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spawnoflard
New Member

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

If I live in the US as a Permanent Resident (CR1) but I'm employed by a UK company and paying Tax in the UK can I just file forms 1040, 1116 (Foreign Tax Credit) to reduce my US tax burden and form 2555 to declare foreign earned income using Turbotax.

Or does US law prevent this or place restrictions, I've tried finding forums on US employment law but this seems the closest and most helpful and I suspect that I will need turbotax to handle my taxes in this situation.


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Accepted Solutions
pk
Level 13
Level 13

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

Whether you are a 2 year or 10 year green card holder , you are treated as a resident / citizen  for tax purposes. There are no limitations to how you legaly earn your living.    You are taxed on your world income and foreign income is taxed just like domestic  ( i.e. US sourced ) income.  If you pay taxes to a foreign  taxing authority  for your income then  you are eligible to recognize  that tax either as a deduction ( if you itemize ) or foreign tax credit.  Hope this helps

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8 Replies
pk
Level 13
Level 13

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

Whether you are a 2 year or 10 year green card holder , you are treated as a resident / citizen  for tax purposes. There are no limitations to how you legaly earn your living.    You are taxed on your world income and foreign income is taxed just like domestic  ( i.e. US sourced ) income.  If you pay taxes to a foreign  taxing authority  for your income then  you are eligible to recognize  that tax either as a deduction ( if you itemize ) or foreign tax credit.  Hope this helps

spawnoflard
New Member

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

Thanks, it helps to have some confirmation, I don't want to screw this up. I was warned by someone that I could be in breach of employment laws or the organisation I work for could find themselves having to comply with US tax laws but could provide no reference to any laws, So far all I can find is that they may have to comply with US employment laws, as they already have a US presence I don't see this being an issue.
pk
Level 13
Level 13

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

SU Bine22 is pointing out a very valid item -- whereas US will consider your income ( from the  UK entity   no US presence ) as US sourced income and if you are  actually having to pay UK taxes on this income ( i.e. UK is considering this  income on a territorial basis ), you may have to consider  to consider  "re-sourcing"  the  income to UK so that it is considered as foreign income  and thus allowing foreign income benefits to flow through.. Please respond to Bine22's question.
bine22
Level 7

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

If you work from the US remotely, that income is not foreign income, but US sourced income. Do you really have to pay taxes in the UK, if you dont live there?

spawnoflard
New Member

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

Thanks, currently I live and work for the company as a UK resident and pay taxes. My company also has a US arm but I am not required to be located in the US to do my job. The advice given to me by my human resources department was that I cannot work remotely in the US at all. Or to use the phoney baloney technical term they used, "It's a no no". After pointing them in the direction of the UK/US double Taxation treaty I thought I'd blown them out of the water. They are now saying that there may not be a personal Tax implication for me but there would be for the UK arm of the business..... but provided nothing to back it up. I simply want to be with my wife, continue to do my job remotely, which I already do and until I can either A: Find an internal vacancy to transfer to or B: My boss transfers me to the US payrol.
So far I can find nothing to support the suggestion that there are tax implication on my employer.
I plan to start the new year armed with facts and will try and force this to a conclusion through internal procedures.
geminibuddah
New Member

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

Hi I was curious how this resolved for you? My fiance and I are in same position. He is a UK citizen and has a remote working job for a UK company. He wants to relocate to the US with me but still pay taxes in the UK. Can you let me know what you did now that its been over a year? Thank you! 

Cladja1
New Member

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

My sitch is a little different, I think. I was born & raised in the US, and work here. My company, of which I am a partner, is the US division of our Austrian company, and is actually completely separate from the Austrian company.  The Austrian company was just purchased by a UK company. The UK company would like to do away with my company and hire me as an independent contractor. How will taxes work?   I work remotely, from NJ. Do I just pay NJ taxes?  Can they hire me as a full-time employee, and if so, would I be eligible for unemployment if my position were eliminated or the company failed?  I have been with my company for over 30 yrs and have been on payroll, so have paid into disability and unemployment all that time. 

ErnieS0
Expert Alumni

Living in the US but employed by a UK company and paying Tax in the UK, Does US Employment law place any restrictions?

Independent contractors are responsible for their own taxes @Cladja1. If you are a US citizen working in the US you will report all your income on your US tax return, regardless of whether you work for a US or foreign company.

 

You will not get a W-2 as an an independent contractor. You may get a Form 1099. If you do not, you will reported your income as a Other self-employed income in TurboTax.

 

New Jersey

New Jersey residents are taxed on income earned anywhere so you will report all your income to NJ, regardless whether you earned it on a W-2 or Form 1099 or in cash or check.

 

Unemployment

If you are a W-2 employee you are generally eligible for unemployment. Your NJ W-2 should have entries for UI/WF/SWF (unemployment, workforce development and supplemental workforce development).

 

Independent contractors are not eligible for unemployment.

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