Green Card holder in the US, but with UK self-employed income

Hi there,

This is kind of backwards because I'm in the US as an alien resident, but still have UK self-employed income.

So, I moved to the US from the UK with my American wife in July 2014. I set myself up a sole trader in the UK before moving and have been paying NI contributions since. I was told by HMRC that I don't need to file my UK taxes until Jan 2016. I now have a job in the US and continue to work and get paid for UK projects (I'm a graphic designer). After moving, I stupidly didn't realise there was a p85 form to tell HMRC i'd no longer be a resident of the UK - am I too late to now file this mid year? At the same time, I am now filing my US taxes with my wife. As required by the IRS, I'm including my UK income on my US return, but don't want to have to pay tax on it all again in January next year when I do my SA return in the UK.

Should I file my p85 now ready for next January? or am I too late?I assume HS302 is the other form I need to get my head around - and I'll submit this with my UK return in Jan 2016?How does this all work when it's over 18 months / two tax years?

Any help is much appreciated!

You are a US person from the date that the green card was activated and subject to US tax on worldwide income and gains from that date.

Work done within the United States is US source and primarily taxable in the United States.

If you believe you are still UK resident, you would claim credit in the UK for the foreign tax payable on any doubly taxed income.

The general principle is that the income is earned where the work is performed, not the country from which it is paid for.

If HMRC argues that for whatever reason (and non-declaration of departure is not generally a "reason") that you remain taxable, you should seek credit for your federal and state tax on that income. You could ask for "competent authority" -- i.e. IRS and HMRC to decide who gets to tax, or tax first, but that seems a useless exercise and tends to antagonze the tax people.

Do a little research (I'm sure it's in the archives) on how you can continue to get NIC credits cheaply, preferable (I think it is) Class 2, voluntary Class 3 if you have to.

By and large the UK State Pension is a bargain. If your life expectancy is short for any reason, fuhgeddaboudit.

Sorry for the slang. As they say, I'm not a regular, only here for the beer, and only this week.

File the P85 so that HMRC knows you are no longer a UK resident.

If you are not a UK resident anymore you don't need to pay UK tax on your US self employment income....or NICs......although you can pay voluntary NICs if you think it would be to your advantage.

You will have to pay both US income and self employment tax.