Working 'in' UK, living in USA - tax
Discussion
Curious if anybody has experience / knowledge here. A family friend is a tax advisor in the US, but was not able to answer, nor any luck on google.
Wife is US citizen. Kids are dual national. I am UK citizen. We all live / work in UK, PAYE + self assessment.
My job involves minimal office time - almost everything is via Skype with occasional travel 4-6 times per year, typically within UK, Switzerland or India.
Have no firm plans to do this, but entertaining this thought:
If we were to relocate to the US (green card should be a given), by waking up early in the morning I could continue my UK job. It is unlikely that my employer would switch me to a US subsidiary.
It would be nice to do this on at least a temporary basis whilst searching for a new role in the US, which seem to be plentiful.
From what I can ascertain, if I was to do this, I would pay UK tax and complete my return as normal in the UK. I would also have to file a US tax return, but my UK tax would produce a credit against this. Assuming tax rates are similar, I'd have little / nothing extra to pay in the US for federal tax.
Thing is, one possible location is Austin, Tx. There is no state tax, but property tax is quite high - approx $1500/month on the type of property we're looking at. As I understand, property tax is a deductible from federal tax, as would be my UK tax credit. That should mean no federal tax bill, but would I have to foot the full bill for property tax? Makes council tax look tame!
Wife is US citizen. Kids are dual national. I am UK citizen. We all live / work in UK, PAYE + self assessment.
My job involves minimal office time - almost everything is via Skype with occasional travel 4-6 times per year, typically within UK, Switzerland or India.
Have no firm plans to do this, but entertaining this thought:
If we were to relocate to the US (green card should be a given), by waking up early in the morning I could continue my UK job. It is unlikely that my employer would switch me to a US subsidiary.
It would be nice to do this on at least a temporary basis whilst searching for a new role in the US, which seem to be plentiful.
From what I can ascertain, if I was to do this, I would pay UK tax and complete my return as normal in the UK. I would also have to file a US tax return, but my UK tax would produce a credit against this. Assuming tax rates are similar, I'd have little / nothing extra to pay in the US for federal tax.
Thing is, one possible location is Austin, Tx. There is no state tax, but property tax is quite high - approx $1500/month on the type of property we're looking at. As I understand, property tax is a deductible from federal tax, as would be my UK tax credit. That should mean no federal tax bill, but would I have to foot the full bill for property tax? Makes council tax look tame!
From what I know you will not be able to work (be it for a UK company or not) while you apply for a green card, as you are not a US citizen you will need to apply for a visa to allow you to live there with your wife, they will want to know how the family will be supported and what your intentions are, tell them you are looking for a US based job and things will start to get messy as by law you are not eligible to work so should not be looking for a job.
Very tricky situation and no guarentee of a green car, I'm sure someone will be along to correct any mistakes in the above or fill in any thing I've missed out
Very tricky situation and no guarentee of a green car, I'm sure someone will be along to correct any mistakes in the above or fill in any thing I've missed out
I expect it's doable but you would need "the right to work", so the green card needs to be first.
Taxation, (not a CPA) Once you have established US residence you could ask your UK based employer to stop withholding because you will file in the US. I believe this is correct due to reciprocal agreements.
However you can't just file your taxes and pay, that would be too simple, you have to make quarterly payments (that are realistic) so that when you do do your taxes the taxes due is close to the taxes paid.
Current situation
Wife US citizen working in UK.....US citizens are taxed on World income, there are lower limits where you do not have to file, possibly being in UK is one of them, but I would check on this.
US tax is better than UK tax, but they use 18% (I think ) on tax you owe with hefty penalties.
Taxation, (not a CPA) Once you have established US residence you could ask your UK based employer to stop withholding because you will file in the US. I believe this is correct due to reciprocal agreements.
However you can't just file your taxes and pay, that would be too simple, you have to make quarterly payments (that are realistic) so that when you do do your taxes the taxes due is close to the taxes paid.
Current situation
Wife US citizen working in UK.....US citizens are taxed on World income, there are lower limits where you do not have to file, possibly being in UK is one of them, but I would check on this.
US tax is better than UK tax, but they use 18% (I think ) on tax you owe with hefty penalties.
Eric Mc said:
What's the question?
On UK PAYE, 'working from home' but move to USA. Can I use my UK tax credit to offset US property tax?Saleen836 said:
Very tricky situation and no guarentee of a green car
In Texas I'd prefer a red truck. I can apply for a green card from the UK. Unless there is suspicion that marriage is fraudulent (unlikely after 8+ years) it will almost certainly be granted. In any case, interest cash from sale of houses & other assets in UK should generate ample living income. jeff m2 said:
I Taxation, (not a CPA) Once you have established US residence you could ask your UK based employer to stop withholding because you will file in the US. I believe this is correct due to reciprocal agreements.
However you can't just file your taxes and pay, that would be too simple, you have to make quarterly payments (that are realistic) so that when you do do your taxes the taxes due is close to the taxes paid.
That could work, though imagine I'd be among the first to ask the question.However you can't just file your taxes and pay, that would be too simple, you have to make quarterly payments (that are realistic) so that when you do do your taxes the taxes due is close to the taxes paid.
jeff m2 said:
Current situation
Wife US citizen working in UK.....US citizens are taxed on World income, there are lower limits where you do not have to file, possibly being in UK is one of them, but I would check on this.
She does have to file and it's a right pain. With her 'alien husband' she can file as 'head of household' so gets a decent tax free allowance. In other circumstances, as she's not a big earner and UK tax free allowance (and interest / dividend allowances) are generous, she'd have to pay additional tax.Wife US citizen working in UK.....US citizens are taxed on World income, there are lower limits where you do not have to file, possibly being in UK is one of them, but I would check on this.
Where will you be tax resident?
Assume USA, as I would be there for 330+ days per year.
Where is "home"?
Currently UK.
In this eventuality we would sell up in UK, buy in USA, with no plans to return to UK. I'd still be a British citizen.
When you say "move to USA" are you talking about going there to live?
Yes, though would commence life in USA working my UK job, employed by ABC (UK) Ltd and taxed at source. I'd anticipate finding a US job within, say, 6 months but would keep working my 'UK job' remotely up until this point.
If renting in US, situation is quite simple. I could pay UK tax and use my tax credit as a deductible for US fedral tax (I'd still have to file there). Most likely would pay no more, as UK taxes are higher.
If purchasing a house in US, I'd be faced with a property tax bill in the region of $18k pa. A bit like council tax, only it can be used as a deductible in my federal tax return.
Suppose the easiest option would be to rent until found new US job, but curious if my understanding of US property tax is correct, or whether they can be offset in any way due to the taxes I've paid in UK.
Assume USA, as I would be there for 330+ days per year.
Where is "home"?
Currently UK.
In this eventuality we would sell up in UK, buy in USA, with no plans to return to UK. I'd still be a British citizen.
When you say "move to USA" are you talking about going there to live?
Yes, though would commence life in USA working my UK job, employed by ABC (UK) Ltd and taxed at source. I'd anticipate finding a US job within, say, 6 months but would keep working my 'UK job' remotely up until this point.
If renting in US, situation is quite simple. I could pay UK tax and use my tax credit as a deductible for US fedral tax (I'd still have to file there). Most likely would pay no more, as UK taxes are higher.
If purchasing a house in US, I'd be faced with a property tax bill in the region of $18k pa. A bit like council tax, only it can be used as a deductible in my federal tax return.
Suppose the easiest option would be to rent until found new US job, but curious if my understanding of US property tax is correct, or whether they can be offset in any way due to the taxes I've paid in UK.
onedsla said:
Where will you be tax resident?
Assume USA, as I would be there for 330+ days per year.
Where is "home"?
Currently UK.
In this eventuality we would sell up in UK, buy in USA, with no plans to return to UK. I'd still be a British citizen.
When you say "move to USA" are you talking about going there to live?
Yes, though would commence life in USA working my UK job, employed by ABC (UK) Ltd and taxed at source. I'd anticipate finding a US job within, say, 6 months but would keep working my 'UK job' remotely up until this point.
If renting in US, situation is quite simple. I could pay UK tax and use my tax credit as a deductible for US fedral tax (I'd still have to file there). Most likely would pay no more, as UK taxes are higher.
If purchasing a house in US, I'd be faced with a property tax bill in the region of $18k pa. A bit like council tax, only it can be used as a deductible in my federal tax return.
Suppose the easiest option would be to rent until found new US job, but curious if my understanding of US property tax is correct, or whether they can be offset in any way due to the taxes I've paid in UK.
The essentials are - Assume USA, as I would be there for 330+ days per year.
Where is "home"?
Currently UK.
In this eventuality we would sell up in UK, buy in USA, with no plans to return to UK. I'd still be a British citizen.
When you say "move to USA" are you talking about going there to live?
Yes, though would commence life in USA working my UK job, employed by ABC (UK) Ltd and taxed at source. I'd anticipate finding a US job within, say, 6 months but would keep working my 'UK job' remotely up until this point.
If renting in US, situation is quite simple. I could pay UK tax and use my tax credit as a deductible for US fedral tax (I'd still have to file there). Most likely would pay no more, as UK taxes are higher.
If purchasing a house in US, I'd be faced with a property tax bill in the region of $18k pa. A bit like council tax, only it can be used as a deductible in my federal tax return.
Suppose the easiest option would be to rent until found new US job, but curious if my understanding of US property tax is correct, or whether they can be offset in any way due to the taxes I've paid in UK.
i) if you live for 330 days out of a single UK tax year (6 April to 5 April) in the US you will be treated by the UK tax authorities as being tax resident OUTSIDE the UK and will therefore not have to pay UK Income Tax on your earnings
ii) if you have UK income it may be taxed at source in the UK but you should be able to get a tax credit for UK tax paid against any US tax payable on that same source of income - depending on the US/UK Double Tax Agreement (DTA)
Tax residency is quite a complex area and you should get specialist advice on the matter.
I'm not sure you can take (or use) a personal allowance in both countries.
I think it would be far beneficial to have no withholding from UK and file and pay US taxes, much better than the tax credit route.
considering your non residency could cause you to lose your UK personal allowance !!!! and it would be held for 15 months because of different tax years.
Another advantage is that you file jointly, and your wife is a moderate earner that can lower your final rate.
Personal exception for married filling jointly is 24K, Fed tax starts at 10% and progresses to the high 30s
With regard to property taxes, there is now a 10K expense cap, not a problem unless you have a mansion or happen to live in NJ.
I think it would be far beneficial to have no withholding from UK and file and pay US taxes, much better than the tax credit route.
considering your non residency could cause you to lose your UK personal allowance !!!! and it would be held for 15 months because of different tax years.
Another advantage is that you file jointly, and your wife is a moderate earner that can lower your final rate.
Personal exception for married filling jointly is 24K, Fed tax starts at 10% and progresses to the high 30s
With regard to property taxes, there is now a 10K expense cap, not a problem unless you have a mansion or happen to live in NJ.
As usual Eric will give great detailed advice, so I'll not comment on that, but as a business owner and Director. if I was your employer I'd let you go, a USA based employee working form a USA address, I'd be most concerned at the potential to create a USA PE for the company, I wouldn't even want to expose my company to the slightest potential for that and you would need to be very special and give me specific written expert opinion at your cost before I'd even consider keeping you in the company.
Gassing Station | Finance | Top of Page | What's New | My Stuff