The legalities of being an American in Britain

sfkitten, yes, I'm afraid it's true. There are links to tax info on the main UKY web page but in short, if you maintain US residency you must pay taxes if you are working here. I'm planning to start working in the autumn so will be coping with all this then but what I understand is that the Fed gov't will credit you with what you've paid to the UK gov't and you might well break even. Many state gov't, so I'm told, do NOT credit you. My US accountant told me to get resident in a state that doesn't have income tax (FL, TX, NV). Has anyone heard of this?

I don't know if all of this is 100% accurate but I will indeed be using this site to get the best info I can.  

I worked in America from Jan-June 2002 and then worked in England at Gap from October-January (about..) I was working on a student visa and paid taxes in England.

I didnt say anything about working in the UK on my taxes that are due in a few days. Smart idea or no? (PS- I dont want to get in trouble. I will be marrying my British boyfriend in a few years and want to live/work in the UK permanently.)

Grrr, I dont like tax time!

PS- Thanks LisaE. for your original post. I saved your info to Word. Thank you!

What if you work here, pay UK taxes, and refuse to pay US taxes on the grounds that you don't live there anymore?  I plan on getting UK citizenship and renouncing my US citizenship.  Also, my hubs is dual citizenship with US and UK, does he have to pay US taxes?  And my sis in law, who only lived in the US for a few years as a child, and lived here for 40, does she have to pay taxes to the US even though she has never lived there other than as a child?

I don't know about the rest of you, I am not registered here, and other than my passport getting renewed, no one knows of my whereabouts other than my family.  I think it is ludicrus that we have to pay taxes to the US while getting well taxed in the UK.  I will not pay taxes to a government who has no authority over me other than the fact that at the time I am still a citizen.

Don't hold me to it, but I think if you are not maintaining residency in the US, you can get out of taxes - but I don't know. If you do maintain residency, ya gotta pay. If you have any banking, property, voting or anything like that, the IRS could catch up with you. Don't know about the dual citizenship thing. I think the US govt believes it's a privilege to have US citizenship (and all the responsibility that goes with it - voting, taxes!) so you'd better do your homework!

I don't feel qualified to answer specific Do-I?/Don't-I? questions on tax, but it's my understanding that if you have US domicile, you have to file US tax returns.

Domicile is the place an individual intends to be his/her permanent home; a place that he/she intends to return whenever absent. A domicle, once established, continues until the individual moves to a new location with the true intention of making his/her permanent home there. An individual can only have one domicile at a time.

I found a list online that gives a pretty good accounting of what you do to establish your domicile. By the reverse token, I think that if you DON'T do any of the following in the US, then you aren't domiciled there. (The quoted information below was taken off a military site and refers more to state domicile. But I thought the list was good and probably translated to our use.)

WHAT PHYSICAL ACTIONS MAY INDICATE MY  DOMICILE?  
One or more of these may prove your  intent that a particular state is your domicile (numbers 1 through 11  are important – others are not required, but may help in a questionable  situation): 
 
1. Expressed intent, oral or written and physical presence, past and present (including duration). 
2. Voter registration. 
3. Vehicle registration as a resident. 
4. Motor vehicle operator's permit. 
5. Location of bank and investment accounts. 
6. Explanations for temporary changes in residence. 
7. Submission of DD Form 2058  (Change of domicile form). 
8. Payment of taxes (income and personal  property). 
9. Payment of nonresident tuition to institutions of higher education 
10. Declarations of residence on legal documents such as wills, deeds, mortgages, leases, contracts,  insurance policies, and hospital records. 
11. Declarations of domicile in affidavits  or litigation. 
12. Residence of immediate family. 
13. Membership in church, civil,  professional, service or fraternal organizations. 
14. Ownership of burial plots. 
15. Place of burial of immediate family members. 
16. Location of donees of charitable contributions. 
17. Location of schools attended by children.  
18. Ownership of real property.  
19. Home of record at the time of entering military service. 
20. Place of marriage. 
21. Spouse's domicile. 
22. Place of birth. 
23. Business interests. 
24. Sources of income. 
25. Outside employment. 
26. Address provided on federal income  tax return. 
 
Generally, unless you have taken at least some of these steps, it is doubtful that your State of legal residence/domicile has changed. Failure to resolve any doubts as to your State of legal residence/domicile may adversely impact on certain  legal privileges which depend on legal residence/ domicile including  among others, eligibility for resident tuition rates at State universities, eligibility to vote or be a candidate for public office, and eligibility for various welfare benefits. If you have any doubt with regard to your State of legal residence/domicile, you should contact your Legal Assistance attorney for legal advice before deciding to change your domicile. 
 
WHAT ACTIONS SHOULD I TAKE IF I CHANGE  MY DOMICILE?  
If you change your domicile, you must be consistent. If you are a legal resident of State A, then you shouldn't keep your driver's  license from State B or vote in State C. Inconsistency is probably the  single biggest mistake that people make in this area.

LisaE,

Thanks so much for this thread and your info.  On my list of things to do today was to get my knickers in a twist about paying taxes to two governments.  I'm going the HSMP route, and one of the requisites is intent to settle in the UK.  After the tax bill I was slammed with for last year's severance and unemployment, I can't afford to keep two countries.

Thanks again!  You warded off a major tizzy.

Here's the deal - even if you renounce your US citizenship, the US government can still "require" you to file taxes for up to 10 years afterwards.

However, since you are "allowed" to earn up to (I think) $80,000 in the UK before you have to "claim" any of it in on your US taxes, chances are you won't owe the US government on anything.

This is, of course, not taking into account if you have a more detailed tax situation - IRA's, stocks, investments, property, et cetera - still in the US.  Personally, I have nothing like that over there, so it's pretty cut and dry for me.  I fill out the forms but don't have to pay anything because I make WAY under the threshold.

Hope that helps.

Thanks Peedal,  I was pretty sure that was the story with the US Fed Govt. I've been told that the US State Govts may be a different story though - or perhaps it's just Maryland which may be why my accountant is advocating a change of domicile to an income tax free state.  

I moved from Florida, so I only file Federal Tax.  Don't know anything about State Tax - sorry!

Sounds like we should pm  Helen to take part here, to help with some of the icky details.

LisaE, your info is VERY helpful. Thank you!  

I'm not sure I should say "you're welcome"...much of it is info that's a burden to realize. I know it saves in the long run, but I just want to put my hands over my ears and go lalalalala. It's all so...depressing  

I know it saves in the long run, but I just want to put my hands over my ears and go lalalalala.

Sooooooo.......what would be the argument against this?  I mean if say, someone, er...I mean a friend of mine had no dependants, property, had never really paid in social security, or anything.  What would be the argument against burning your bridges?   Who would know?  And if ashes were returned, who would even know?   Is that something that needs to be decared?  

sfkitten, yes, I'm afraid it's true. There are links to tax info on the main UKY web page but in short, if you maintain US residency you must pay taxes if you are working here. I'm planning to start working in the autumn so will be coping with all this then but what I understand is that the Fed gov't will credit you with what you've paid to the UK gov't and you might well break even. Many state gov't, so I'm told, do NOT credit you. My US accountant told me to get resident in a state that doesn't have income tax (FL, TX, NV). Has anyone heard of this?

I don't know if all of this is 100% accurate but I will indeed be using this site to get the best info I can.  

We established domicile in WA state before we moved to the UK, mostly because we have lots of stuff in storage w/ DH's parents in WA, but also because WA does not have state income tax.  We also own a vehicle registered in WA, our US bank account and CC addresses go to a WA address, and our US address (for anything that requires a US address) is in WA state.  And, we do intend to move to Seattle when we are done here, if DH has a choice w/ his job.  We previously lived in MN, aka "The State that taxes everything", so establishing domicile in a state w/ little or no income tax was a priority for us when we moved.  Having DH's family in WA made everything quite easy.

Stephanie, you bring up an excellent point. I'd not considered state tax implications because Florida doesn't have state tax. I guess if there's a lesson to know BEFORE you move, establish your domicile in a state that doesn't have tax...if it's possible.

Mindy, I don't know how to answer your question. For me, keeping a domicile in the US is important. Not for any emotional reason, possibly a slight patriotic reason (given a new President would raise my allegiance), but more for financial reasons. I worked a lot in the US. I've got some good Social Security there that I can't turn my back on. I also want a US bank account and credit card to make travel easier. I have a pension that I want to keep adding to. My son is in the US and chances are he will inherit something from me. There are just too many things that keep my domicile there. But that's me personally. My heart, though, is in the UK.

If your friend wishes to have ashes scattered, I'd recommend he not write that request down; that it simply "just be done". Then again, minds might change in years to come. Home is where the heart is, afterall.

A side story, and probably not related, but the ashes reminded me...When I was married to my ex he received an odd request from people he didn't know all that well. He lived in Florida, "sort of" knew this woman who had a request to have her ashes scattered there. He had a boat, could he do it for them? Imagine our surprise when we were told HOW "mother" was coming...By FED EX! Okay, that's not legal, before anyone thinks "hey what a great idea!". So, when "mother" went missing, we couldn't exactly tell Fed Ex what we were waiting for. She did arrive, finally, the next day, ("mother" was sent 2nd day delivery!) but not without making another impact. The ex scattered her without realizing the winds were changing.