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Where Taxpayers and Advisers Meet

Double taxation relief with USA

Mikethebook
Posts:38
Joined:Wed Aug 06, 2008 4:09 pm
Double taxation relief with USA

Postby Mikethebook » Thu Mar 22, 2018 1:47 pm

My wife is a US citizen, living and resident in the UK. In the USA her income is covered by the Foreign Earned Income exemption but she does pay self-employment tax each year. Until now she has also escaped income tax in the UK but this last year started to receive her US social security pension. This will be covered by her allowances/exemptions in the USA but she will face UK income tax on it. My question concerns any double taxation agreement between the UK and the USA and, assuming there is one, will she be able to offset income tax paid in the UK against self-employment tax paid in the USA?

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

Re: Double taxation relief with USA

Postby DavidTreitel » Sun Mar 25, 2018 9:25 pm

Mike - as your wife is ordinarily resident in the United Kingdom she has no liability to US self-employment tax. She may wish to file amended US returns to reclaim tax paid in error. Assuming she is filing on the arising basis, US social security pension is completely exempt from US income tax. I cannot see where there is any double taxation based on the facts presented.

Mikethebook
Posts:38
Joined:Wed Aug 06, 2008 4:09 pm

Re: Double taxation relief with USA

Postby Mikethebook » Mon Mar 26, 2018 7:45 am

David, Thank you for your reply. As I understand it, as a US citizen, my wife is taxable on her worldwide earnings. She pays no income tax on her earnings because of Foreign Earned Income exemption but in the return her income figure is automatically transferred to the self-employment calculation and I see no provision for exempting her from it. I know nothing about the arising basis and how this is claimed or what other alternatives are available (is there a box to be ticked on the Return). A tax accountant completes the Return. To clarify my wife's situation, she is a missionary working in the UK independent of any missionary organisations. Her income consists of donations from individuals most of whom live in the USA. I would appreciate more help in clarifying the situation and this "arising" basis and what it is. Thank you for your help.

Mikethebook
Posts:38
Joined:Wed Aug 06, 2008 4:09 pm

Re: Double taxation relief with USA

Postby Mikethebook » Sat Mar 31, 2018 4:26 pm

You've sewn doubts in my mind, David. Can you furnish evidence of what you say regarding the self-employment tax?

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

Re: Double taxation relief with USA

Postby DavidTreitel » Thu Apr 05, 2018 9:17 pm

Mike - US returns for Americans in the UK are decently complex. Delighted to assist. Feel free to contact me.

With kind regards

David Treitel | Managing Director | American Tax Returns Ltd
The Old Exchange, 12 Compton Road, London, SW19 7QD

Tel: 020 3542 6330

Email: david.treitel@americantaxreturns.co.uk

Mikethebook
Posts:38
Joined:Wed Aug 06, 2008 4:09 pm

Re: Double taxation relief with USA

Postby Mikethebook » Fri Apr 06, 2018 7:50 am

David,
Thanks for your reply. Sounds interesting at the very least. I'll contact you soon by e-mail.
Best
Mike


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