Go Back  British Expats > Living & Moving Abroad > USA
Reload this Page >

US Tax J1 - Tax residence question

US Tax J1 - Tax residence question

Old Feb 15th 2021, 9:25 pm
  #1  
Just Joined
Thread Starter
 
Joined: Feb 2021
Posts: 3
WhatMan is an unknown quantity at this point
Default US Tax J1 - Tax residence question

Hello there,

I have a question about whether I can file US taxes claiming the UK-US tax treaty, but first I will explain my particular situation below.

I was a J1 research scholar in the US from Aug 2019 to Aug 2020, paid by a US university. I am a spanish national, in 2019 I payed US taxes based on the spanish-US tax treaty which jor J1 researchers is particularly bad as there is no tax exemption - I payed taxes with no deductions both in 2019 and 2020. In 2020 though, I moved out of the US in March due to COVID, moving back to Spain for four months until July when I finally moved to the UK where I continue to live now and will for years to come.

The question is whether I can claim the UK-US tax treaty for filing my US tax return in for 2020. The UK-US tax treaty allows for 2 year tax exemption which would save me some money. However, I am unsure if this could apply to me and what implications would it have in the UK tax return. Any help is appreciated.

Many thanks for your answers!
WhatMan is offline  
Old Feb 16th 2021, 4:24 pm
  #2  
Ex Expat
 
MMcD's Avatar
 
Joined: Oct 2011
Location: "LA LA Land"
Posts: 2,315
MMcD has a reputation beyond reputeMMcD has a reputation beyond reputeMMcD has a reputation beyond reputeMMcD has a reputation beyond reputeMMcD has a reputation beyond reputeMMcD has a reputation beyond reputeMMcD has a reputation beyond reputeMMcD has a reputation beyond reputeMMcD has a reputation beyond reputeMMcD has a reputation beyond reputeMMcD has a reputation beyond repute
Default Re: US Tax J1 - Tax residence question

Originally Posted by WhatMan View Post
Hello there,

I have a question about whether I can file US taxes claiming the UK-US tax treaty, but first I will explain my particular situation below.

I was a J1 research scholar in the US from Aug 2019 to Aug 2020, paid by a US university. I am a spanish national, in 2019 I payed US taxes based on the spanish-US tax treaty which jor J1 researchers is particularly bad as there is no tax exemption - I payed taxes with no deductions both in 2019 and 2020. In 2020 though, I moved out of the US in March due to COVID, moving back to Spain for four months until July when I finally moved to the UK where I continue to live now and will for years to come.

The question is whether I can claim the UK-US tax treaty for filing my US tax return in for 2020. The UK-US tax treaty allows for 2 year tax exemption which would save me some money. However, I am unsure if this could apply to me and what implications would it have in the UK tax return. Any help is appreciated.

Many thanks for your answers!
Interesting conundrum....

I don't have a clue but perhaps this response will spur someone more knowledgeable to reply.

Meanwhile...in case you haven't seen this and dived into its links...take a look:

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

https://www.irs.gov/individuals/inte...s-and-trainees

Last edited by MMcD; Feb 16th 2021 at 4:27 pm.
MMcD is offline  
Old Feb 16th 2021, 5:07 pm
  #3  
Just Joined
Thread Starter
 
Joined: Feb 2021
Posts: 3
WhatMan is an unknown quantity at this point
Default Re: US Tax J1 - Tax residence question

Originally Posted by MMcD View Post
Interesting conundrum....

I don't have a clue but perhaps this response will spur someone more knowledgeable to reply.

Meanwhile...in case you haven't seen this and dived into its links...take a look:
Thanks for answering! I am a "nonresident alien" cause I am a J1 visa holder even if you live there, at least for the first two years. With regards to my question I think I found my answer by looking at the UK/US tax treaty. Article 20, first point quoted below:

. A professor or teacher who visits one of the Contracting States for a periodnot exceeding two years for the purpose of teaching or engaging in research at auniversity, college or other recognised educational institution in that Contracting Stateand who was immediately before that visit a resident of the other Contracting State,shall be exempted from tax by the first-mentioned Contracting State on anyremuneration for such teaching or research for a period not exceeding two years fromthe date he first visits that State for such purpose.
So I can't claim that tax exemption unfortunately. Just glad I won't have to do US taxes anymore, what a system!
WhatMan is offline  
Old Feb 16th 2021, 7:33 pm
  #4  
BE Commentator
 
S Folinsky's Avatar
 
Joined: Feb 2010
Location: Los Angeles, California
Posts: 7,502
S Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond reputeS Folinsky has a reputation beyond repute
Default Re: US Tax J1 - Tax residence question

Originally Posted by WhatMan View Post
Hello there,

I have a question about whether I can file US taxes claiming the UK-US tax treaty, but first I will explain my particular situation below.

I was a J1 research scholar in the US from Aug 2019 to Aug 2020, paid by a US university. I am a spanish national, in 2019 I payed US taxes based on the spanish-US tax treaty which jor J1 researchers is particularly bad as there is no tax exemption - I payed taxes with no deductions both in 2019 and 2020. In 2020 though, I moved out of the US in March due to COVID, moving back to Spain for four months until July when I finally moved to the UK where I continue to live now and will for years to come.

The question is whether I can claim the UK-US tax treaty for filing my US tax return in for 2020. The UK-US tax treaty allows for 2 year tax exemption which would save me some money. However, I am unsure if this could apply to me and what implications would it have in the UK tax return. Any help is appreciated.

Many thanks for your answers!
BTW, one thing to examine is whether or not you were subject to US employment taxes (e.g. Social Security, Medicare). This is not a question under the tax treaty.
S Folinsky is offline  
Old Feb 16th 2021, 8:03 pm
  #5  
Lost in BE Cyberspace
 
Joined: May 2010
Location: San Diego, California
Posts: 7,928
SanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond reputeSanDiegogirl has a reputation beyond repute
Default Re: US Tax J1 - Tax residence question

Does not Article 22 of the following document extend to your situation - where there is a tax exemption for students/researchers etc

https://www.irs.gov/pub/irs-trty/spain.pdf

SanDiegogirl is online now  
Old Feb 23rd 2021, 6:52 pm
  #6  
Just Joined
 
Joined: Dec 2020
Posts: 3
mt8271 is an unknown quantity at this point
Default Re: US Tax J1 - Tax residence question

I don't think there's any way to use the UK-US treaty, as Article 20A therein specifically requires you to be resident in the UK *at the beginning* of your US visit. Having moved there later doesn't seem to help. If anything, you might be able to use the treaty for your UK taxes for the next two years, but only if you leave the UK within two years.

But, as SanDiegogirl points out, Article 22 of the US-Spain treaty might be helpful. It's titled Student and Trainees, so your university and tax prep software might not have recognised that it might apply to you, but it seems to be worded more broadly than other "student" articles I've seen in other countries' tax treaties, so maybe you could try to claim an exemption under that, also for 2019. Art 22 paragraph 1 (a) (iii) might apply to you, if your payments from the US university could count as as "grant, allowance or award".
mt8271 is offline  
Old Feb 23rd 2021, 7:50 pm
  #7  
Just Joined
Thread Starter
 
Joined: Feb 2021
Posts: 3
WhatMan is an unknown quantity at this point
Default Re: US Tax J1 - Tax residence question

Originally Posted by SanDiegogirl View Post
Does not Article 22 of the following document extend to your situation - where there is a tax exemption for students/researchers etc
Originally Posted by mt8271 View Post
I don't think there's any way to use the UK-US treaty, as Article 20A therein specifically requires you to be resident in the UK *at the beginning* of your US visit. Having moved there later doesn't seem to help. If anything, you might be able to use the treaty for your UK taxes for the next two years, but only if you leave the UK within two years.

But, as SanDiegogirl points out, Article 22 of the US-Spain treaty might be helpful. It's titled Student and Trainees, so your university and tax prep software might not have recognised that it might apply to you, but it seems to be worded more broadly than other "student" articles I've seen in other countries' tax treaties, so maybe you could try to claim an exemption under that, also for 2019. Art 22 paragraph 1 (a) (iii) might apply to you, if your payments from the US university could count as as "grant, allowance or award".
I had the same though upon reading US-Spain article 22 for the first time a year ago. I consulted with tax prep software, tax department at my Uni and also some expert tax advisor and everybody agreed it does not apply to Researchers. The expert tax advisor said it was wrong (only meant for students and trainees as per the title) and researches claiming that exemption had high chances of being audited by IRS. So I dismissed that line of action. All other EU colleagues could claim exemptions as their treaties had a clause that specifically mentions researchers but not the US-ES unfortunately.
WhatMan is offline  

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Contact Us - Archive - Advertising - Cookie Policy - Privacy Statement - Terms of Service - Do Not Sell My Personal Information -

Copyright © 2021 MH Sub I, LLC dba Internet Brands. All rights reserved. Use of this site indicates your consent to the Terms of Use.