# Localization



## JimGreig (Jul 18, 2011)

Hi everyone,

I am a UK citizen and have been working as an expat in the US for the last 3 1/2 years. My company now wants me to localize. Is there anyone out there from the UK who has gone through this process and is there any hidden pitfalls that would be worth knowing about?

Any advice would be greatly appreciated

Jim


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## twostep (Apr 3, 2008)

JimGreig said:


> Hi everyone,
> 
> I am a UK citizen and have been working as an expat in the US for the last 3 1/2 years. My company now wants me to localize. Is there anyone out there from the UK who has gone through this process and is there any hidden pitfalls that would be worth knowing about?
> 
> ...


What do you mean by "localize"?


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## JimGreig (Jul 18, 2011)

twostep said:


> What do you mean by "localize"?


Sorry, I thought that was a common term.

They want me to come of my ex-pat agreement and become a US employee, in other words go through the green card process and lose my ex-pat benefits.

Does that help?

Jim


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## Fatbrit (May 8, 2008)

JimGreig said:


> Hi everyone,
> 
> I am a UK citizen and have been working as an expat in the US for the last 3 1/2 years. My company now wants me to localize. Is there anyone out there from the UK who has gone through this process and is there any hidden pitfalls that would be worth knowing about?
> 
> ...


Depends whether you want to stay in the US or not.

Permanent residence (aka green card) puts you on almost the same footing as a US citizen -- you can work for whoever you like or even go self employed.It's also a path to US citizenship. However, you will also lose those perks you got through your transfer such as longer vacation times, flights home, etc.

On an L1 or H1, you are around half-way through your allotted time in the US and will eventually need to take at least a year out. You are tied to your company and live and work here at their will -- almost indentured servitude in my book.


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## JimGreig (Jul 18, 2011)

Thanks,

Its a big decision given the current job market.

I have been in contact with the Revenue and customs guys back home regarding my NI contributions, any other things I should look out for while making my decision?


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## Fatbrit (May 8, 2008)

JimGreig said:


> Thanks,
> 
> Its a big decision given the current job market.
> 
> I have been in contact with the Revenue and customs guys back home regarding my NI contributions, any other things I should look out for while making my decision?


Are you at the beginning, middle or end of your work life?

Are there kids to consider?


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## JimGreig (Jul 18, 2011)

Fatbrit said:


> Are you at the beginning, middle or end of your work life?
> 
> Are there kids to consider?


I am nearly 50, I have one daughter aged 10. The alternative is to go back to Europe, probably be based in Geneva (very expensive I know) as a local there.
We are thinking about staying but want to make sure we are not missing anything that could come back and bite us later


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## Fatbrit (May 8, 2008)

JimGreig said:


> I am nearly 50, I have one daughter aged 10. The alternative is to go back to Europe, probably be based in Geneva (very expensive I know) as a local there.
> We are thinking about staying but want to make sure we are not missing anything that could come back and bite us later


So it's looking good. You will have enough social security contributions to qualify for medicare on the same basis as USCs (10 years), and your child won't age out in the process.

There's probably little point in making UK NI contributions since any UK government pension will reduce your US SSA pension.

Dual UK/US citizenship is possible and should be your eventual goal if staying.

The main issue with US citizenship (or even long-term residency) is that you are on the IRS tax hook for worldwide income. This can be an issue if you go to work, for example, in the UAE where you will not be on an even footing with your UK compatriots. Although, I believe a little creative accounting evens the playing field somewhat.


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## JimGreig (Jul 18, 2011)

Fatbrit said:


> So it's looking good. You will have enough social security contributions to qualify for medicare on the same basis as USCs (10 years), and your child won't age out in the process.
> 
> There's probably little point in making UK NI contributions since any UK government pension will reduce your US SSA pension.
> 
> ...


Thanks for this,

Any idea how long the residency would need to be before the IRS hooked me for worlwide income? I am unlikely to go for citizen ship (way to proud of my Scottish roots) but may look for other positions in time outside of the one I have now in the US.

Appreciate all your help

Jim


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## Bevdeforges (Nov 16, 2007)

In the company I worked for this was known as "going onto the local payroll" as opposed to being on the expat payroll.

The main consideration is that you lose all your expat goodies. The key ones to think through are:

- any "tax equalization" benefits, especially having the company pay for tax assistance and preparation of returns

- switching from your UK retirement, health and other social benefits to the black hole of the US non-existent safety net. Don't forget that vacation time in the US is NOT legally mandated and will probably put you back to 2 weeks a year (or whatever your company allows).

- on local payroll, if you lose your job for any reason, it'll be all on you to repatriate yourself and your family. 

You may also want to consider where (and when) you're planning on retiring. You only need 10 years of credits to qualify for a US Social Security pension, but those are not meant to be anything more than a supplement to your retirement portfolio. Any UK pension will be subject to currency fluctuations and you have limited time to accumulate funds in an IRA or 401K (the usual American answer to retirement planning). 
Cheers,
Bev


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## Bevdeforges (Nov 16, 2007)

JimGreig said:


> Thanks for this,
> 
> Any idea how long the residency would need to be before the IRS hooked me for worlwide income? I am unlikely to go for citizen ship (way to proud of my Scottish roots) but may look for other positions in time outside of the one I have now in the US.
> 
> ...


You only get lifetime filing requirements if you take US citizenship - or don't give up your green card on your way out the door. 
Cheers,
Bev


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## Fatbrit (May 8, 2008)

JimGreig said:


> Thanks for this,
> 
> Any idea how long the residency would need to be before the IRS hooked me for worlwide income? I am unlikely to go for citizen ship (way to proud of my Scottish roots) but may look for other positions in time outside of the one I have now in the US.
> 
> ...


You're taxed on worldwide income from the moment you become a permenant resident.

You will NOT lose your Scottish roots by becoming a USC. But you will be disadvantaged if you don't. A few non-exhaustive examples for you:
* Your daughter (darling at 10 though I'm sure she is) gets caught at a pot party at the tender age of 17. Her class mates get a slap on the wrist; she gets removed from the country.
* You and your wife die in a auto accident. As the sole survivor, your daughter as a permenant resident is taxed on anything over $650k. As a citizen, your daughter would enjoy up to $5M tax free.
* Your wife's mother falls ill in the UK and your wife goes out to look after her. After a year out, she is in danger of losing her US residency, whereas as a USC she can spend as much time as she likes out.


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## Fatbrit (May 8, 2008)

Bevdeforges said:


> You only get lifetime filing requirements if you take US citizenship - or don't give up your green card on your way out the door.
> Cheers,
> Bev


I believe there's also a provision whereby if you've held a green card for X years, you are still on the IRS hook even if you do give up the green card.


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## Bevdeforges (Nov 16, 2007)

Fatbrit said:


> I believe there's also a provision whereby if you've held a green card for X years, you are still on the IRS hook even if you do give up the green card.


That wouldn't surprise me in the slightest. They're getting absolutely bizarre about these things lately!
Cheers,
Bev


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## twostep (Apr 3, 2008)

JimGreig said:


> Thanks for this,
> 
> Any idea how long the residency would need to be before the IRS hooked me for worlwide income? I am unlikely to go for citizen ship (way to proud of my Scottish roots) but may look for other positions in time outside of the one I have now in the US.
> 
> ...


Please read up on privileges and duties of GC holders. You will find most of your questions answered. 
USCIS - Green Card

Friend IRS will snag you on day one. Have you considered the impact on your daughter?


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## JimGreig (Jul 18, 2011)

twostep said:


> Please read up on privileges and duties of GC holders. You will find most of your questions answered.
> USCIS - Green Card
> 
> Friend IRS will snag you on day one. Have you considered the impact on your daughter?


We are trying to take everything into account. Our daughter is a big part of this, she loves it here but honetly I am not sure its the right thing long term as the education system where we are is not great.


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## Fatbrit (May 8, 2008)

JimGreig said:


> We are trying to take everything into account. Our daughter is a big part of this, she loves it here but honetly I am not sure its the right thing long term as the education system where we are is not great.


The issue is that your daughter will become an American because this is where her schooling is. It's heartbreaking for those who have to leave at the age of 21 because of their immigration status.


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