Remote work for non-US employer while living in US

[Mollie09 1,543]

1 minute ago, chriskrichardson said:

To clarify: I'll have to keep my non-US employer and work remotely until I find something!

 

So, if I'm right, my options are:

 

1. My employer gets an EIN, pays the IRS tax/medicare/social security each month, and gives me a W2 at the end of the tax year.
2. My employer gets an EIN, pays me everything/I pay everything myself, and gives me a 1099 at the end of the tax year.
(And, in either case, consult an accountant on worldwide income tax returns when I arrive in the US.)

 

And what happens if my employer does not get an EIN? Does this mean I will declare this income on my tax return without a W2/1099, and pay double tax? Thank you again for the advice.

If your employer does not get an EIN you cannot be employed by them as a US resident.

[ir1cr12021 6]

34 minutes ago, Mollie09 said:

If your employer does not get an EIN you cannot be employed by them as a US resident.

To clarify: when I arrive and become a US resident (when my visa is stamped at point of entry), I will be employed by them. 

 

So, what you are saying is that if the employer does not get an EIN, I will need to quit? 

[Wuozopo 4,293]

1 hour ago, chriskrichardson said:

To clarify: I'll have to keep my non-US employer and work remotely until I find something!

 

So, if I'm right, my options are:

 

1. My employer gets an EIN, pays the IRS tax/medicare/social security each month, and gives me a W2 at the end of the tax year.
2. My employer gets an EIN, pays me everything/I pay everything myself, and gives me a 1099 at the end of the tax year.
(And, in either case, consult an accountant on worldwide income tax returns when I arrive in the US.)

 

And what happens if my employer does not get an EIN? Does this mean I will declare this income on my tax return without a W2/1099, and pay double tax? Thank you again for the advice.

Yes. The easiest option for the employer is #2 because he does not have to send money to the IRS each paycheck or pay a service to handle that task for him. My wife somehow accidentally ended up talking to a lady at IRS that issues EINs to foreign employers. She said it’s real easy. They just call up, give some info, and get assigned a number. Then the employer issues a 1099 to you saying how much total they paid you between Jan 1 and Dec 31. Here’s what a 1099 looks like. Most of the boxes he wouldn’t fill in. https://www.irs.gov/pub/irs-pdf/f1099msc.pdf
The left side is for His business name, address, etc and your name, address, etc. And his EIN number and your SSN. On the right side it would just be something like

Box 3. $20,123.45   Box 4. $0.00 and done because the rest of the boxes are not about wages.

If this is a UK company, I know there is a code that payroll can submit to HMRC meaning you are not taxed and no NI either. I can’t help much more because I haven’t any experience with it. He sends you the full pay with no deductions, and being wise, you will set some of each check aside for when you pay quarterly to the IRS. It’s four times a year and you just estimate what to send.It doesn’t have to be exact. The IRS just wants a bit of money coming in regularly rather than you owing a bunch at tax filing time. If you send too much, it comes back as your tax refund. 
 

On a tax return, worldwide income is no different than US income really. It’s all income and goes in the same place on a tax return. It simply income and they don’t care where it came from or if it was paid into a UK bank account.
 

 The 2021 tax year will be the more complicated return because you’re part UK resident and part US resident. You report everything you earn on your tax return, BUT the part you earned while resident In the UK (Jan & Feb), you can take a Foreign Earned Income Exclusion (Form 2555 added to your tax return.) Since you earned it while living abroad and paid taxes on it already, your US return calculates how much the US tax would have been for the 2 months and subtracts that from your total tax. TurboTax handled it for me my first year. You can also go to an accountant. 

As far as no EIN or 1099. 🤷‍♂️ Dunno. You still report how much you earned.  I have somebody who is supposed to give me a 1099 as a contractor. He hasn’t for two years. We still report how much he paid me.

 

[ir1cr12021 6]

11 hours ago, Wuozopo said:

Yes. The easiest option for the employer is #2 because he does not have to send money to the IRS each paycheck or pay a service to handle that task for him. My wife somehow accidentally ended up talking to a lady at IRS that issues EINs to foreign employers. She said it’s real easy. They just call up, give some info, and get assigned a number. Then the employer issues a 1099 to you saying how much total they paid you between Jan 1 and Dec 31. Here’s what a 1099 looks like. Most of the boxes he wouldn’t fill in. https://www.irs.gov/pub/irs-pdf/f1099msc.pdf
The left side is for His business name, address, etc and your name, address, etc. And his EIN number and your SSN. On the right side it would just be something like

Box 3. $20,123.45   Box 4. $0.00 and done because the rest of the boxes are not about wages.

If this is a UK company, I know there is a code that payroll can submit to HMRC meaning you are not taxed and no NI either. I can’t help much more because I haven’t any experience with it. He sends you the full pay with no deductions, and being wise, you will set some of each check aside for when you pay quarterly to the IRS. It’s four times a year and you just estimate what to send.It doesn’t have to be exact. The IRS just wants a bit of money coming in regularly rather than you owing a bunch at tax filing time. If you send too much, it comes back as your tax refund. 
 

On a tax return, worldwide income is no different than US income really. It’s all income and goes in the same place on a tax return. It simply income and they don’t care where it came from or if it was paid into a UK bank account.
 

 The 2021 tax year will be the more complicated return because you’re part UK resident and part US resident. You report everything you earn on your tax return, BUT the part you earned while resident In the UK (Jan & Feb), you can take a Foreign Earned Income Exclusion (Form 2555 added to your tax return.) Since you earned it while living abroad and paid taxes on it already, your US return calculates how much the US tax would have been for the 2 months and subtracts that from your total tax. TurboTax handled it for me my first year. You can also go to an accountant. 

As far as no EIN or 1099. 🤷‍♂️ Dunno. You still report how much you earned.  I have somebody who is supposed to give me a 1099 as a contractor. He hasn’t for two years. We still report how much he paid me.

 

Great. So without an EIN/1099, I'll report my gross (not net) salary on my US tax return. And pay double tax?

 

Also good to know on quarterly contributions: happy to estimate and send them something each quarter, if that's better than waiting until the end of the year.

 

But it sounds like it'll be better to get the EIN and a 1099. If they already have US citizens/residents employed (which I believe they do), will they likely have an existing EIN that I can use, or does this need to be a specific one for me?

 

If I was living outside of the US and working for them, and had to declare on my US tax return, I assume the process would be the same? (Get an EIN and 1099, and declare gross salary on my tax return)?

 

Thank you so much again.

[Wuozopo 4,293]

1 hour ago, chriskrichardson said:

Great. So without an EIN/1099, I'll report my gross (not net) salary on my US tax return. And pay double tax?

No, you never should pay double tax. There is a tax treaty. Make arrangements for your employer to quit taking HMRC tax out of your check. Theoretically, that would be the day you move to the US, but realistically maybe pick a break day on the closest payday to your change of residence.  Say for example that your employer can make arrangements for your last check with UK tax withheld to be issued March 19. Then your next check will be when you are getting paid as a US resident...full gross pay. 
 

On your 2021 tax return (that you won’t do until a year from now) you would have something like 

UK resident earnings- $4000

US resident earnings- $20,000

You report $24,000 on your tax return. You fill outForm 2555 (Foreign Earned Income Exclusion) for $4000 that you earned while resident in a foreign country. The US tax on the $4000 will subtracted.
In simple terms it’s like—

[Tax on $24,000] minus [Tax on $4000] equals [Tax you owe]

And you already paid in during the year toward that [Tax you owe] so it’s mostly covered and very little to pay at the end or maybe even a refund if you over paid.

 

2 hours ago, chriskrichardson said:

If they already have US citizens/residents employed (which I believe they do), will they likely have an existing EIN that I can use, or does this need to be a specific one for me?

One EIN number is all they need for their business as a payer of wages. Employer Identification Number is how the IRS recognizes them for as many employees that they might pay. 
 

2 hours ago, chriskrichardson said:

If I was living outside of the US and working for them,.....

You lost me. You mean like if you moved to France for a couple of years but you are a US greencard holder? You could lose your greencard (US permanent residency) if you go live somewhere else. If that happened and you were no longer a US permanent resident then no US tax return.

[Mollie09 1,543]

17 hours ago, chriskrichardson said:

So, what you are saying is that if the employer does not get an EIN, I will need to quit? 

What I'm saying is if they pay you without an EIN they will be paying you as a foreign company paying a foreign resident, not a US resident. That complicates things both from a tax perspective and an immigration perspective.

Edited March 3, 2021 by Mollie09

[ir1cr12021 6]

3 hours ago, Wuozopo said:

You lost me. You mean like if you moved to France for a couple of years but you are a US greencard holder? You could lose your greencard (US permanent residency) if you go live somewhere else. If that happened and you were no longer a US permanent resident then no US tax return.

Sorry, I wasn't very clear! If a US citizen (not me) was employed by the same firm, and living outside of the US, then they would get an EIN, a 1099, and declare it on their federal tax return? A hypothetical that may be getting off topic.

 

Thank you for the other information in your answer. I suppose on the "double tax" point I am just asking what to do if I end up being taxed overseas before my salary enters my account. But you've suggested having my employer update before my first payslip once I enter the US, so that makes sense!

3 hours ago, Mollie09 said:

What I'm saying is if they pay you without an EIN they will be paying you as a foreign company paying a foreign resident, not a US resident. That complicates things both from a tax perspective and an immigration perspective.

Thank you, that makes sense! If I'm living in the US, what would the complication be from an immigration perspective? (Now a little worried about continuing to work remotely from the US, if it's an immigration issue!)

[Wuozopo 4,293]

3 hours ago, Mollie09 said:

What I'm saying is if they pay you without an EIN they will be paying you as a foreign company paying a foreign resident, not a US resident. That complicates things both from a tax perspective and an immigration perspective.

I don’t understand. Immigration and taxes are separate things. I don’t see an immigration complication at all. 

Edited March 3, 2021 by Wuozopo

[Wuozopo 4,293]

53 minutes ago, chriskrichardson said:

Thank you for the other information in your answer. I suppose on the "double tax" point I am just asking what to do if I end up being taxed overseas before my salary enters my account. But you've suggested having my employer update before my first payslip once I enter the US, so that makes sense!

There's a solution for that scenario too. As a US resident, living in the US, your earnings are taxable, full stop. But if you paid foreign taxes as well, there is a form to get a Foreign Tax Credit for taxes paid to a foreign government when you’ve been taxed on that same money by the US.

 

53 minutes ago, chriskrichardson said:

Sorry, I wasn't very clear! If a US citizen (not me) was employed by the same firm, and living outside of the US, then they would get an EIN, a 1099, and declare it on their federal tax return? A hypothetical that may be getting off topic.

That’s where the Foreign Income Exclusion (Form 2555) comes in. If your hypothetical USC was legally living and working abroad for a foreign company, they pay taxes to the foreign country. They still report that foreign income on their US tax return, but Form 2555 allows them to exclude any taxes on the income earned while legally living/working abroad. They can’t just be on a long holiday abroad and trying to dodge some taxes. 

 

it’s like your first year example from earlier

$4000 earned while your residence was the UK. You legally lived and worked there. You get to claim the foreign exclusion for that couple of months.

$20,000 earned after your residence was the US. You no longer live abroad so can’t exclude the income as “foreign earned” even though the employer is abroad. The tax treaty says you pay  the country where you live not where your employer lives.

 

Edited March 3, 2021 by Wuozopo

[ir1cr12021 6]

On 3/3/2021 at 5:52 PM, Wuozopo said:

There's a solution for that scenario too. As a US resident, living in the US, your earnings are taxable, full stop. But if you paid foreign taxes as well, there is a form to get a Foreign Tax Credit for taxes paid to a foreign government when you’ve been taxed on that same money by the US.

 

That’s where the Foreign Income Exclusion (Form 2555) comes in. If your hypothetical USC was legally living and working abroad for a foreign company, they pay taxes to the foreign country. They still report that foreign income on their US tax return, but Form 2555 allows them to exclude any taxes on the income earned while legally living/working abroad. They can’t just be on a long holiday abroad and trying to dodge some taxes. 

 

it’s like your first year example from earlier

$4000 earned while your residence was the UK. You legally lived and worked there. You get to claim the foreign exclusion for that couple of months.

$20,000 earned after your residence was the US. You no longer live abroad so can’t exclude the income as “foreign earned” even though the employer is abroad. The tax treaty says you pay  the country where you live not where your employer lives.

 

Thank you for being incredibly generous with your time. I now have a much better understanding of what I need to do. Now, to catch that flight... Honestly, I can't thank you enough.