US/UK tax treaty
Sep 6th 2002, 8:56 pm
#1
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US/UK tax treaty
There is a tax treaty between the US and UK that says that UK residents working in the US do not have to pay taxes for 2 years. After this time, if you are still in the US the tax is due back to the IRS retrospecitvely for those 2 years. Turns out this incurs interest and penalties. I have not paid tax for 1.5 years that I've been here, and if I want to stay longer (probably do) then I want to sort this issue out in the cheapest way possible.
Has anyone been through this and have any good advice on how to handle it??
Has anyone been through this and have any good advice on how to handle it??
Sep 9th 2002, 11:38 pm
#2
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Posts: n/a
Re: US/UK tax treaty
"Dunny" <[email protected]> wrote in message news:[email protected]...
> There is a tax treaty between the US and UK that says that UK residents working in
> the US do not have to pay taxes for 2 years. After this time, if you are still in
> the US the tax is due back to the IRS retrospecitvely for those 2 years. Turns out
> this incurs interest and penalties. I have not paid tax for 1.5 years that I've
> been here, and if I want to stay longer (probably do) then I want to sort this
> issue out in the cheapest way possible. Has anyone been through this and have any
> good advice on how to handle it??
If you stay in the U.S. beyond the two years, you will end up paying taxes, including
back taxes, for the tax treaty time. Just get used to the idea.
You should check with a tax accountant about what to do. The cheapest way is probably
to take whatever steps you can to be considered a resident alien for tax purposes as
soon as possible, definitely for the tax year 2002, because you can claim more
deductions, like dependents, mortgage interest, etc.
> There is a tax treaty between the US and UK that says that UK residents working in
> the US do not have to pay taxes for 2 years. After this time, if you are still in
> the US the tax is due back to the IRS retrospecitvely for those 2 years. Turns out
> this incurs interest and penalties. I have not paid tax for 1.5 years that I've
> been here, and if I want to stay longer (probably do) then I want to sort this
> issue out in the cheapest way possible. Has anyone been through this and have any
> good advice on how to handle it??
If you stay in the U.S. beyond the two years, you will end up paying taxes, including
back taxes, for the tax treaty time. Just get used to the idea.
You should check with a tax accountant about what to do. The cheapest way is probably
to take whatever steps you can to be considered a resident alien for tax purposes as
soon as possible, definitely for the tax year 2002, because you can claim more
deductions, like dependents, mortgage interest, etc.
Sep 9th 2002, 11:44 pm
#3
Guest
Posts: n/a
Re: US/UK tax treaty
Sylvia Ottemoeller wrote:
> "Dunny" <[email protected]> wrote in message news:[email protected]...
> > There is a tax treaty between the US and UK that says that UK residents working
> > in the US do not have to pay taxes for 2 years. After this time, if you are still
> > in the US the tax is due back to the IRS retrospecitvely for those 2 years. Turns
> > out this incurs interest and penalties. I have not paid tax for 1.5 years that
> > I've been here, and if I want to stay longer (probably do) then I want to sort
> > this issue out in the cheapest way possible. Has anyone been through this and
> > have any good advice on how to handle it??
> If you stay in the U.S. beyond the two years, you will end up paying taxes,
> including back taxes, for the tax treaty time. Just get used to the idea.
> You should check with a tax accountant about what to do. The cheapest way is
> probably to take whatever steps you can to be considered a resident alien for tax
> purposes as soon as possible, definitely for the tax year 2002, because you can
> claim more deductions, like dependents, mortgage interest, etc.
I've had this (related) question before a long time ago, maybe you know the answer.
I have two kids living in Holland. I pay $250 dollars a month for them, that is the
Dutch law. Can I deduct that? Since you mentioned dependents.
Entered the US on a K-1 Visa, still pending for my Greencard. First year I did not
need to pay taxes, second year I did. Thanks.
--
steg
> "Dunny" <[email protected]> wrote in message news:[email protected]...
> > There is a tax treaty between the US and UK that says that UK residents working
> > in the US do not have to pay taxes for 2 years. After this time, if you are still
> > in the US the tax is due back to the IRS retrospecitvely for those 2 years. Turns
> > out this incurs interest and penalties. I have not paid tax for 1.5 years that
> > I've been here, and if I want to stay longer (probably do) then I want to sort
> > this issue out in the cheapest way possible. Has anyone been through this and
> > have any good advice on how to handle it??
> If you stay in the U.S. beyond the two years, you will end up paying taxes,
> including back taxes, for the tax treaty time. Just get used to the idea.
> You should check with a tax accountant about what to do. The cheapest way is
> probably to take whatever steps you can to be considered a resident alien for tax
> purposes as soon as possible, definitely for the tax year 2002, because you can
> claim more deductions, like dependents, mortgage interest, etc.
I've had this (related) question before a long time ago, maybe you know the answer.
I have two kids living in Holland. I pay $250 dollars a month for them, that is the
Dutch law. Can I deduct that? Since you mentioned dependents.
Entered the US on a K-1 Visa, still pending for my Greencard. First year I did not
need to pay taxes, second year I did. Thanks.
--
steg
Sep 14th 2002, 9:52 am
#4
Guest
Posts: n/a
Re: US/UK tax treaty
The rule is essentially a concession to ensure that a UK expatriate residing in the
US for less than two years remains taxed in the UK.
Consequently, if you are in the US for less than two years and want to allocate your
tax liability over your US sourced income to the US, you may want to check with your
accountant as to whether you can elect to be source taxed in the US - this would be
the easiest way to allocate your US sourced income to US taxation (without dragging
any UK income you may also be earning (such as Tessa interest) whilst in the US into
the US tax net) and would secure all the entitlements as well.
"Sylvia Ottemoeller" <[email protected]> wrote in message news:[email protected]...
> "Dunny" <[email protected]> wrote in message news:[email protected]...
> > There is a tax treaty between the US and UK that says that UK residents working
> > in the US do not have to pay taxes for 2 years. After this time, if you are still
> > in the US the tax is due back to the IRS retrospecitvely for those 2 years. Turns
> > out this incurs interest and penalties. I have not paid tax for 1.5 years that
> > I've been here, and if I want to stay longer (probably do) then I want to sort
> > this issue out in the cheapest way possible. Has anyone been through this and
> > have any good advice on how to handle it??
> If you stay in the U.S. beyond the two years, you will end up paying
taxes,
> including back taxes, for the tax treaty time. Just get used to the idea.
> You should check with a tax accountant about what to do. The cheapest way
is
> probably to take whatever steps you can to be considered a resident alien for tax
> purposes as soon as possible, definitely for the tax year 2002, because you can
> claim more deductions, like dependents, mortgage interest, etc.
US for less than two years remains taxed in the UK.
Consequently, if you are in the US for less than two years and want to allocate your
tax liability over your US sourced income to the US, you may want to check with your
accountant as to whether you can elect to be source taxed in the US - this would be
the easiest way to allocate your US sourced income to US taxation (without dragging
any UK income you may also be earning (such as Tessa interest) whilst in the US into
the US tax net) and would secure all the entitlements as well.
"Sylvia Ottemoeller" <[email protected]> wrote in message news:[email protected]...
> "Dunny" <[email protected]> wrote in message news:[email protected]...
> > There is a tax treaty between the US and UK that says that UK residents working
> > in the US do not have to pay taxes for 2 years. After this time, if you are still
> > in the US the tax is due back to the IRS retrospecitvely for those 2 years. Turns
> > out this incurs interest and penalties. I have not paid tax for 1.5 years that
> > I've been here, and if I want to stay longer (probably do) then I want to sort
> > this issue out in the cheapest way possible. Has anyone been through this and
> > have any good advice on how to handle it??
> If you stay in the U.S. beyond the two years, you will end up paying
taxes,
> including back taxes, for the tax treaty time. Just get used to the idea.
> You should check with a tax accountant about what to do. The cheapest way
is
> probably to take whatever steps you can to be considered a resident alien for tax
> purposes as soon as possible, definitely for the tax year 2002, because you can
> claim more deductions, like dependents, mortgage interest, etc.
