Tax process - working remotely in US for UK company

[JRoo 3]

Moving to California (CR1 visa) and working remotely for a UK company

Hi there. I'm moving to Los Angeles in January with my wife who is an American and British Citizen. I have a CR1 visa. I am seeking advice on tax processes and what my legal requirements are as a US resident.

My company want to keep me as a full time employee and are happy with me working remotely. They told me that I can remain on the UK payroll and continue getting my salary (£90k) into my UK account, while I am living in the US. It is then up to me to transfer money to my US account as I need. They said that because of the US/UK tax treaty I won't be liable for income taxes in the US, however after reading posts on here it seems that this could be incorrect. I want to make sure that I'm not breaking any laws and that this is a sensible way to continue working with them. For more context I have a permanent address in the UK but will be living full time in the US.

My questions are:
1. Is it legal to be paid into my UK account while living in the US?
2. Will I need to pay UK and US taxes at the same time? 
3. Would it be advisable to be paid into a US account instead?

If anyone has been in this situation and can offer advice, or recommend a tax expert to contact, that would be greatly appreciated!

[Crazy Cat 41,984]

***I moved this topic to the Tax and Finances forum****

1.  Yes.  Almost of my wife's income goes into her home-country accounts (as it is from a foreign source).  She simply transfers some of it to her US account as needed.  

2.  You will definitively have to report that income to the IRS via US taxes (All world-wide income must be reported).  However, I would absolutely consult a qualified tax pro who is competent in world-wide income reporting since it might qualify for foreign income exclusion.  I also highly suggest that tax pro help you decide the best tax strategy (joint vs separate filing) for your first tax year in the US.  

3.  The only advantage I see is to avoid the hassle of transferring funds if needed.   Others here might have other thoughts.

Good luck on your move. 

Edited December 30, 2023 by Crazy Cat

[jan22 3,056]

With the possible exception of he first year, you will not qualify for the foreign income exclusion, as that only applies to income when you are living and earning outside the US. 

 

IMO, a main consideration -- for which I believe you should seek professional advice -- is how you can deal with paying into Social Security, Medicare, etc., to protect your future retirement needs (even if that's a long way off).

[Crazy Cat 41,984]

1 minute ago, jan22 said:

is how you can deal with paying into Social Security, Medicare, etc., to protect your future retirement needs (even if that's a long way off).

Excellent points......

[milimelo 4,508]

I imagine you'd also have to do FBAR every year. 

 

May want to consult with one of big 4 tax firms - they have international tax reporting clients and should be able to guide you better than a HR Block person or even a CPA who only do simple or limited complexity taxes (federal, state taxes). Better to do it now than in the thick of tax season. 

[Crazy Cat 41,984]

39 minutes ago, milimelo said:

I imagine you'd also have to do FBAR every year. 

I do not like that FBAR and foreign asset reporting stuff.  It's a hassle, imo. 

[Boiler 45,733]

Usually being a Contractor makes more sense.

[NorthByNorthwest 359]

To add to what the others already noted, in addition to the US federal income tax you will also owe state income tax living in California - this gets complicated real fast, especially with pensions and other tax-deferred savings down the line. Definitely talk to professionals and consider what your long-term plans are, including where you will retire.

 

Health care certainly also comes into play, does your wife already have an insurance that you can join or would you sign up for a new one? These days many insurance plans are high-deductible which qualifies for an HSA (Health Savings Account) that has multiple tax benefits - participating in that will be difficult if all your income is in the UK.

[Boiler 45,733]

This weeks as an urgent job move for the USC so should be ok

[analitikas 3]

I would look into the totalization agreements listed on the social security website.

 

Also the Foreign Tax Credit. 

 

 

Edited January 15 by analitikas

[OldUser 6,980]

You can legally work as LPR for foreign companies. You'll have to pay taxes in the US though.

 

Now, 90k GBP salary is not bad for the UK. However, this tells me, unless you're overvalued at your current place, you should be able to make $140-200K at a similab job in the US. I'd keep working for UK employer and start looking for a new position in LA area. You'll likely need health insurance and other benefits your UK employer won't be able to easily arrange.