# HMRC treatment of US income



## catherinewilson9 (May 10, 2011)

I am a UK resident, US citizen, and plan to work in the USA 1/2 time. I will need to file two sets of tax returns on my total income, claiming tax credits in each country.
For the UK I'd like to keep taxable income under £100K to keep my tax-free allowance. I do this by making extra pension contributions. Suppose I earn £50K in Britain and £60K in the USA, but pay £20K in US tax which I claim a credit for. 
Does HMRC consider my income to be £110K (lost allowance) or £90K? (kept it).


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## Bevdeforges (Nov 16, 2007)

The key question here is: where are you "tax resident"? 

As a US citizen you ALWAYS file US taxes, no matter where in the world you live or work. That's the easy part. You may be eligible for the FEIE (foreign earned income exclusion) if you meet the requirements - and if so, you can exclude (via form 2555) any income earned in the UK, but not interest or other "unearned" types of income. 

If you maintain your UK residence, you may be able to claim the FEIE under the bona fide resident criteria, but check the requirement carefully. Otherwise, you declare and pay taxes in the UK (as your country of residence) and credit taxes paid to the UK against your US tax obligation.

To avoid paying tax to the UK, I believe you have to file something with the UK tax authority giving up your UK residence altogether.
Cheers,
Bev


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## catherinewilson9 (May 10, 2011)

*?*

Thank you- the question I had was actually different to the one you answered. If you have a chance to reread it and know the answer, I'd be interested in your opinion. 
Cheers, C

QUOTE=Bevdeforges;1226128]The key question here is: where are you "tax resident"? 

As a US citizen you ALWAYS file US taxes, no matter where in the world you live or work. That's the easy part. You may be eligible for the FEIE (foreign earned income exclusion) if you meet the requirements - and if so, you can exclude (via form 2555) any income earned in the UK, but not interest or other "unearned" types of income. 

If you maintain your UK residence, you may be able to claim the FEIE under the bona fide resident criteria, but check the requirement carefully. Otherwise, you declare and pay taxes in the UK (as your country of residence) and credit taxes paid to the UK against your US tax obligation.

To avoid paying tax to the UK, I believe you have to file something with the UK tax authority giving up your UK residence altogether.
Cheers,
Bev[/QUOTE]


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