Visa approved. Help with next steps

[Bug&Bug 147]

Right so I now have a CR1 and I need to figure out the next steps and im overwhelmed. Sorry for the long text.

 

1. USA income taxes

So the current plan is to enter the US in the next 6 months to get the green card but come back and continue at my UK job for few months until ive sorted myself out. 

 

Reading the IRS guide for aliens it looks clear that I would be a resident alien for tax purposes the moment i go through the POE. And any time before that I would be a NRA unless I chose to be treated as a RA.

 

Did I get this right?

So even if I worked for several months in the UK for a UK company, my income after POE would be taxable in the USA.

 

2. HMRC taxes

Right so for several months I would be living in the UK, making UK income and being a UK resident for all purposes while holding a green card.

So its fair to assume HMRC will tax that my income. Is there a treaty between the UK and US so I dont pay taxes twice on the same income and how do I even go about it?

 

3. Accounts

I own a EU bank account, UK bank accounts, a UK cash ISA and S&S ISA. None of them make any substancial income ( maybe a £100  per year). Can I keep them in the UK or what happens to them if I move to the US?  I also have a pension but i guess that will have its own conditions.

 

 

4. NI

What happens with the NI that ive payed in the UK and europe? Is there a treaty with the US so that my years paying taxes are not lost?

 

Thank you SO MUCH with any help you can provide, as you can see I am clueless.

[Villanelle 4,122]

There is a sub forum for taxes. The mods may move your thread there...

 

Anyway I would suggest reading through some posts there but in all honesty the best advice is for you to speak to a CPA. You want to find someone who specializes in these types of tax situations. Do not use a place like HR block. They are not CPAs but rather hourly employees given a certificate by the company saying they are 'qualified' to help you file taxes. There are various types of CPAs. Some deal with employment stuff, some deal with real estate stuff, and some deal with foreign income issues. Find one that knows foreign income.

 

Everyones tax situation is different and tax laws are super complex. It is doubtful that anyone here can give you the correct advice- especially with out knowing all the information and numbers. Generally speaking- there are tax treaties. That means you only pay tax once. So if you pay the tax in the UK there is a way to show that on the US tax- and the US wont tax you since you already paid tax on it and vice versa. Its not as complicated as it sounds. I believe its just entering it correctly on the main 1040 tax form and then attaching a worksheet or supplement form. You just mainly need proof (the tax returns from the other country) to show how much tax you paid on how much income). Also you can have bank accounts in any country you like. In the US there is a separate form (in addition to being asked on your taxes) if you have any foreign accounts with balances over 10k. If you do you have to disclose so.  I believe NI is the equivalent of SS right? Retirement benefits? There are provisions in the SS act for counting foreign earned income like that towards your SS retirement benefits. Unless you are close to being able to claim SS retirement I would not really worry about that right now. There are publications from SSA about the topic if you are curious. That would be a future you problem when you apply for retirement benefits but generally yes, the years you spent working there will count towards your SS benefits here. 

 

[Bug&Bug 147]

Thanks @Villanelle

 

Yes I know about the tax forum but while it focuses on the USA side of things it doesnt focus on the  UK and having to sort out the HMRC side of things wich I suspect people here will have more experience.

 

[Wuozopo 4,293]

4 hours ago, Bug&Bug said:

 

Reading the IRS guide for aliens it looks clear that I would be a resident alien for tax purposes the moment i go through the POE. And any time before that I would be a NRA unless I chose to be treated as a RA.

 

Did I get this right?

So even if I worked for several months in the UK for a UK company, my income after POE would be taxable in the USA.

Yes. Anything after POE becomes an IRS event.

 

4 hours ago, Bug&Bug said:

HMRC taxes

Right so for several months I would be living in the UK, making UK income and being a UK resident for all purposes while holding a green card.

So its fair to assume HMRC will tax that my income. Is there a treaty between the UK and US so I dont pay taxes twice on the same income and how do I even go about it?

Yes there is a tax treaty. You don’t pay IRS and HMRC for the same earnings. You can get HMRC to stop taxing you after that POE date.  I am not familiar with the process,  but a friend in Pennsylvania mentioned to me your employer can submit a code indicating your wages are not taxable.  Talk to your HR department and see what info they can help you with on the HMRC side. 

Another option is a tax credit on your US tax return for taxes paid HMRC because the IRS will tax you on that income. There is an IRS form 1116 which is mucho complicated to recoup foreign taxes paid.
 

 

4 hours ago, Bug&Bug said:

Accounts

I own a EU bank account, UK bank accounts, a UK cash ISA and S&S ISA. None of them make any substancial income ( maybe a £100  per year). Can I keep them in the UK or what happens to them if I move to the US?  I also have a pension but i guess that will have its own conditions.

You can keep your accounts. Any interest they pay you during the tax year is reportable on your US tax return, the same way interest paid from a US bank or savings account is reported. Same line, no special forms but you do convert to US dollars. You basically add up all your interest from multiple accounts anywhere and plug that number into a line on your tax return. 
 

When you maintain foreign accounts with an aggregate total exceeding $10,000, there is a report to file in April each year with the US Treasury listing each account—bank name, address, account number and highest balance during the year. It is a report, not a tax event. It is not on the tax return. You do it all online. It is commonly called FBAR if you want to look it up. It isn’t due until next April and only if you move during 2020. If you move in 2021 then due April 2022. I wouldn’t get too bothered with it now while your head is wooly with so much to learn. It’s a report I have done many times, the first one being a year late with no issues. Finally I dropped below $10k and skipped reporting this year. They make it sound scary with big penalty possibilities, but that is truly for the billionaires that are hiding money in offshore accounts the IRS wants to catch failing to report mega investment earnings. They aren’t going to be bothered with small fish like us with only a few quid. 
 

If you move the money to the US, there is no tax on the balance you move. It isn’t new income, it’s just your money. The only thing taxable is interest it earns during the given tax year whether it was earned abroad or US or half here and there.

 

4 hours ago, Bug&Bug said:

NI

What happens with the NI that ive payed in the UK and europe? Is there a treaty with the US so that my years paying taxes are not lost?

That falls under Social Security Administration at SSA.gov. It’s a whole big topic for another time or looking up old posts. Maybe I can find some for you. It kind of depends on your age and if most of your earnings are going to be under Social Security or NI. I came to the US after already having my 30 years so I will definitely collect my full UK state pension and my Social Security will be insignificant. If you have 25 years left  to earn under Social Security, you stand to get a whole lot more from SSA. There is a provision where you can’t double dip and  collect full from both. If you come in the middle of your career, there is also a provision where you can claim some of the UK years to beef up your total years so you're not screwed on both for half/half in each place with neither reaching max. And the UK will allow you to keep paying them voluntarily after you’ve left UK to get to your 30 years.  Many options to learn another day. You have time before you retire.
 

One basic thing to know is on UK state pension for those fully qualified with their 30 years, everybody earns the same amount from the barista to the company executive. (Currently £9,110.40/yr) One standard rate for all. With Social Security, your payments are based on your salary level. A high wage earner is going to get a lot more monthly than the part-time barista. I suppose which is the better system depends on if you are going to have a minimum salary career or a big salary one. I believe the maximum SSA retirement possible this year is more than $35,000/year. 

Edited September 27, 2020 by Wuozopo

[Bug&Bug 147]

Thank you SO much @Wuozopo, thats incredibly helpful.

 

Ok ill try give HMRC a call see if they can point me in the right direction and I will start reading on SS.

[shallot343 116]

On 9/27/2020 at 3:57 PM, Wuozopo said:

It is commonly called FBAR if you want to look it up. It isn’t due until next April and only if you move during 2020. If you move in 2021 then due April 2022. I wouldn’t get too bothered with it now while your head is wooly with so much to learn. It’s a report I have done many times, the first one being a year late with no issues

Just want to add re: the FBAR. I had no idea about it and owed an FBAR  filing from 2013. I filed the old FBAR this year, so 7 years late, and no one batted an eyelash and I haven't faced any penalties. The IRS tends to make things sound very scary and very serious but in my experience most mistakes made in good faith are pretty easily remedied. 

[Wuozopo 4,293]

9 minutes ago, shallot343 said:

Just want to add re: the FBAR. I had no idea about it and owed an FBAR  filing from 2013. I filed the old FBAR this year, so 7 years late, and no one batted an eyelash and I haven't faced any penalties. The IRS tends to make things sound very scary and very serious but in my experience most mistakes made in good faith are pretty easily remedied. 

I completely agree that they aren’t even bothered at small fish like us. My first FBAR was over a year late. 

[os306 103]

On 9/27/2020 at 4:50 PM, Bug&Bug said:

Right so I now have a CR1 and I need to figure out the next steps and im overwhelmed. Sorry for the long text.

 

1. USA income taxes

So the current plan is to enter the US in the next 6 months to get the green card but come back and continue at my UK job for few months until ive sorted myself out. 

 

Reading the IRS guide for aliens it looks clear that I would be a resident alien for tax purposes the moment i go through the POE. And any time before that I would be a NRA unless I chose to be treated as a RA.

 

Did I get this right?

So even if I worked for several months in the UK for a UK company, my income after POE would be taxable in the USA.

 

2. HMRC taxes

Right so for several months I would be living in the UK, making UK income and being a UK resident for all purposes while holding a green card.

So its fair to assume HMRC will tax that my income. Is there a treaty between the UK and US so I dont pay taxes twice on the same income and how do I even go about it?

 

3. Accounts

I own a EU bank account, UK bank accounts, a UK cash ISA and S&S ISA. None of them make any substancial income ( maybe a £100  per year). Can I keep them in the UK or what happens to them if I move to the US?  I also have a pension but i guess that will have its own conditions.

 

 

4. NI

What happens with the NI that ive payed in the UK and europe? Is there a treaty with the US so that my years paying taxes are not lost?

 

Thank you SO MUCH with any help you can provide, as you can see I am clueless.

 

It was my understanding that once you become a resident alien for tax purposes you would be required to declare the income from your UK job to the IRS, but you would be able to exclude up to the equivalent of $105,900 from taxation (known as the Foreign Earned Income Exclusion). My wife (USC) and I currently live in the UK, but I have a SSN from when I previously lived in the US. Last year we filed as "married filing jointly" which entails treating me as a resident alien for tax purposes. Therefore, I'm required to declare my UK income to the IRS, but none of this is taxed due to the Foreign Earned Income Exclusion.

[Wuozopo 4,293]

2 hours ago, os306 said:

 

It was my understanding that once you become a resident alien for tax purposes you would be required to declare the income from your UK job to the IRS, but you would be able to exclude up to the equivalent of $105,900 from taxation (known as the Foreign Earned Income Exclusion). My wife (USC) and I currently live in the UK, but I have a SSN from when I previously lived in the US. Last year we filed as "married filing jointly" which entails treating me as a resident alien for tax purposes. Therefore, I'm required to declare my UK income to the IRS, but none of this is taxed due to the Foreign Earned Income Exclusion.

To claim the foreign income exclusion, you must be living in the UK, which you currently are. Once you POE, your residence is the US and any UK income earned after the move to the US can not be excluded on Form 2555. Any part of the year while living in the UK is excludable still. The maximum amount that can be excluded is figured as a percentage equal to the percent of the year you resided in the UK. Example—If you move exactly halfway through the year, your UK residence is 50%. The most you can exclude is 50% x $105,900= $52,950. Form 2555 has a calculation by days to come up with your percentage.

Edited September 29, 2020 by Wuozopo

[os306 103]

23 minutes ago, Wuozopo said:

To claim the foreign income exclusion, you must be living in the UK, which you currently are. Once you POE, your residence is the US and any UK income earned after the move to the US can not be excluded on Form 2555. Any part of the year while living in the UK is excludable still. The maximum amount that can be excluded is figured as a percentage equal to the percent of the year you resided in the UK. Example—If you move exactly halfway through the year, your UK residence is 50%. The most you can exclude is 50% x $105,900= $52,950. Form 2555 has a calculation by days to come up with your percentage.

Thanks @Wuozopo. If the OP's plan is to return to the UK immediately after POE and continue working (and earning money) in his/her UK job for a few months, then can they claim that they were residing in the UK while this income was earned (and hence exclude from taxation whatever percentage of $105,900 the calculation adds up to based on days resided in the UK)? Or does the fact that the OP will have an I-551 stamp mean that they are considered a US resident even if they return to the UK immediately after entering?

Edited September 29, 2020 by os306

[Wuozopo 4,293]

1 hour ago, os306 said:

Thanks @Wuozopo. If the OP's plan is to return to the UK immediately after POE and continue working (and earning money) in his/her UK job for a few months, then can they claim that they were residing in the UK while this income was earned (and hence exclude from taxation whatever percentage of $105,900 the calculation adds up to based on days resided in the UK)? Or does the fact that the OP will have an I-551 stamp mean that they are considered a US resident even if they return to the UK immediately after entering?

 The IRS isn’t going to be checking his POE date. They aren’t tied in to immigration so he could falsify, however if he follows the rules, then he becomes a US permanent resident at POE and has immigrated. His home is the US. He broke the continuous residence in the UK that allows the exclusion. But as I said, how would they know if it was a very short time. It’s not meant for hopping back and forth. There should be one date that is the switch date. The IRS won’t be checking. 
 

So let’s say he moved  October 1. Then he works November and December in the UK and pays UK taxes because it was too much hassle to get off HMRC. The rules as I understand them are

All income Jan-Dec is reported as wages if filing a joint return.

Jan 1- Oct 1 qualifies for Foreign Earned Income Exclusion Form 2555. US tax on that portion is deducted. 

Oct 2 - Dec count as income that can not be excluded. He is taxed by US.

But the UK tax he paid Oct-Dec can be excluded on Form 1116 because he would be paying US and UK taxes on the same money. He gets a credit off his US tax bill for the foreign taxes paid.

 

You can not double dip benefits on the same earnings.You can’t exclude foreign income and the taxes you paid on it. You have to pick Form 2555 (exclude income) or Form 1116 (foreign tax credit). However you can split the year and form 2555 Jan- Oct 1 while resident in the U.K. and  do Form 1116 the remainder of the year while resident in the US. 

 

Tell me if that doesn’t make sense. 😳

Edited September 29, 2020 by Wuozopo

[Boiler 45,496]

I know someone who was in this situation the Company paid for an Accountant to sort it out.

[Bug&Bug 147]

On 9/29/2020 at 9:40 PM, Wuozopo said:

To claim the foreign income exclusion, you must be living in the UK, which you currently are. Once you POE, your residence is the US and any UK income earned after the move to the US can not be excluded on Form 2555. Any part of the year while living in the UK is excludable still. The maximum amount that can be excluded is figured as a percentage equal to the percent of the year you resided in the UK. Example—If you move exactly halfway through the year, your UK residence is 50%. The most you can exclude is 50% x $105,900= $52,950. Form 2555 has a calculation by days to come up with your percentage.

Sorry I havent read this before.  Im confused of what you mean by residence and living and moving. 

After POE I can still be living and working in the UK for up to a year, (wich would make me a UK resident for HMRC if more than 6 months), so what does that count as?

[Boiler 45,496]

So you are going to come in get a re entry permit and go back?

[Wuozopo 4,293]

45 minutes ago, Bug&Bug said:

Sorry I havent read this before.  Im confused of what you mean by residence and living and moving. 

After POE I can still be living and working in the UK for up to a year, (wich would make me a UK resident for HMRC if more than 6 months), so what does that count as?

Pay your taxes to the country where your permanent home is and where you go to sleep each night???