# Double Taxation agreement and State Taxes



## mcrowe (May 31, 2011)

Hi guys,
I'm Self-employed and from Ireland and plan to move to California shortly on a green card.

I'm worried about my tax situation. There's a Double Taxation treaty between Ireland and the US, but this applies only to Federal Taxes, not local state taxes.

My California Income tax would be in the 9-10%, for which I won't get any Foreign Tax Credits, and so I think I will end up being taxed twice on a portion of my income.

Does anyone have any experience with this?
Thanks!
Martin.


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## Bevdeforges (Nov 16, 2007)

There are multiple levels of taxation in the US. It's only at the Federal level that the tax treaties hold. State taxes (and in a few instances city income taxes) apply only to those resident in the state or city.

As a US resident (i.e. with a green card) you'll be taxed on your earned income in the US, which includes Federal and State income tax. You shouldn't wind up being taxed by Ireland on your self-employment earnings once you're resident in the US. So no double taxation. (And no, it doesn't count as "double taxation" that you're taxed on both the State and Federal level.)
Cheers,
Bev


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## mcrowe (May 31, 2011)

Thanks for the info Bev, much appreciated!

I'll be tax resident in Ireland and the US for 2011, from August 1st, when I move over. The only provision that would allow me NOT to be taxed in Ireland on my self-employed income is "Split Year relief" from what I can see. But this doesn't seem to apply to the self-employed according to this example :-(
crowleysdfk.ie/wp-content/uploads/2010/03/Expatriate-Taxation.pdf

I'll chase the Revenue department on it and report back my findings anyway!

Thanks
Martin.


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## Bevdeforges (Nov 16, 2007)

At least for the US side of things, you only start your tax obligation as of the date you take up residence - i.e. August 1st. You should probably check with the Revenue folks to see if there is any kind of form to be filled out, notifying them of your change in residence and thus of tax liability.
Cheers,
Bev


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## stormgal (Sep 30, 2009)

Basically it's, Federal, State *and* City (county) tax.


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## JohnSoCal (Sep 2, 2007)

stormgal said:


> Basically it's, Federal, State *and* City (county) tax.


For 2011 you would file a NR state tax form which basically taxes you on the income you have earned in California and your deductions are prorated for the months you are resident in California. Any self-employment expenses are tax deductible. You will have to pay self-employment tax which means that you have to pay both the employee and employer share of Social Security and Medicare ( ~15% total on the first $108,000 of annual income ). It may be beneficial to incorporate as a "S" corporation. I have done both the self employment ( 1099 ) route and "S" corporation route.

There are states like Washington, Nevada, Texas, Florida, etc. that do not have a state income tax.


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## raceman (Apr 3, 2011)

Ok a supplimentary question lol, I have properties that i rent out in the UK. If i marry my GF, and move to US, who do i pay tax to on that income?


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## tcscivic12 (Jul 2, 2008)

raceman said:


> Ok a supplimentary question lol, I have properties that i rent out in the UK. If i marry my GF, and move to US, who do i pay tax to on that income?


You would pay the UK government as that is income on a property in the UK.


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## Bevdeforges (Nov 16, 2007)

raceman said:


> Ok a supplimentary question lol, I have properties that i rent out in the UK. If i marry my GF, and move to US, who do i pay tax to on that income?


Ultimately you pay the tax to the UK - but you still have to declare the income on your US tax returns and claim the tax credit against the rental income. 
Cheers,
Bev


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## raceman (Apr 3, 2011)

Bevdeforges said:


> Ultimately you pay the tax to the UK - but you still have to declare the income on your US tax returns and claim the tax credit against the rental income.
> Cheers,
> Bev


Ah ok, so i wouldn't end up paying tax on them in the UK and US then......


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## RealMonkey (Jun 12, 2011)

raceman said:


> Ah ok, so i wouldn't end up paying tax on them in the UK and US then......


No, the UK gets the first slice of their pie, and then any extra tax due would be payable to the US. If you are a UK citizen you would still be entitled to your personal allowance, which helps reduce the UK tax due.
Also, in the US you can offset the income by depreciating the asset on your rental properties, so actually you end up paying very little tax on your rental income.


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## adrianyates (Jun 19, 2011)

If you havn't already take a look at the HM revenues website 
(sorry as Im a new member cannot post link)

It has some great advise as to the process from the UK side not sure about Ireland. Here in the US anyway, you start being liable for tax as Bev says as soon as you take up residence and of course you will need a social number also.

Always best to consult an accountant at least get a free consultation, we would be happy to help with that if ever you need any help.

Cheers,

Adrian, 
Houston, TX


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