Time in US "on business"

Hi all,

Quick question about filling out time on business in the USA...advice appreciated!

There is a statement about having to exclude time in the US on business from FEIE  (2555).

For me, as a dual citizen (UK/USA) and permanent UK resident, I work for a UK company, in the UK. However, we have partnership deals with large companies in the US so I often travel over there a few days a year on business to meet with them. Similarly, I go to 1-2 conferences in America where I am asked to speak (not paid for speaking I should add!!). All of these I am on business and so receive my end of month salary where those days are included as paid by the UK company I work for.

So how do I treat these days on the 2555? I am not "earning money in the US" I am simply with my company meeting with people. I would earn the same whether in the US, UK, or anywhere for that matter.

Sorry if the answer is obvious but this is really not clear to me.

Many thanks,
J

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If I'm in the US for work, I put down business. It never seems to make any odds, as I'm never there long enough to be disqualified as a UK resident.

Hi there,

Thanks for the reply! I guess I should clarify – this is not in reference to residency status, but rather FEIE.

My understanding (and I may be wrong) is that the FEIE limit is based on 365 days in a foreign country. In other words, the $100,800 is based upon your income entirely for the calendar year coming from the UK, in this case.

Now let’s say you are a bona fide resident of the UK, having established your home there and work. However, 30 days in the year you spent on business in the US. My understanding is that the maximum FEIE you could claim in such a situation is (365-30)/365 x $100,800 = $92,515.

Now this won’t matter much to me as I will still qualify for FEIE however I want to fill out my form accurately, and also need to know this if in a few years’ time if I get lucky with pay rises (!) and/or exchange rate dramatically were to change, I could find myself closer to the FEIE limit.

So I spend some time in the US “on business” meeting with partners with my UK-based company. I did not profit from this and received no income from the US, but was obviously still salaried from my UK employer. It seems quite unfair that I would have to exclude this time from my allowance as it is a necessity of my UK employer in my role that I go to these meetings.

So I am just seeking clarity on that matter, rather than residence, if that makes sense! My ONLY assets are in the UK (house, mortgage, family, financial accounts) and am very much a bona fide UK resident!!

Thanks,

J

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Ahh yes!  Well, for me it's not mattered yet on the FEIE front either, but like you, I could be getting close at somepoint.   Hmm.  I'm probably of no use to you!

Well maybe someone will be able to enlighten both of us then! :-)

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Any income you earn on business trips to the US is US source income for purposes of the FEIE and FTCs so they are excluded from the FEIE and FTC. This is the case even if you are working for a UK company and are a UK resident. Of course the UK will also want to tax that money and will have done so through PAYE. Looks like a possible double taxation situation. The solution is probably to resource the US income to the UK by treaty....just a guess, maybe someone who actually knows can comment.

You personally have US source income and would treat as such on Forms 2555 & 1116. If you are working in a State that has an income tax you might have State filing obligations.

Thanks for the thoughts nun. If that is true that sounds insane! We have teleconferences with these guys where we are doing the same thing and just because I am physically present in the us doesn't mean I make any money I wouldn't if just on the phone to them!

So this would reduce the feie limit - but could I still apply that income during my time to the earned income? I.e would it just mean that my exclusion limit is reduced but if total income is still less than this reduced limit I wouldn't pay tax on it?!

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Guya - so if I go on a scientific conference which happens to be in the US, I am liable for taxation during my time there?! Even though 1000s of other people from other countries are also technically there on "business" but don't have work visas nor are they liable to us taxes? How does that make sense?!? IRS are messed up.

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Why would those "other people" not be subject to US taxation under the domestic laws of the United States on income allocated to days worked within the United States?

My point is there are millions of people that come to conferences per year as is necessary in their field.  They are there on business but won't have a work visa and certainly none of them file US taxes. Half of my company will go to the US every year on such terms and they are non-US citizens yet according to the definition you give, are working in the US and anyone who works in the US should be filing tax returns?!

Which is why I'm confused how the IRS can define this as income in the US when that would mean millions of people per year are earning income in the US and not declaring it to the authorities.


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The IRS do not define anything; the sourcing of income is defined in the Internal Revenue Code (agreed by Congress) and refined by the Courts. In your circumstances, why is following the law troubling you, as filing your US and UK tax returns correctly should not cost you a penny in additional tax?

IRS instructions for Form 1116 and Publication 54 are good places to start reading.

Apologies, I'm not trying to be obtuse, I'm merely trying to understand the law and the way it sounds to me is completely irrational. I cannot wrap my head around why it is so irrational.

And the problem is between all of this and my UK employer-matched pension it is becoming so complicated I don't feel confident filing 4yrs  (& 7yrs FBAR) correctly myself so it will cost me a lot of money to get professional help. I say that as someone who is quite good at mathematics and technical things generally, just not well versed in finance and law matters.

For example I look up form 8833 as I'm told I need to fill that out because of my pension but then I'm meant to cite all sorts of appropriate treaty sections and it just isn't straightforward at all.

All because my US parents registered me as a citizen born abroad yet I live, reside, work, have my family, and have full UK citizenship...crazy.

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Apologies, I'm not trying to be obtuse, I'm merely trying to understand the law and the way it sounds to me is completely irrational. I cannot wrap my head around why it is so irrational.

It's annoying, but not irrational. For example, when a UK resident does work in the UK, but is paid by a company in the US, they are liable to UK taxation because of where the work was performed.

Most UK residents don't have a requirement to file US taxes and small amounts of income earned on brief business visits to the US are usually not US taxable. But as you are not an NRA you don't have that exemption.

So you should do your taxes and calculate the portion of your income that is US source and see how much you can exclude and how much US tax you owe after your usual deductions and exemptions have been applied....these might make the tax due on US source income zero, in which case the fact that the UK has taken PAYE on all of your income won't lead to double taxation.

If you end up having a US tax bill and you've already had PAYE deducted you face double taxation. But the treaty (and the IRS) allow you to resource US income in such a situation so that it is UK income and you can then take a FTC.

Hi nun,

I see what you are saying but I am not sure your analogy is the same. You say if a "UK resident" however I am not nor ever are a "resident" in the US. I am merely a visitor for short periods of time meeting or going to conferences with work.

Thus in my mind, an equivalent scenario would be:

John Doe is an engineer. He is a dual US and UK citizen, and works for a US company, does not own the company and is on the US payroll. One of the company's clients is located in the UK and John normally talks to that person on the phone. However, to keep up good relations, John flies over to the UK to meet this client of his company for 5 days. Obviously this is not personal holiday, he is a visitor to the UK on business and not a "resident".

In the above scenario, would you expect John to be subject to UK tax assessment as a UK citizen for those 5 days in the UK, even though he was not resident in the UK and did not receive UK funds from a UK payroll?

Further, based on some comments above about local state tax, imagine John was actually just a US citizen. HE went on an engineering conference but this was in another state. This lasted 1 week and he stayed in a hotel in that other state.

Now, in the above example, would John be subject to that other state's local state taxes and filing for so for that week he was present in that particular state at a conference?