Hello, I am a UK citizen who has recently moved to the US with a green card visa. I have a UK based Limited Company via which I employ myself as a contractor/freelancer. I work remotely for UK based clients. I remunerate myself via the Limited Company with a combination of salary and dividends. I pay my personal and business taxes in the UK. I understand that I need to declare this income on my US tax return, my question is am I likely to owe US taxes on this UK income? Thanks Peter
It is possible. You would be considered as self-employed and required to pay self-employment tax. If you did not pay in any estimated FICA taxes to the IRS or any withholding during the tax year, you would probably end up owing. Since you did not work overseas, you would not qualify for the foreign income exclusion. However, you pay taxes to both the US and UK government, you might be able to claim a foreign tax credit to offset your US taxes.
To enter this information in the TurboTax program, here are the steps:
- Open up your TurboTax account and select Pick up where you left off
- At the right upper corner, in the search box, type in "foreign tax credit" and Enter
- Select Jump to foreign tax credit
- Follow prompts
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