Hi,
I'm moving from the UK to USA (Illinois) in November. My employer will pay me a (contractually guaranteed) bonus in March 2018 for this year. I'll qualify for UK split year treatment. I understand that the UK will also want to tax me on that bonus for the portion of the year that I was UK resident. I'm trying to figure out whether to subscribe for EIS and so trying to figure out how the whole thing is going to get taxed.
One scenario I see is:
I pay UK tax on my income to November. I pay US and Illinois tax on the post-November income and the bonus. The UK then taxes me on the portion of the bonus which is taxable (how does it calculate that? From start of calendar year, tax year, or employment (which began in July)?) But I can offset the US tax paid (but how is that calculated, its paid on the total income + bonus, and is only finalised at the end of 2018, which could be after my 2017/2018 UK filing deadline.) In this case claiming the EIS credit would reduce my UK tax liability without impacting the US.
Or:
I pay UK tax on my income to November and the portion of the bonus which is UK-attribute. I pay US Tax and state tax on my post-November income plus the bonus, but can offset the UK income tax paid (but how is this calculated? Again there is tax paid on UK income pre-Nov and UK income post-Nov, do they just calculate an average tax rate? Or the marginal tax paid for the marginal bonus income?) In this case I could see that claiming EIS credit could reduce the tax credit that I could claim in the US (I assume I can't offset the EIS credit against the pre-November income only.)
I appreciate that the EIS thing makes the whole thing more complicated, so even if someone could just explain who gets first dibs on what pieces of income, I feel like I'd understand the whole thing a lot better.
My employer's paying a big 4 accountant to provide tax advice but they don't seem to be able to answer even the simpler question.
Thanks
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