Working in the US/UK Tax Relief?

brian.wainwright_2

Hi all,

I started a new job just before the New Year and as a result I live/work in the USA for 4 weeks before returning home to the UK to work for 1 week before repeating the cycle.

I've been working on this cycle since 1st Jan and will continue with it until at least the end of my current project which is scheduled to finish in March 2008.

I am employed by a UK based consultancy company and my salary is paid by them and they obviously bill the company they have me working for in the US.

This past week, two separate friends of mine have suggested that I might be entitled to some kind of tax break as I am out of the country for most of the year and only on UK soil for a total of 11-12 week this year?

I don't know the tax rules so I'm not sure! And to be honest, if I'm not entitled to a tax break, then I don't mind, but I obviously don't want to be paying more tax than I need to!

Can anyone with a little knowledge clarify my tax position for me please!?!

Thanks!

Brian...

Cook_County

1. It would help (a lot) if you said what kind of visa you have (eg L-1, H1-B, J-1 etc)

2. What kind of accommodation do you have in each country (rented flat, hotel room etc etc)?

3. Which State are you working in?

With a little more detail this is going to be simple to answer!

eira

Also the IRS have a website with useful information and state based helplines that you can ring from the UK-although you'll have to pay for the call. The Inland Revenue International tax helpline is very helpful. Crucial issues are the definitions of residency (look this up on the website) and the length of time in each country. Where the company is located is important-is it totally UK based or does it have a relationship with the US company (this can also affect the 'grade' of visa)
What is your Social Security status ? Do you have an ITIN number ?
If you have legitimate sources of US income you can open a US bank account-if you bank with a multi-national they can set the account up for you. You can then get a Master cashcard which can be used at ATMs all over the world (free from the bank's own machines and others they inform you of) or used for purchases. This saves money on transferring pounds to dollars an vice versa. You will need an ITIN number to open an account. You can also get interest if you have a balance over a certain amount-but it's pitiful and you have to fill in forms to not pay tax. It takes a bit of time to set up the account and the US banking system is way behind the UK

brian.wainwright_2

I'm currently working on a H1-B visa.

I live in a rented corporate apartment, the rent for which is claimed back from the client through expenses. I live and work in Los Angeles, California while in the US and then stay/work from my parents house for the few weeks I'm back in the UK.


I have to stress that I am paid my salary and claim my expenses from my own company who are entirely UK based - I have NO income from any US company. I have NO USA social security status and/or a ITIN number. My company are a UK based consultancy and I am working for one of their clients who are a US based company, who in turn have me based on one of their own client sites in LA, California.

My question is purely regarding UK tax because given my current schedule, I will have been out of the country for approx. 45 weeks this tax year.

Thanks again...

eira

The tax office international sector is very helpful. Can your company HR department help? My understanding is that it depends on your residency/domicile status . I thought something like 185 days out of the country was the magic number.
A friend of mine does a to and fro situation, but he's largely based in New Hampshire and his company is multi-national.

As I said I found the tax office very helpful.

Cook_County

1. You are resident in both the US and the UK under the domestic rules of each because you are not absent from the UK in full-time employment for a period including a complete UK tax year

2. The tie-breaker tests of the US/UK treaty would probably have you as UK resident

3. Thie treaty will never exempt you from California tax because California was not a signatory to the treaty so you will owe CA taxes, but these will be creditable in the UK

4. You may qualify for detached duty relief in the UK for commuting/travel costs plus the costs of your housing in CA

5. You will owe Federal taxes on income attributable to US workdays, but this will be creditable in the UK as well

You should ask your company for help with sorting these things out given that they want/need you in CA & it is this action that creates the tax liabilities