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Topic: First year's US taxes  (Read 1116 times)

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First year's US taxes
« on: April 11, 2006, 10:10:23 PM »
Hello!
In 2 weeks I'm finally moving to the UK.  I will have a UK employer and have a question about when I file US taxes NEXT year.
My 2006 tax year will be 1/3 US income and 2/3 UK income.  Obviously, the US income has the tax withholding (and at the levels that I always get a refund).
Also, for 2006, I will have been in residence 8 months. 
How does that jibe with the 1 year residency requirement the IRS mentions for foreign income?  And with all the mess of 2 countries income, will I still be able to get the refund on the amount over-withheld?
« Last Edit: April 12, 2006, 12:18:15 AM by genorp »
Arrived on WP (5-year):  24 April, 2006
ILR granted:  28 March, 2011

NCS or Postal: NCS Camden
Date of Submission: 10 April, 2012
Basis: WP => 12 months ILR
Date cheque cleared: 23 April, 2012
Date of acknowledgement letter: 17 April, 2012 (received 21 April)
Date of decision:  26 July, 2012
Date of receiving invitation letter from UKBA: 02 August, 2012
Date of Ceremony: 22 August, 2012

Date of passport interview: 10 October, 2012
Date received passport: 12 October, 2012


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  • Death and taxes: I'd rather pay tax than be dead.
    • British American Tax
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Re: First year's US taxes
« Reply #1 on: April 12, 2006, 09:03:19 AM »
Genorp,

1)  How long are you moving to the UK?  The length of time can affect your residence status here.  They have two kinds of residents:  Ordinary Residents and Resident Not Ordinarily Resident (RNOR).  These can affect your UK taxation, where shorter is better than longer. 
2)  They also distinguish between resident and domicile; most Americans who move here retain their US domicile.
3)  The one year residency requirement will be met in a rolling 365 day year, so you'll meet it in April 2007; of which you'll get a prorata 2/3rds amount for 2006.  If you return to the US for more than 35 days within that rolling 365 day period, you'll have to wait until January 2008 to file so that you're here for one full calender year (2007).  Again, you'll be allowed a prorata 2/3rds amount on your 2006 return.
4)  That's just the US return, your state return can be filed at the normal time.
5)  Don't forget to take a deduction for all your goods you might be giving to charities before you move.  Your moving expenses will be a good-sized additional deduction which should further increase your US refund.
6)  You may want to open special offshore bank accounts here, as they confer tax advantages to nondomiciled persons.  They're easy to do, and fully integrated with the UK banking system.  Any local UK bank branch can help, though if you're a high wage earner, I'd recommend Barclay's. 
7)  Many companies pay for your tax return preparation in your first year here.  Do check to see if that's a company benefit, as the returns can be upwards of 50 pages in the year you move.
Liz Z i t z o w, EA
British American Tax


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Re: First year's US taxes
« Reply #2 on: April 12, 2006, 11:57:51 PM »
Lizzit makes some good comments on the US side of things but the interpretation of the UK piece of life is my opinion unfortunately rather inaccurate in several details.

She also recommends a  bank, which is too close to investment advice to be legal over here without a great deal more knowledge and appropriate FSA registration.   Barclays Bank have never paid the best interest rates, so I am not certain why they would be at the top of your shopping list.  There is also advice relating to the number of bank accounts, investor protection and probate that an adviser should share with you.

The kind of advice given can potentially be subject to preparer/adviser penalties in both the US and the UK should you choose to rely on it.  (I see there are no Circular 230 disclosures).

I recommend that you obtain specific advice from someone who both qualified in the US and the UK BEFORE you move over.



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Re: First year's US taxes
« Reply #3 on: April 13, 2006, 08:10:39 AM »
I should clarify that I recommend Barclay's for convenience only; as they have three offshore branch offices in London making it easy to do your banking.  There are loads of banks; and there's loads of internet only banks as well.  You should pick the one best suited to your needs.
Liz Z i t z o w, EA
British American Tax


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Re: First year's US taxes
« Reply #4 on: April 13, 2006, 04:15:35 PM »
Thank you for the input.  I've looked into my crystal ball and definitely see an accountant in my future.
Arrived on WP (5-year):  24 April, 2006
ILR granted:  28 March, 2011

NCS or Postal: NCS Camden
Date of Submission: 10 April, 2012
Basis: WP => 12 months ILR
Date cheque cleared: 23 April, 2012
Date of acknowledgement letter: 17 April, 2012 (received 21 April)
Date of decision:  26 July, 2012
Date of receiving invitation letter from UKBA: 02 August, 2012
Date of Ceremony: 22 August, 2012

Date of passport interview: 10 October, 2012
Date received passport: 12 October, 2012


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