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Working Across Borders / Tax Issues

Working Across Borders / Tax Issues

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Old Jul 26th 2018, 5:09 am
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Default Working Across Borders / Tax Issues

Hi there

I was hoping to get some advice. I’ve been living in the USA for six years, and have not worked since we got here, initially for visa reasons. Back in the UK I worked freelance in recruitment. Now we have GCs I’m thinking about doing some work. Now, here’s where I’m unsure. My contacts are all in the Uk and may be able to offer me some work. Any problems with working for a UK company and getting paid into a UK account while living in the USA? Who is that declared to and taxed by?

I woukd also like to look into opportunities over here, so may end up working for US and UK companies. I’m sure this brings up complex tax issues, and Is it actually allowed?

Any info most gratefully recieved guys!

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Old Jul 26th 2018, 5:38 pm
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Default Re: Working Across Borders / Tax Issues

I worked for my former employer while I was in the US and they were in the UK. But I was a contractor - it's easier that way: I send an invoice; they (eventually) pay into my UK bank account. They don't need to worry about US taxes and I didn't need to worry about UK taxes - each pays their own in their own country. Make sure they don't withhold NI or anything else only applicable to UK residents or whatever. Where you are paid is not relevant, but if you accrue $10k in foreign bank accounts for even just a day you're supposed to declare it (FBAR - simple form).

Working across state lines is okay as well, but you may end with a thicker tax return depending on the tax requirements of the states involved. Don't try to do the "no income tax in state XXX" thing (Wyoming, Nevada, etc) - it might work, it might not, but is shadowy at best, illegal at worst if you don't work mostly in that state.
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Old Jul 26th 2018, 11:00 pm
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Default Re: Working Across Borders / Tax Issues

Originally Posted by HelsW View Post
Hi there

I was hoping to get some advice. I’ve been living in the USA for six years, and have not worked since we got here, initially for visa reasons. Back in the UK I worked freelance in recruitment. Now we have GCs I’m thinking about doing some work. Now, here’s where I’m unsure. My contacts are all in the Uk and may be able to offer me some work. Any problems with working for a UK company and getting paid into a UK account while living in the USA? Who is that declared to and taxed by?

I woukd also like to look into opportunities over here, so may end up working for US and UK companies. I’m sure this brings up complex tax issues, and Is it actually allowed?

Any info most gratefully recieved guys!

You can work freelance (or as an "independent contractor") for anyone, in any country or state. You bill the client, they pay you (with no taxes withheld), you report to the IRS and your state (if relevant) on the quarterly estimated tax form (ES-1040), paying installments on the taxes you owe throughout the year, and doing a "final reckoning" for April 15.
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Old Jul 27th 2018, 6:32 am
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Default Re: Working Across Borders / Tax Issues

Thanks so much to you both for the replies.

I’ll definitely be in the contractor space, I guess I’m a little unsure who I’ll owe taxes to. From my rudimentary research I’m thinking I’ll be a UK sole trader and complete my tax obligation that way in the UK. Now, i k kw I need to declare any income on my US tax return, but will I actually be liable to pay tax again on my UK income?

The quarterly thing I’ve nwver heard of before, is that standard practice for a US freelancer?

Much appreciation for your help!

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Old Jul 27th 2018, 1:29 pm
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Default Re: Working Across Borders / Tax Issues

Originally Posted by HelsW View Post
Thanks so much to you both for the replies.

I’ll definitely be in the contractor space, I guess I’m a little unsure who I’ll owe taxes to. From my rudimentary research I’m thinking I’ll be a UK sole trader and complete my tax obligation that way in the UK. Now, i k kw I need to declare any income on my US tax return, but will I actually be liable to pay tax again on my UK income?

The quarterly thing I’ve nwver heard of before, is that standard practice for a US freelancer?

Much appreciation for your help!

Link below re estimated taxes for self-employed people. When I do work for a client overseas, I instruct them to pay directly into my US account in US dollars. (I also have a bank account that doesn't charge me for incoming wires.) I pay taxes in the US, not in the client's country -- you are a US tax resident. By the way, don't forget that if you are an independent contractor, you can write off all manner of expenses beyond your actual office supplies, such as pro-rated electricity and phone for your office, gas, mileage, professional dues, c/e books and publications.

https://www.irs.gov/businesses/small...stimated-taxes
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Old Jul 27th 2018, 3:26 pm
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Default Re: Working Across Borders / Tax Issues

Originally Posted by HelsW View Post
Thanks so much to you both for the replies.

I’ll definitely be in the contractor space, I guess I’m a little unsure who I’ll owe taxes to. From my rudimentary research I’m thinking I’ll be a UK sole trader and complete my tax obligation that way in the UK. Now, i k kw I need to declare any income on my US tax return, but will I actually be liable to pay tax again on my UK income?

The quarterly thing I’ve nwver heard of before, is that standard practice for a US freelancer?

Much appreciation for your help!

If you live and work in the US then that's where you'll pay taxes - federal/IRS and State, if any.

Quarterly estimated taxes, that's what they like you to do but you can pay monthly or even yearly if you want. You might get a bit of interest with the latter but the federal rate is pretty low (but the state might not be).
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Old Jul 27th 2018, 5:18 pm
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Default Re: Working Across Borders / Tax Issues

Originally Posted by GeoffM View Post

Quarterly estimated taxes, that's what they like you to do but you can pay monthly or even yearly if you want.
I've never met an accountant who thought it was a good business practice to pay other than quarterly. I think many people also need the discipline.
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Old Jul 27th 2018, 5:34 pm
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Default Re: Working Across Borders / Tax Issues

Originally Posted by Nutmegger View Post
I've never met an accountant who thought it was a good business practice to pay other than quarterly. I think many people also need the discipline.
That entirely depends on your situation. If, like me, you like to keep the taxes owed (or overpaid) to an absolute minimum then the 0.5%/month is negligible. Even if you owed a bit, and you have fluctuating income, and needed some chunky purchase, do you defer payment of your taxes (0.5%) to pay cash, or pay the taxes now and stick the purchase cost onto your credit card for payment later (20%)?

As I said earlier, the state interest rate may be a lot higher (CA starts at 5% I think, ie 10x higher). Just need to do your maths to work out whether religiously paying every quarter is financially better, because it may not be.
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Old Jul 27th 2018, 6:16 pm
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Default Re: Working Across Borders / Tax Issues

My husband was self employed (Arizona) and never paid the quarterly taxes. He paid all at the end of the year. If there was a fine, it was only a few dollars. It was worth it to him.

Rene
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Old Jul 27th 2018, 9:58 pm
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Default Re: Working Across Borders / Tax Issues

Thanks so much, I’m really appreciative of your time and help.

So so it would be better to have the UK companies I work for pay me in a US bank account rather than my UK account? That being the case, I won’t be liable for UK tax on my income?

And also, do I need to register as self employed eg a sole trader as you would in the UK?

Thanks again guys!
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Old Jul 27th 2018, 10:12 pm
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Default Re: Working Across Borders / Tax Issues

Six of one, half a dozen of the other as to whether a UK or US bank account. I'd lean toward a UK account so you can control the exchange rate, which a big company wouldn't make much of an effort to do. Pros and cons to both approaches really. I let them deposit into my UK bank account and then used XE to transfer over (better rates than the bank wires). UK tax is irrelevant for this.

I'm assuming (from your profile) you will be trading in CA? I have a CA LLC which is a pretty simple entity. Every April you pay a franchise tax fee of $800 (or more if you earn $$$$), you file two quick forms every two years, and then you include the taxes into your personal taxes. So the income just passes through, but having that LLC there protects your personal estate from your business dealings. In other words, you mess something up in your business and somebody sues you, they can't come after your house or personal car. It's best to separate home and work life as much as possible to build that wall between the two - separate business and personal accounts, pay for business stuff out of the business account, pay for home stuff out of the personal account. I used to use a dual US/UK tax accountant but realized using something like TurboTax was easy enough to do as well, even with the business layer. Far, far easier for me than when I did Self Assessment in the UK.
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Old Jul 27th 2018, 10:19 pm
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Default Re: Working Across Borders / Tax Issues

Really helpful. Thanks Geoff. You’re right, I’m in CA......hence my need to start working again, jeez it’s expensive here!!
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Old Jul 27th 2018, 10:28 pm
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Default Re: Working Across Borders / Tax Issues

Originally Posted by HelsW View Post
jeez it’s expensive here!! ������
Ain't that the truth
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Old Aug 28th 2018, 9:01 pm
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Default Re: Working Across Borders / Tax Issues

Hey guys, I’m popping up here again as I have now definitely been offered some work (working remotely) from a UK company. They require me to be a Uk registered sole trader or limited company. My preference would be a sole trader as it’s simpler for now....(apologies if I covered this at all in the above thread but trying to get it straight in my own head).....so I can register as a UK sole trader which needs a Uk address (I can use one from family I guess if needed), is that correct? But then my tax liability would still be in the US?

Thanks again, any help much appreciated.

Last edited by HelsW; Aug 28th 2018 at 9:03 pm.
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