# Working for UK Remotely from US



## en09art (Jun 23, 2013)

Hiya all,

So I'm a UKC finally moving to Austin, TX in April after a lengthy CR1 visa application process and fortunately, the company I work for in London is wanting me to work remotely from the states for a little bit.

My question is, does anyone know how would this work in regards to taxes etc.?

Should I keep my english bank account open and have them pay money into there? 

Thanks in advance


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## BBCWatcher (Dec 28, 2012)

en09art said:


> My question is, does anyone know how would this work in regards to taxes etc.?


No problem. Here are the highlights:

1. There is no state income tax in Texas (or local income tax in Austin), so that's simple.

2. On the U.K. side, when the time comes, you'd fill out HMRC's Form P85 to "check out" of the U.K. tax system. Make sure your U.K. employer is aware of this, too. (You're supposed to obtain what's called a "code NT.") If you still have U.K. tax filing requirements due to ongoing U.K. source income (other than the U.K. company that's still paying you for work that you perform in/from the U.S.), that's fine, and you'd proceed as normal. Keep track of U.K. income tax paid on such income since you can use it as a Foreign Tax Credit on your U.S. tax return.

3. Start making quarterly estimated U.S. federal income tax payments (and probably SE Tax payments -- see below). Refer to IRS Form 1040-ES for details including each quarter's payment deadline. Note that the deadlines themselves are not exactly lined up quarterly -- they're a bit odd.

4. When the time comes, file your U.S. federal income tax return (including IRS Forms 8938, 3520, and 3520-A, as/if applicable) and FinCEN Form 114 (if applicable). I recommend that you use tax preparation software to help you fill out the forms. Please note that you are taxed on your worldwide income, although you are allowed a Foreign Tax Credit (IRS Form 1116) if you have to pay income tax on your foreign source income. (Payments from your U.K. based employer for work you perform in/from the U.S. are not foreign source -- you're working in the U.S.) Note that you won't get a "W-2" form, the normal U.S. wage/salary statement, but that's perfectly OK -- you'd still report the income, and it would be earned income.

5. According to the U.S.-U.K. Social Security treaty, as I read it, you should stop making U.K. National Insurance payments (and your employer should stop withholding such payments), and you should start making U.S. Social Security/Medicare contributions (the U.S. Self-Employment Tax in this case). That's because your U.K. employer isn't really "sending" you to the U.S. -- you're moving there as a permanent resident. But, per the treaty page I linked to, you can ask for guidance.

6. As a U.S. resident you will be subject to the Shared Responsibility Payment (higher income tax) if you do not have Minimum Essential Coverage medical insurance. You should check your options at Healthcare.gov and get enrolled in medical insurance, or you may be able to be added to your spouse's employer's medical insurance policy.



> Should I keep my english bank account open and have them pay money into there?


That's up to you and your employer. The location of the bank account where you get paid -- or even if you get paid in bags of corn left on your doorstep -- doesn't matter for tax purposes. Income is income.

It would be in your self interest to make sure that you have the lowest cost way(s) of tapping such funds from the U.S. Are you familiar with those lowest cost transfer/currency conversion options?


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## Bevdeforges (Nov 16, 2007)

Just an aside - if your UK employer has a US presence (office, branch, etc.) you should ask if you could be paid on the US payroll. That eliminates quite a bit of the hassle and assures that your pay is being appropriately withheld for taxes and benefits. 

If that's not possible, consider asking for a slight raise in pay. Working remotely you'll be responsible for what would normally be the employer's contributions (social security, health and other benefits) and for the administrative side of taxes (quarterly estimates, accounting so you can report your earnings, etc.) and your own work expenses (paper, computer supplies, etc.).

People often forget about those side costs when they start working for themselves (i.e. remotely) and it can wind up being not such a good deal if you don't consider the additional expenses you're taking on.
Cheers,
Bev


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## en09art (Jun 23, 2013)

Thanks so much for your help!

I've talked to my work about these options and they've gone and contacted the company's HR about the whole situation - with them saying I will need to register myself as a Ltd Company? 

I feel like from the advice I've been given here that registering as a Ltd company is not related or necessary? Can I just confirm this? I prefer the other options but I'm confused as to how this would even work? 

I've found some topics posted here, but they don't seem to confirm or disprove it.

Thanks in advance


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## Bevdeforges (Nov 16, 2007)

I suspect that the HR department is thinking of a UK style Ltd company. It's not absolutely necessary in the US (you can do business as a sole proprietor without getting a corporation registration) however it may make life easier for the company if they can show that they are paying a "real business." You might want to talk to a local accountant to explore what business forms might work for you (and for your employer) under the circumstances. (Maybe your UK employer could offer to pick up the cost of the visit.)
Cheers,
Bev


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## twostep (Apr 3, 2008)

en09art said:


> Thanks so much for your help!
> 
> I've talked to my work about these options and they've gone and contacted the company's HR about the whole situation - with them saying I will need to register myself as a Ltd Company?
> 
> ...


There is no such thing as Ltd in the US. Will you be working as virtual employee or as contractor?


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