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Topic: Confused Please help  (Read 1436 times)

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Confused Please help
« on: June 12, 2011, 04:19:03 AM »
Hi
I am already running business in USA whcih is online, and moving to UK to live with my wife, US bank are connected with my websites so the money is coming to USA,  should i continues paying taxes to USA or will have to pay to UK as well,
Please advise


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Re: Confused Please help
« Reply #1 on: June 12, 2011, 09:09:17 AM »
You can avoid double taxation to some extent. The rules can be found in the US-UK Tax Treaty - see:

http://www.irs.gov/businesses/international/article/0,,id=169552,00.html

The technical explanation actually makes the treaty a bit clearer.


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Re: Confused Please help
« Reply #2 on: June 12, 2011, 01:25:51 PM »
if the funds are being deposited in US and it is an online business, it is not clear if there is any law about online business?


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Re: Confused Please help
« Reply #3 on: June 12, 2011, 01:54:33 PM »
The UK has plenty of tax law. Promise.

If you are managing and controlling the business from the UK then the profit is entirely reportable and taxable in the UK.  If this is unincorporated, which I think is what you are saying the US would give you the choice of the foreign earned income and housing exclusions and/or foreign tax credits.


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Re: Confused Please help
« Reply #4 on: June 12, 2011, 10:37:13 PM »
Thanks, but suppose my income was 100000, and i paid 35 thousand to IRS and now i have to pay to UK HM too,
if so what is the percentage,
thanks


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Re: Confused Please help
« Reply #5 on: June 12, 2011, 11:05:09 PM »
You would pay tax at UK graduated rates plus NIC.  You would either claim the foreign earned income exclusion or foreign tax credits to eliminate US liabilities, so you would end up paying zero to the IRS.


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    • Professional tax preparation for American expatriates
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Re: Confused Please help
« Reply #6 on: June 13, 2011, 01:45:05 AM »
Your biggest concern should be not the income tax, which you will perfectly handle through the foreign income exclusion and/or foreign credits, as noted guya. If you work it out properly, you  can  even get foreign tax credit carryover on the U.S. side.

With $100K income, you will not pay U.S. income tax but you are still responsible for FICA taxes (see http://www.taxesforexpats.com/expat-tax-advice/expat-tax-obligations.html#a7). You have the ability to choose whether you will pay UK National Security or US FICA tax - whatever works better for you. However, taking advantage of the Social Security Totalization agreement does not occur automatically. To avoid paying FICA tax to the U.S., you need to request a certificate of coverage from National Security and attach a photocopy to your U.S. tax return each year as proof of the U.S. exemption from self-employment taxes.
Professional tax preparation for American expatriates by a Federally-Authorized EA - www.TaxesForExpats.com


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Re: Confused Please help
« Reply #7 on: June 13, 2011, 10:33:11 PM »
First of all, my website is attach with US merchant service (Bank) and the funds are going  dirctly to US bank acount, i have people working from India helping me out, i do see my sales once in a day,
should i continue giving tax to IRS, and and the end inform UK about my overseas income?


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Re: Confused Please help
« Reply #8 on: June 13, 2011, 11:34:31 PM »
As a UK resident you are taxable on business profits at UK graduated rates.  You may need to be VAT registered.  You would of course also pay Class 2 NIC lus possbly Class 4 NIC.


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