keeping $ in US account/keeping US resident status

My hubby may come over to the UK to work and bring me and our two kids with him.  He'll be working for a US company as a consultant to a UK company.

From other Americans who have done this, I understand that you have to keep a certain amount of money in the US to keep your residency.  My questions:

1) How much?  Is it a percentage of your income?
2) We live pretty much paycheck to paycheck and if we could we'd prefer to use any extra money to buy down debt (US credit cards to pay; US mortgage we could pay more on, etc.).  What would happen if we used extra funds to pay US debt instead of sitting in a US bank account?
3) Do they count investments such as 401K kept in the US?
4) What benefit is there to keeping your US residency status?  We plan on living here 1-3 years.

I do not really understand your question.

However from a tax perspective he will probably create a permanent establishment of the US entity in the UK from a UK corporate tax perspective.

This will mean that the US company will itself have to register for and file UK corporate returns.

Seperately he will have to file personal UK tax returns reporting worldwide income (he may be able to deduct the 401(k) in the UK though after going through some complex paperwork).

If you mean you want to keep State residency for some reasons then this will depend on the rules of the State.  Please expand the question!

I do not really understand your question.

Unfortuanately, neither do I, or else I'd be happy to expand it.
I think I'll sit down with a tax professional in the states when I get back and maybe I'll figure out what hubby's coworker was talking about.  Thanks for trying to help

I think the biggest mis-understanding is about keeping money in the States equals residency for some reason.  I think that is where we are getting a bit confused.

First, if you are all US citizens, you will NEVER lose your US Citizenship and can at any point return to the US and take up residence again.  If you are green card holders, then there are some potential issues if you leave the US for a period of time, but I am assuming that is not the case here.

Second, why would you want to maintain residence in the US if you are truly not residing there?  Residence is established by where you make you live, both in the UK and the US and there are certain physical presence tests to support this.  Generally there are no tax advantages to maintaining a residence in the States and potentially some disadvantages if you are truly residing overseas.

There are certain UK tax advantages to those who only intend to work in the UK for either less then 2 years or less then 3 years.  You should check those out.

Also, as a side note, just because a US company sends an employee to the UK to be a consultant for another UK company doesn't mean, as guya pointed out, that they are free to operate in the UK and do business, nor that your husband wouldn't need a work permit.  Anyone working in the UK who is not an EU or British citizen requires some sort of visa to be able to work in the UK, even for a US company.  You can get into a bit of a nightmare if a work permit is not sorted out for your husband by his employer.

I agree with everything that kit says. The only other reason why some people like to stay home that I can think of is to qualify for in-state tuition fees for kids in college - but that is not an issue here...

If you are coming to the UK on certain work permits I believe that the UK requires a certain amount of cash invested here...but again this is not the question nor good tax planning!   

First, if you are all US citizens, you will NEVER lose your US Citizenship and can at any point return to the US and take up residence again. 

yup - just what i was gonna say!

Great help all - this legal/tax mumbo jumbo is all Greek to me, no matter what country we're talking about.  It's confusing enough in the US and I'm a citizen there! 

Second, why would you want to maintain residence in the US if you are truly not residing there? 

I was under the impression that there are some tax advantages to US residence, but it sounds like I'm wrong there.  I'll have to check that out.

Anyone working in the UK who is not an EU or British citizen requires some sort of visa to be able to work in the UK, even for a US company.

Yep, company is working on that as we speak.

Yeah, I can't think of a tax benefit to maintaining a US residence.  Now if you still owned property in the US that you wanted to claim the tax benefit of the interest on the mortgage, then you can get into a bit of a sticky situation if you also claim you have a household abroad and are residing there, especially if you claim deductions based on maintaining a foreign household.

That is the only thing I can think of, even though personally I claimed the foreign earned income credit while I was abroad, but didn't claim any foreign household expenses, but did claim my US residence was my primary and therefore claimed a deduction on the mortgage interest.

If you know of a tax benefit for maintaining a US residence, let us all know please!