Hi all, I have another question, sorry if this is too frequent!
My wife is a US citizen residing with me in the UK. She does "gig work" on websites as a freelance contractor. The work includes social media moderation as well as freelance copy-writing. For the past two years she has been paying the US self employment tax on her income using form 1040 and Schedule C.
Recently we came to know that the totalisation agreement between the USA and the UK allows her to not have to pay the self employment tax to both the US and UK authorities. However, we have come across conflicting information on how to do this.
Some sources say that a Certificate of Coverage from Inland Revenue needs to be provided to the IRS (
https://www.ssa.gov/pubs/EN-05-10199.pdf [nofollow] ), however, inquiries to the HMRC forum led to a seemingly different answer: HMRC seems to be saying that we would use a
Certificate of Residence as the Certificate of Coverage, or alternatively we would have to obtain some form from the IRS that we would have to fill out and have the HMRC sign.
A second source gave me this advice:
"if your wife resides in the U.K., she would have to only pay into the U.K. system. Self-employed taxpayers must attach a photocopy of the certificate of coverage (Form UK/US1) to their U.S. individual tax return to claim the exemption."
I realise that there have been some recent changes to how the Coverage Certificate is done, including the absorption of Inland Revenue into HRMC, so I am not sure what the latest and correct advice is on this issue.
I would really appreciate some clarification, including any details we might get wrong. Thanks!
