason: typo
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