Working for a UK employer while in the US as a CR1

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I've read a few different posts on this topic so want to see if I understand it correctly.

For various personal reasons I want to continue working for my UK employer once I get my CR1, but let me put this scenario from entering on a K1 as well as a CR1 and perhaps someone with some experience can spot the gaps.

 

My job also does not require me to be in the US or perform any tasks there but my employer does have a US presence.

Both the CR1 and K1 permit you to work in the US but you cannot work for a US employer without a greencard.

 

Entering the country on a K1 Visa, does not make me a US resident until I complete an (AOS) and become a CR1 making me a resident with conditions.

During the time between entering on a K1 and adjusting status to a CR1 I can work for my UK employer and earnings during that time would be covered under the 2001 USA-UK Double Taxation Convention.  

 

When I become a CR1, regardless of whether I am in the US or the UK I am still subject to US tax laws and would have to submit forms 1040, 1116 (Foreign Tax Credit) to reduce my US tax burden and form 2555 to declare foreign earned income.

Also form 8938 to list foreign assets and form TD F 90-22.1 where I declare all non-US bank accounts.

During that first Tax year I will be a "dual-status Alien" to the IRS but only that first year.

 

Have I understood this correctly?

If I am still working for my UK employer the next tax year do I do the same again or do I need to request an EIN and my UK employer remove me from the HMRC and PAYE, withhold the tax amount from my pay and send it to the IRS?

 

Is anyone aware of any employment legislation, could I continue to work for my UK employer indefinitely or after 2 years would they say the job must be a fully US job even if my work doesn't require me to be present in the US.

I suspect that having someone living and working in the US but only subject to UK employment law would be tricky.

 

Thanks for any clarity anyone can provide.

[JFH 12,190]

You're confused. A K-1 applicant doesn't adjust to or become a CR-1. A CR-1 is just the visa to get a spouse into the country. Since K-1s are already in the country they don't need a visa. A CR-1 visa is worthless the minute the holder arrives as it's a single-use visa to get them on the plane. Once they land they become a permanent resident. K-1s likewise adjust to permanent residents after a lengthy paperwork circus. 

 

Why are you even bothering with a K-1? Doesn't sound like it's the best solution fir hour situation (for most Europeans it isn't). Get married, enter on a CR-1 and work. No grey area. The easiest way is set yourself up as a consultant to the U.K. company and bill them for your services as an LLC. 

Edited December 22, 2017 by JFH

[Dashinka 24,494]

7 minutes ago, JFH said:

You're confused. A K-1 applicant doesn't adjust to or become a CR-1. A CR-1 is just the visa to get a spouse into the country. Since K-1s are already in the country they don't need a visa. A CR-1 visa is worthless the minute the holder arrives as it's a single-use visa to get them on the plane. Once they land they become a permanent resident. K-1s likewise adjust to permanent residents after a lengthy paperwork circus. 

 

Why are you even bothering with a K-1? Doesn't sound like it's the best solution fir hour situation (for most Europeans it isn't). Get married, enter on a CR-1 and work. No grey area. The easiest way is set yourself up as a consultant to the U.K. company and bill them for your services as an LLC. 

Technically speaking any immigrant granted LPR on a conditional basis is a Conditional Resident whether the enter on a spousal visa or a fiancé visa and AOS is approved. 

 

That being said, I agree with you, I would think that the OP would be better off getting married and then their spouse can file for a spousal visa and then they can enter as a conditional resident and work immediately.  

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Apologies, I thought that the AOS meant transitioning from a K1 to a CR1 after marriage.

Basically I'm trying to understand the taxation situation once I become a resident, I believe that whether I am physically in the US or not I will still be required to file a tax return once I am a CR1 as a CR1 after the first entry on a CR1 Visa you can come and go as you please.

As I work remotely quite a lot when I am in the UK and as my work doesn't actually require me to perform any tasks in the US, I would like to keep my job and payroll etc the same and just remote work from the US until I can find a US based job. Something I think I will more successfully do when I am in the country.

I'm trying to see where the legal obstacles might be:-

• Personal taxation doesn't seem to be an obstacle
• Ability to perform my job doesn't seem to be an obstacle
• Being legally allowed to work doesn't seem to be an obstacle

The only obstacles that I can think there might be, are my employers tax liability if I am earning while working in the US, or employment legislation and what employment rights I would have in the US as an employee of a UK company.

[Italian_in_NYC 259]

I am going to speak on the tax issues, not the visa ones.

You will always be subject to US taxation once you have a green card or become a US person for tax purposes.

The issue is how to source your salary. If it is sourced to the UK, then your UK employer has to withhold taxes according to UK laws, you will possibly have to file a UK return and then report the same income on your 1040 and take UK taxes paid as foreign tax credit to partially or totally offset the US federal tax liability (careful: no foreign tax credit for State income taxes, so you'd be hit by a pretty hefty NJ tax bill).

Source rules are complex and not always straightforward. However, if you are working in the US (although for a UK company) it is difficult to source that salary to the UK. If the IRS were to audit you and determine that your salary income was US-sourced, then you could not claim any foreign tax paid as foreign tax credit, as foreign tax paid can only offset foreign-sourced income.

Be very careful. Also your company may be deemed to have effectively connected income (ECI) to a US trade or business (since they have an employee in the US) and that's a whole can of worms the UK company would not want to open.

If your employer has a US subsidiary, the safest option is to have you on the US payroll as soon as you are authorized to work.

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On ‎25‎/‎12‎/‎2017 at 1:39 AM, Italian_in_NYC said:

I am going to speak on the tax issues, not the visa ones.

You will always be subject to US taxation once you have a green card or become a US person for tax purposes.

The issue is how to source your salary. If it is sourced to the UK, then your UK employer has to withhold taxes according to UK laws, you will possibly have to file a UK return and then report the same income on your 1040 and take UK taxes paid as foreign tax credit to partially or totally offset the US federal tax liability (careful: no foreign tax credit for State income taxes, so you'd be hit by a pretty hefty NJ tax bill).

Source rules are complex and not always straightforward. However, if you are working in the US (although for a UK company) it is difficult to source that salary to the UK. If the IRS were to audit you and determine that your salary income was US-sourced, then you could not claim any foreign tax paid as foreign tax credit, as foreign tax paid can only offset foreign-sourced income.

Be very careful. Also your company may be deemed to have effectively connected income (ECI) to a US trade or business (since they have an employee in the US) and that's a whole can of worms the UK company would not want to open.

If your employer has a US subsidiary, the safest option is to have you on the US payroll as soon as you are authorized to work.

Thanks, think you are right that being on the US payroll is the safest option.

 

Basically I had a K1 and wanted to remain and do my AOS then return to the UK , take care of personal matters and try and get an internal transfer.

(Why is this important.... well near the end of the K1 process a relative got sick, remaining with the same employer would mean keeping the amount of annual leave I get and that I could remote work from time to time to provide extra care as well as take care of any arrangements with doctors etc)

 

My Boss said I couldn't do it because of Tax reasons and that this was what our own HR had said, being rather too trusting I believed him..... however as I got to my CR1 stage I decided to investigate if this changed anything and obviously found out that what I was fed was a crock of XXXX.

 

So this has meant an extra year away from my wife and almost another $2,000 in additional fees.

Although as you say ECI could open a can of worms, I'm hoping that as my actual job doesn't require me to be in the US, this should not be an issue.

This should be a simple matter to transfer me onto the US payroll as the company has a presence in the US and pays Tax's there, but people are being obstructive.

I'm trying to figure out what obstacles they may through in my path so I can be prepared.

So far every excuse I have blown out of the water by pointing to the correct legislation, or challenging their excuse with a request for their response in an email with a link to the correct policy, procedure or legislation, or to share the correspondence from the "expert" they consulted. They have not responded to any of these requests.

At some point I will probably initiate the grievance procedure, before I do I like to be fully prepared.