This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. To find out more about cookies on this website and how to delete cookies, see our Cookie Policy.
Analytics

Tools which collect anonymous data to enable us to see how visitors use our site and how it performs. We use this to improve our products, services and user experience.

Essential

Tools that enable essential services and functionality, including identity verification, service continuity and site security.

Where Taxpayers and Advisers Meet

Tax liability from US earnings

Aquavitae
Posts:3
Joined:Wed Jul 26, 2017 12:47 pm
Tax liability from US earnings

Postby Aquavitae » Wed Jul 26, 2017 12:55 pm

I worked for 4 months last year in the US at a university and paid federal/state tax on earnings. I am in the process of claiming this tax back at the moment. I am a UK resident and have to complete a tax return annually. My question is whether I am liable in the UK on the entire sum earned in the US or only the amount I repatriate back to this country, which I would count as "income" as a sole trader? Thanks for all due consideration.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Tax liability from US earnings

Postby maths » Wed Jul 26, 2017 11:10 pm

Why do refer to a "sole trader"?

Are you not an academic who perhaps taught for a short period?

AmanSood
Posts:216
Joined:Mon Jan 09, 2017 4:12 pm

Re: Tax liability from US earnings

Postby AmanSood » Wed Jul 26, 2017 11:57 pm

Given you only spent 4 months in the US you are unlikely to be considered US tax resident. So you are likely to be UK tax resident for the full period even whilst abroad. So the UK would have taxing rights on the income you earned whilst in the US but HMRC should give you a tax credit against any taxes paid in the US (capped at the UK tax rate).
Advising on UK employment, expatriate and personal taxes
aman.sood@e-taxconsulting.com.
+44 (0) 207 846 0155

Aquavitae
Posts:3
Joined:Wed Jul 26, 2017 12:47 pm

Re: Tax liability from US earnings

Postby Aquavitae » Thu Jul 27, 2017 10:15 am

Why do refer to a "sole trader"?

Are you not an academic who perhaps taught for a short period?
Yes, an academic but an independent one who occasionally has some income to declare as a consultant or researcher. I don't know if "sole trader" is the right term to use, for someone with occasional income from earnings either overseas or domestically that rarely goes over the personal tax liability threshold. Probably not.

Aquavitae
Posts:3
Joined:Wed Jul 26, 2017 12:47 pm

Re: Tax liability from US earnings

Postby Aquavitae » Thu Jul 27, 2017 10:22 am

Given you only spent 4 months in the US you are unlikely to be considered US tax resident. So you are likely to be UK tax resident for the full period even whilst abroad. So the UK would have taxing rights on the income you earned whilst in the US but HMRC should give you a tax credit against any taxes paid in the US (capped at the UK tax rate).
So it looks like I will have to declare all earnings made in US then on SA106. Thanks for help.

DavidTreitel
Posts:271
Joined:Thu Aug 16, 2012 4:31 pm

Re: Tax liability from US earnings

Postby DavidTreitel » Sat Jul 29, 2017 11:52 am

What visa type did you have in the US? Was US tax withheld? If so, was it on W-2, 1099 or 1042-S? Is there a State tax liability?


Return to “Income Tax”