# First year ExPat tax payer - US/UK citizen moved to UK



## rpsharman (Nov 3, 2013)

Hello all -

This might get complicated.

I moved to the UK last year. Dual US/UK citizen. Don't plan to move back to the US, but anything can happen.

First, I have over $10,000 in UK banks - I have filled out FATCA forms. Do I need to do something else? Will bank report interest to IRS, etc.?

Second, I have a Ltd company. I am the sole owner. I record sound on movies and rent gear that I own to the companies that hire me. I am not taxed at source (PAYE). Some money has been paid to me as a sole trader (before starting Ltd company). I will, of course pay NI and income tax on that income. I have read form 8832, and it reads that in the UK only Public Limited Company in the United Kingdom is considered a Foreign Entity Classified as Corporations for Federal Tax Purposes. Does this mean I still need to fill out the form and elect to be a "disregarded entity", or am I already a disregarded entity because I am the sole owner of the company and it's not a Public Limited Company?

Do I then only declare income as well as income and dividends I take from the company on my 1040 and use 2555 to eliminate any tax burden, as I fall under the threshold married filing jointly? Or do I have to declare company profits too, even if I haven't withdrawn them from the company?

How do I show that NI payments have been made - where do I get a certificae of coverage, and what forms do I fill out to avoid paying self-employment tax in the US? Or is it better to pay SS tax in the US and avoid NI tax in the UK? I live here now, so benefit from NHS, and feel I should pay taxes here.

Thanks


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## Bevdeforges (Nov 16, 2007)

Saw and responded to your other post before I saw this one, so some of this may be a duplicate.



> First, I have over $10,000 in UK banks - I have filled out FATCA forms. Do I need to do something else? Will bank report interest to IRS, etc.?


All they report from the FATCA forms is the existence of the accounts (and possibly the high balance as you reported it). Just FYI, you should be reporting any interest on your US tax returns - but at the current rates of interest, it's not exactly a critical issue and shouldn't affect the taxes you owe to the US.



> Second, I have a Ltd company. I am the sole owner. I record sound on movies and rent gear that I own to the companies that hire me. I am not taxed at source (PAYE). Some money has been paid to me as a sole trader (before starting Ltd company). I will, of course pay NI and income tax on that income. I have read form 8832, and it reads that in the UK only Public Limited Company in the United Kingdom is considered a Foreign Entity Classified as Corporations for Federal Tax Purposes. Does this mean I still need to fill out the form and elect to be a "disregarded entity", or am I already a disregarded entity because I am the sole owner of the company and it's not a Public Limited Company?


You'll get a variety of opinions here. My personal opinion is that "no" as a private limited company, you don't need to fill out the 8832 or any of that other stuff. (That's basically how I've handled things for the last 18 or 20 years and have never had any questions from the IRS.) I report my "salary" from our company, listing the company as my employer (same address as my home address, so I'm not "hiding" anything) - and then I take the FEIE on the whole thing.



> Do I then only declare income as well as income and dividends I take from the company on my 1040 and use 2555 to eliminate any tax burden, as I fall under the threshold married filing jointly? Or do I have to declare company profits too, even if I haven't withdrawn them from the company?


Declare your "salary" from the company (i.e. what you take out of the company) - and that is subject to the FEIE. Dividends aren't - and go on schedule B along with any bank interest. The company income is just that - the company's income and subject to whatever taxes it is subject to in the UK. (Again, you'll get differing opinions on this.)



> How do I show that NI payments have been made - where do I get a certificae of coverage, and what forms do I fill out to avoid paying self-employment tax in the US? Or is it better to pay SS tax in the US and avoid NI tax in the UK? I live here now, so benefit from NHS, and feel I should pay taxes here.


You should ask for a certificate of coverage from whatever agency you pay your social insurances to in the UK. To avoid self-employment tax in the US, you simply indicate your company name as your employer and declare your "salary" from the business. You don't actually get a choice as to whether to pay US or UK social security - you pay where you live (and benefit from the contributions). It's actually fairly rare that overseas taxpayers are asked to produce the certificate of coverage as most folks who declare employment income from a country where there is a US Social Security treaty are pretty much assumed to be covered by the local system. But it's a good document to have in your files "just in case."
Cheers,
Bev


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## JustLurking (Mar 25, 2015)

rpsharman said:


> ...Will [the] bank report interest to IRS, etc.?


The bank will report both interest and end of year (or closure) balance to the IRS. See Article 2 para 2(a) of the US/UK FATCA IGA for full details.


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## BBCWatcher (Dec 28, 2012)

....So, unless the relevant tax treaty says otherwise, one should report gross interest on IRS Form 1040 Schedule B and then, if applicable, take a Foreign Tax Credit using IRS Form 1116 to reflect the foreign income tax paid on that interest. As always, tax preparation software is your helpful partner to fill out the forms for you.


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