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US Taxation due to mid year move from UK to US

US Taxation due to mid year move from UK to US

Old Apr 30th 2013, 9:06 pm
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Default US Taxation due to mid year move from UK to US

Hi,
I start job in US on 1st May. Until now i was working in UK. This means i'll only receive 8 months of the salary this year in US.

When filing taxes for 2013 at the end of the year in US, do i need to take into account the income I received in UK from Jan-Apr this year?

I have never visited or worked in US before.

Any answers or places to look for answers would be really appreciated.

Cheers!
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Old Apr 30th 2013, 11:38 pm
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Default Re: US Taxation due to mid year move from UK to US

What will your status be in the US?

(For all we know you could even be a US citizen - the fact that you have never previously lived or worked in the US does not preclude that possibility ...)
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Old Apr 30th 2013, 11:39 pm
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Default Re: US Taxation due to mid year move from UK to US

Originally Posted by lazysunday07 View Post
Hi,
I start job in US on 1st May. Until now i was working in UK. This means i'll only receive 8 months of the salary this year in US.

When filing taxes for 2013 at the end of the year in US, do i need to take into account the income I received in UK from Jan-Apr this year?

I have never visited or worked in US before.

Any answers or places to look for answers would be really appreciated.

Cheers!
Yes since you will meet the "substantial presence test" and therefore will be treated as a resident for tax purposes meaning that you have to report worldwide income. However, any taxes paid on any foreign income (both earned and unearned) can be used to offset any federal taxes owed on that income. Usually if you were working in a high tax country (most of the European countries) during part of the year, there should be enough foreign tax credits to offset any taxes owed on that income.

Some expats that do not meet the "substantial presence test" elect to be treated as a resident for tax purposes since there can be tax benefits over filing as a non resident alien.

http://www.irs.gov/Individuals/Inter...-Presence-Test
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Old May 1st 2013, 1:24 am
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Default Re: US Taxation due to mid year move from UK to US

Thanks for the responses. I have been doing some reading up and turns out that i have two options


1. File the returns for 2013 as Dual-Status Alien. Non-resident until Apr and Resident from May onwards. I'll need to fill both form 1040 and 1040NR. The income until 1040NR will be non-taxable in U.S. this option has some restrictions on standard deductions that can be applied on 1040 and filing status. I cannot file as Married filing jointly.

-or-

2. As mentioned in the previous thread, choose to file as a resident for the entire year in which case i'll need to declare my income until Apr as foreign income and also file Jointly.

There is also a provision to exclude foreign income upto 95k (in 2012) if you meet certain criteria. One that applies in my case is having lived in the foreign country (as my tax home) for 330 days in a 12 months period. the 12 month period can be outside the tax period but must either start OR end in the tax period.

I still need to check if there is any other special conditions on foreign income exclusions.

PS: i am not a U.S. citizen nor a GC holder
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Old May 1st 2013, 1:22 pm
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Default Re: US Taxation due to mid year move from UK to US

Originally Posted by lazysunday07 View Post
I cannot file as Married filing jointly.
You can if you're married!


PS: i am not a U.S. citizen nor a GC holder
I think the question was more to find out what visa you have... because some visas allow you to defer or avoid paying US taxes!

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Old May 4th 2013, 2:18 am
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Default Re: US Taxation due to mid year move from UK to US

Originally Posted by lazysunday07 View Post
1. File the returns for 2013 as Dual-Status Alien. Non-resident until Apr and Resident from May onwards. I'll need to fill both form 1040 and 1040NR. The income until 1040NR will be non-taxable in U.S. this option has some restrictions on standard deductions that can be applied on 1040 and filing status. I cannot file as Married filing jointly.
Check ALL of this with a competent CPA. First year tax returns, with part year non-resident, are not normally something you should do on your own.

Subject to all of that ...

You suggest you're married. You'd have to file married/separate, you could file a 1040 for the portion of the year in which you are resident. You'd only need to file a 1040NR for the rest of the year if you had U.S. source income.


2. As mentioned in the previous thread, choose to file as a resident for the entire year in which case i'll need to declare my income until Apr as foreign income and also file Jointly.
Your spouse would also have to make the election to be treated as full year U.S. resident.


There is also a provision to exclude foreign income upto 95k (in 2012) if you meet certain criteria. One that applies in my case is having lived in the foreign country (as my tax home) for 330 days in a 12 months period. the 12 month period can be outside the tax period but must either start OR end in the tax period.

I still need to check if there is any other special conditions on foreign income exclusions.

PS: i am not a U.S. citizen nor a GC holder
Unclear if you could claim foreign earned income exclusion, however it may not make much difference if you claim foreign tax credit.

Note that most states do not allow foreign tax credits.

Be aware that just because you may have foreign income that's "tax free" in the country it originates from, it's not necessarily "tax free" in the United States. And be aware of all your information reporting requirements, on bank accounts, etc.

Last edited by JAJ; May 4th 2013 at 2:20 am.
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