# UK unemployment and disability benefits



## Jerethdatiger (2 mo ago)

So I can't find anything about this and it's driving me to illness.

I am a US expat living in UK 

I have no or negligible earned income
Everything I get is tax free from UK government.

From what I gather this is unearned income ....which means the British government is effectively paying us taxes.. with me as the middle man can I report it as earned income to make it all go away. Or what


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## Bevdeforges (Nov 16, 2007)

Just don't report it. If you look in the IRS publication on Taxable and Non Taxable Income, you'll find that "welfare benefits" are not considered taxable income and therefore do not have to be declared on your forms. While there are loads of things that state that US unemployment benefits are taxable (both state and federal), foreign "welfare benefits" are not considered taxable income : >>Don’t include in your income governmental benefit payments from a public welfare fund based upon need, such as payments due to blindness.<< (IRS pub 525, p. 29) If unemployment isn't a "need" I don't know what else is. Besides, the IRS has no way of knowing when you have received state benefits from the "state" (i.e. country) you're living in outside the US.


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## Jerethdatiger (2 mo ago)

So report basically no income ok thanks I've been worried sick over this

And your sure it says foreign welfare payment. And surely they know via fatca filings from my bank? Who's UK based


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## Bevdeforges (Nov 16, 2007)

Jerethdatiger said:


> So report basically no income ok thanks I've been worried sick over this
> 
> And your sure it says foreign welfare payment


IRS Pub 525 is available on their site if you want to see for yourself how it's worded. Everything it says about "Unemployment benefits" seems to specifically mention "US unemployment benefits" or "state and federal" unemployment benefits - and there is something about how whether or not they are taxable depends on "what kind of benefits they are" without much discussion of what kinds are and aren't. If you consider UK benefits to be a form of "welfare payments" then you're off the hook. But I leave it to you to see what you think of what's written in the IRS publication. That's the stance I took several years back when I was on French unemployment for a time - and never heard anything more about it all.


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## Jerethdatiger (2 mo ago)

Thanks I just find it all really stressful it's like they never considered this type of situation in all there millions of words they couldn't have put forign welfare/social security type payments do not need reporting


So it looks like my income tax will be a lot of zeros 

Wait.... Do I need. To file if my reportable income is zero


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## Bevdeforges (Nov 16, 2007)

Jerethdatiger said:


> Wait.... Do I need. To file if my reportable income is zero


Not really.


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## Jerethdatiger (2 mo ago)

Well that's a relief I can stop panicking about IRS goons knocking my door down since three things. Now. Say I'm ok and if they do audit me I can point to these things hopefully will still check with an accountant


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## Bevdeforges (Nov 16, 2007)

Jerethdatiger said:


> will still check with an accountant


Be careful with that approach. Because tax accountants need to "cover their butts" in order to maintain their IRS registration if they do taxes for people, they may insist that you must declare your foreign unemployment as income. I just happen to be an accountant by trade, so am used to making my own interpretations of IRS publications and I'll defend myself if and when they ask any questions.

But audits of overseas taxpayers are very rare, especially if you don't fall into the upper income brackets or happen to hit the newspapers when you sell your fabulous mansion (like Boris did).


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## Jerethdatiger (2 mo ago)

Bevdeforges said:


> Be careful with that approach. Because tax accountants need to "cover their butts" in order to maintain their IRS registration if they do taxes for people, they may insist that you must declare your foreign unemployment as income. I just happen to be an accountant by trade, so am used to making my own interpretations of IRS publications and I'll defend myself if and when they ask any questions.
> 
> But audits of overseas taxpayers are very rare, especially if you don't fall into the upper income brackets or happen to hit the newspapers when you sell your fabulous mansion (like Boris did).


Ok but by my reading I think your right it doesn't make sense otherwise
The treaty says something similar.
What about fatca paperwork I got a letter from my UK bank obviously I'll fill it out but I'm guessing that's as far as it will go thell tell HMRC who will tell it's there no income there or something


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## Bevdeforges (Nov 16, 2007)

There is some real doubt as to what the IRS does with the FATCA reports from the foreign banks. So far, no one seems to bother comparing what the banks report to anything that taxpayers report (or don't report) unless we're talking really large numbers and a massive amount of potentially missing taxes. If the total of your overseas accounts exceeds $10,000 at any point in the year, you're supposed to report them on an FBAR but again, there is no real indication that the IRS does anything with the FBARs other than just filing them away.


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## Jerethdatiger (2 mo ago)

I'm lucky when my Ballance after payday bills exceeds 100£


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## Jerethdatiger (2 mo ago)

I really appreciate your help I couldn't find anything anywhere the only acounts I have is a UK one for banking and a. Us savings account with 15$ in it for receiving Xmas money or hey dad I'm broke loan me 50$ which at most totals 300$ a year


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## Harry Moles (11 mo ago)

Jerethdatiger said:


> And surely they know via fatca filings from my bank?





Jerethdatiger said:


> What about fatca paperwork I got a letter from my UK bank obviously I'll fill it out but I'm guessing that's as far as it will go thell tell HMRC who will tell it's there no income there or something


FATCA data is limited to year-end balance plus interest/dividend income. There is no reporting of individual transactions. Furthermore, the IRS lacks the resources to proactively look at FATCA data. By the sounds of it your balances are so low that the bank may not even bother reporting your accounts at all (they are not required to for balances under $50,000).

In your situation you can simply file nothing and forget about this. Hopefully you did file enough in the past few years to collect your $3,200 stimulus benefit?


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## Jerethdatiger (2 mo ago)

My dad might have done something cause I got some I think he claimed me as dependent that year to help which is true he financially helps me came through to his account so who knows . But no until I got that letter I never even knew I needed to file or not file as the case maybe . And to be fair I'd rather stay out of the cross hairs of irs 

I'm poor disabled autistic and less I have to do with alphabet agencies the better


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## Harry Moles (11 mo ago)

Jerethdatiger said:


> I'm poor disabled autistic and less I have to do with alphabet agencies the better


I can't imagine how you're entitled to live in the UK under these circumstances, but apparently it's working.

If $3,200 would be useful to you, might be worth looking into.


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## Jerethdatiger (2 mo ago)

I've been here. Since. I was a minor I got leave to remain which gives me access to benifits so England is my home 🏠


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## Jerethdatiger (2 mo ago)

Bevdeforges said:


> Be careful with that approach. Because tax accountants need to "cover their butts" in order to maintain their IRS registration if they do taxes for people, they may insist that you must declare your foreign unemployment as income. I just happen to be an accountant by trade, so am used to making my own interpretations of IRS publications and I'll defend myself if and when they ask any questions.
> 
> But audits of overseas taxpayers are very rare, especially if you don't fall into the upper income brackets or happen to hit the newspapers when you sell your fabulous mansion (like Boris did).


So if a client came to you with this situation you'd be mostly ok with this as a solution


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## Bevdeforges (Nov 16, 2007)

Jerethdatiger said:


> So if a client came to you with this situation you'd be mostly ok with this as a solution


I've never practiced as a "tax accountant" per se. (Other than a brief rotation through the tax department back in my early days with a public accounting firm in the US - so I wasn't signing the tax forms). But when folks over here have asked for my help with US taxes, this is exactly how I would advise them. (And frankly, how I did it myself when I was on unemployment for a time here in France.) 

The IRS is hurting for resources and has been for ages. They aren't going to spend much time checking up on any returns unless there is the possibility of collecting a significant amount of past due or undeclared taxes and it sounds like you're simply not in that category. 

And just a word on that "pandemic bonus" stuff. Yes, it's tempting - but given how far behind the IRS is on processing back forms, there's no guarantee you'll ever receive the money now. (A friend of mine got the first two checks, but never received the third check despite receiving notification of its being sent. She tried to follow up, but at this point, that's kind of a lost cause.) Of course you can do as you like, and what helps you sleep at night, but just don't hold your breath if you're just filing in order to get the "pay outs."


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## Jerethdatiger (2 mo ago)

Even if I declared all cash I get I'd only owe 400$ a year and that's it but if the treat is right then they can't even claim that


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## Jerethdatiger (2 mo ago)

Bevdeforges said:


> I've never practiced as a "tax accountant" per se. (Other than a brief rotation through the tax department back in my early days with a public accounting firm in the US - so I wasn't signing the tax forms). But when folks over here have asked for my help with US taxes, this is exactly how I would advise them. (And frankly, how I did it myself when I was on unemployment for a time here in France.)
> 
> The IRS is hurting for resources and has been for ages. They aren't going to spend much time checking up on any returns unless there is the possibility of collecting a significant amount of past due or undeclared taxes and it sounds like you're simply not in that category.
> 
> And just a word on that "pandemic bonus" stuff. Yes, it's tempting - but given how far behind the IRS is on processing back forms, there's no guarantee you'll ever receive the money now. (A friend of mine got the first two checks, but never received the third check despite receiving notification of its being sent. She tried to follow up, but at this point, that's kind of a lost cause.) Of course you can do as you like, and what helps you sleep at night, but just don't hold your breath if you're just filing in order to get the "pay outs."



It sounds like a lot of tax law is how u Interpreted it which is odd but whatever.


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## Harry Moles (11 mo ago)

Jerethdatiger said:


> It sounds like a lot of tax law is how u Interpreted it which is odd but whatever.


It's about what you can get away with.


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## Jerethdatiger (2 mo ago)

Harry Moles said:


> It's about what you can get away with.


Still wierd but in this case I think I'm ok


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