Working for my UK employer when living in the USA

[Wuozopo 4,292]

1 hour ago, jadmac said:

Thanks so much for this, much appreciated! 

Where does the turbo software fit in with all this? I.e. what does it actually allow you to do? 

My wife has used TurboTax since way before I arrived, but she also reads IRS topics and publications  and understands whatever new situation  comes along, like my self-employment and foreign income exclusion first year. TurboTax is not going to teach you taxes just by saying yes or no to a question if you have no clue what the question means. Make sense?  
 

So we purchase the cd every year and install on the desktop computer. You can create all the returns you want to examine which is best for you and just save under a different file name. You don’t have to wipe out your one online return in progress to try out filing separately vs jointly or any “what if” situations if you want. You can have many going at once. You pay for the software and that’s your price—-no add on costs that online can stick you with. Yes the cd encourages you to upgrade or pay for audit defense, etc, but we never do. Auditing by the IRS is extremely rare for regular blokes with little money. They need their resources to check out the big fish. 

 

With TurboTax Deluxe, you can handle your Foreign income exclusion which is likely your first year when you earned part year in UK  and part residing in US. If you go the self employed contractor route for your UK boss, Turbo has the Schedule C (profit/loss from your “business”) and any allowed business deductions. Schedule SE (self employment tax)which is just your contribution for social Security and Medicare. If one is an “employee” the boss takes it out of your check and sends to IRS, but as self-employed you pay yourself to IRS calculated by Schedule SE. Most of that just gets done by TurboTax in the background. It knows your name, SSN, earnings, self-employed, etc and just creates the form and sticks everything where is goes.  If you have lots of investments, all the big firms like Edward Jones, Fidelity. Schwab are available to download the years’ data straight into Turbo. It puts everything where it needs to go and creates Schedule B and D. That would be interest, dividends, stock sales, capital gains. Magic! And going year to year it imports your names, address, birth date, SSN,  marital status, where you had investments the previous year, etc  and you don’t have to enter manually again. It just asks you to check the accuracy or edit/delete if anything changed  Time saver subsequent years.  And the more you do it, the more familiar it becomes. 
 

Bottom line if you want to do your own taxes for $40 ($50 if you have state income tax) with the cd software, you can, but you need to understand some basic concepts for best results. You can find all you need from the IRS website when you don’t know. Many just wing it and seem to do okay too. And if you aren’t interested in ever knowing anything about taxes, you can bundle up all your information and pay somebody $$$ to do it for you. It just depends on your personality and what suits you…DIY or just pay somebody to have it done for you. 

[jadmac 8]

On 11/12/2021 at 2:32 PM, Wuozopo said:

My wife has used TurboTax since way before I arrived, but she also reads IRS topics and publications  and understands whatever new situation  comes along, like my self-employment and foreign income exclusion first year. TurboTax is not going to teach you taxes just by saying yes or no to a question if you have no clue what the question means. Make sense?  
 

So we purchase the cd every year and install on the desktop computer. You can create all the returns you want to examine which is best for you and just save under a different file name. You don’t have to wipe out your one online return in progress to try out filing separately vs jointly or any “what if” situations if you want. You can have many going at once. You pay for the software and that’s your price—-no add on costs that online can stick you with. Yes the cd encourages you to upgrade or pay for audit defense, etc, but we never do. Auditing by the IRS is extremely rare for regular blokes with little money. They need their resources to check out the big fish. 

 

With TurboTax Deluxe, you can handle your Foreign income exclusion which is likely your first year when you earned part year in UK  and part residing in US. If you go the self employed contractor route for your UK boss, Turbo has the Schedule C (profit/loss from your “business”) and any allowed business deductions. Schedule SE (self employment tax)which is just your contribution for social Security and Medicare. If one is an “employee” the boss takes it out of your check and sends to IRS, but as self-employed you pay yourself to IRS calculated by Schedule SE. Most of that just gets done by TurboTax in the background. It knows your name, SSN, earnings, self-employed, etc and just creates the form and sticks everything where is goes.  If you have lots of investments, all the big firms like Edward Jones, Fidelity. Schwab are available to download the years’ data straight into Turbo. It puts everything where it needs to go and creates Schedule B and D. That would be interest, dividends, stock sales, capital gains. Magic! And going year to year it imports your names, address, birth date, SSN,  marital status, where you had investments the previous year, etc  and you don’t have to enter manually again. It just asks you to check the accuracy or edit/delete if anything changed  Time saver subsequent years.  And the more you do it, the more familiar it becomes. 
 

Bottom line if you want to do your own taxes for $40 ($50 if you have state income tax) with the cd software, you can, but you need to understand some basic concepts for best results. You can find all you need from the IRS website when you don’t know. Many just wing it and seem to do okay too. And if you aren’t interested in ever knowing anything about taxes, you can bundle up all your information and pay somebody $$$ to do it for you. It just depends on your personality and what suits you…DIY or just pay somebody to have it done for you. 

Hi again, 

Thanks for the insights and sorry for my late response, just been settling in over here and really need to get this one ticked off my list. 

So can I ask what would happen if the employer just sends me the payment without any deductions? I think I will be classed as a self-employed contractor. I really can't see them applying for the EIN or 1099, which I saw you mention happen to you and it didn't really impact you filing? 

Also, how do I actually file? In the UK it's all automated, but I'm assuming I need to do the following: 

1. Register as a self employed contractor? Do you have any idea where to do this? 
2. File my taxes? I'm assuming this is done via Turbotax, but what information do I need to provide it exactly? Am I likely to have everything required if I've just moved here? 

Thanks again for your assistance, it's much appreciated. 




 

[aaron2020 11,651]

2 hours ago, jadmac said:

Hi again, 

Thanks for the insights and sorry for my late response, just been settling in over here and really need to get this one ticked off my list. 

So can I ask what would happen if the employer just sends me the payment without any deductions? I think I will be classed as a self-employed contractor. I really can't see them applying for the EIN or 1099, which I saw you mention happen to you and it didn't really impact you filing? 

Also, how do I actually file? In the UK it's all automated, but I'm assuming I need to do the following: 

1. Register as a self employed contractor? Do you have any idea where to do this? 
2. File my taxes? I'm assuming this is done via Turbotax, but what information do I need to provide it exactly? Am I likely to have everything required if I've just moved here? 

Thanks again for your assistance, it's much appreciated. 




 

You need to hire a qualified accountant who can advise you.   Not an immigration help board.  

[jadmac 8]

2 minutes ago, aaron2020 said:

You need to hire a qualified accountant who can advise you.   Not an immigration help board.  

Pointless contribution? 

I happen to think sharing experiences is valuable and in any case basic admin is part of the immigration experience hence why it has it's own portal. 

[Wuozopo 4,292]

5 hours ago, jadmac said:

So can I ask what would happen if the employer just sends me the payment without any deductions? I think I will be classed as a self-employed contractor. I really can't see them applying for the EIN or 1099, which I saw you mention happen to you and it didn't really impact you filing? 

You need to know the amount you were paid during the tax year Jan 1-Dec 31. If your employer supplies a 1099 wage statement to the IRS, then the IRS knows exactly what you should be reporting. That’s the point, so you can’t cheat and it is the way IRS wants it done. But if you don’t have a 1099, keep some kind of evidence of your payments just for your records. (Your bank statements show deposits or perhaps they send you some kind of pay slips.)

 

Look at the Schedule C https://www.irs.gov/pub/irs-pdf/f1040sc.pdf

Part 1 #1 is where you enter your earnings. (Turbo asks how much you earned and enters the amount on a form). So you aren’t actually filling out a form, but I think it is helpful to know what Turbo is doing.

The rest of the form is mostly covering expenses and such for many types of self employment including people who make trinkets to sell at craft fairs, as an example. They of course will have costs of their paint, glue, glitter, packaging, etc that gets subtracted from their gross receipts (Part 1 #1). So while the form looks overwhelming, most of yours will be blank because you aren’t manufacturing a product, paying minions to do the work, buying heavy equipment for construction business, using your vehicle for business.. You may have no expenses to deduct. The bottom line income (after all those possible expense deductions) is on Line 31. Net Profit or Loss. Look at the form again. That number goes to Schedule 1 and Schedule SE and eventually ends up on the 1040 (main tax form) as the money you earned and pay tax on. But TurboTax just puts everything where it needs to go and adds any needed forms like Schedule C, 1, and SE to your return. You just answer questions like “Did you have employees?” “Did you buy glitter for your business?” Haha just kidding about that question but you get the point. You answer questions and TurboTax does the magic with the forms and math.

 

5 hours ago, jadmac said:

Also, how do I actually file? In the UK it's all automated, but I'm assuming I need to do the following: 

1. Register as a self employed contractor? Do you have any idea where to do this? 
2. File my taxes? I'm assuming this is done via Turbotax, but what information do I need to provide it exactly? Am I likely to have everything required if I've just moved here? 

1) I haven’t registered anywhere and have filed as a self-employed contractor for 8 or 9 years now. Turbo Tax will ask specifics about your business the first year and you pick a code number from a list  that best describes the type of work you do. In subsequent years, it pulls in info from the previous year including your business type. The code I chose is 541510 Computer Systems Design. It asks the name of my business and I just call it my first and last name because I have no registered special business name. 

 

2) TurboTax efiles. When it finishes doing it’s thing and checks for errors and you are ready, you click FILE and off to the IRS it goes. Or you have the option to paper file by printing it, signing, and mailing. There are instances where people have to paper file.

Here’s some things from the IRS  to read, including links to online tutorials. 

 

https://www.irs.gov/businesses/small-businesses-self-employed/self-employed-individuals-tax-center

Information for those who file Schedule C https://www.irs.gov/pub/irs-pdf/p334.pdf

I am just sharing some of my experiences with you and pointing you toward IRS documents that helped us understand independent contractor tax reporting. My wife always has to understand the concepts when we add something new like self-employment to our taxes. 

 

Edited November 24, 2021 by Wuozopo

[Wuozopo 4,292]

@jadmac

 

Forgot to remind you in my reply above that since part of your year was in the UK, that income qualifies for the foreign earned exclusion. So even though you are reporting all of it, the part while residing in the UK isn’t taxed.by the US. It gets subtracted out on Schedule 1

#

[jadmac 8]

On 11/24/2021 at 10:09 PM, Wuozopo said:

@jadmac

 

Forgot to remind you in my reply above that since part of your year was in the UK, that income qualifies for the foreign earned exclusion. So even though you are reporting all of it, the part while residing in the UK isn’t taxed.by the US. It gets subtracted out on Schedule 1

#

Thanks again for all your help and sharing your experiences, much appreciated!