Resident alien US tax liability? Advice?

November 18, 2007 11:57 AM

Tax question/advice re: UK IT worker moving to US

(I'm posting this on behalf of Mr. Potsmokinghippieoverlord-to-be, who works in the IT industry.)

I'm a Brit looking to move to the US and I'm also looking to pay no tax! [HEH! - psho] As I see it, I have two options:

1) Contract, perform the work in the US, put the money through my UK company and merely draw it in the US.

2) Full-time UK company employee who happens to work in the US. There's no material gain by working in the US, so can the US touch me?

Do either of these work in the US? I've checked them out in the UK and I'm free and clear here for both.

(Psho here -- my understanding is that resident aliens in the US have to pay tax on all sources of income, so he'd have to declare his UK income and pay tax on that -- or am I wrong? And we will be seeking professional tax advice. Just wondering what others have experienced.)

posted by potsmokinghippieoverlord to work & money (4 comments total)

from the irs

Resident aliens are generally taxed in the same way as U.S. citizens. This means that their worldwide income is subject to U.S. tax and must be reported on their U.S. tax return.
posted by noloveforned at 12:57 PM on November 18, 2007

When I was doing this I took advantge of a UK/US agreement whereby you are not double taxed. i.e. you pay tax in one country or the other but not both. It was a number of years ago but I think the phrase to search for is "foregn earned income". Turbo Tax has a tab for it.

Or go to your local IRS office and ask, they walked me through it.
posted by fshgrl at 1:27 PM on November 18, 2007

If you get a job in the US on certain visas (can't remember exactly, but a postdoctoral academic scientist seemed to be the ticket), you can claim back all US tax withheld at the end of the year (n.b.: that information was current as of 1999). Otherwise, pay your US tax and use the amount to decrease your UK tax liability, which will almost certainly be higher.
posted by methylsalicylate at 4:42 AM on November 19, 2007

The double-taxation exemption on foreign earned income applies only if you live more than 180 days out of the tax year in the foreign country. Otherwise, you may be taxed doubly.
posted by oaf at 4:43 AM on November 19, 2007