British expats considered to be non-resident aliens

British expats considered to be non-resident aliens

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Moving to America as a British expat and tax status

If you are moving from the England, UK to the United States of America there will be terms that you will need to get used to

Resident alien

Non-resident alien

The IRS terminology is used to describe your American tax status as a British expat.

The U.S. does not tax foreign source income received by non-resident aliens, but non-resident aliens are subject to taxation of income from U.S. sources.

IRS tax forms to be completed as a British Expat who are resident aliens

Non residents aliens need to complete the 1040-NR tax return to the IRS and pay any tax due on US sources of income. This income is referred to by the IRS as “Income Effectively Connected With US Trade/Business.

If the taxpayer is married, the “Married nonresident alien” box must be marked, even if the spouse does not reside with the taxpayer.

Other forms that may be completed by a British person moving to the US

– Non-resident aliens that have no dependents and only receive wages from a U.S based employer may complete the simplified form 1040NR-EZ.

– Non-resident aliens that have no dependents need to complete the form 1040NR-EZ.

– Non-resident aliens that had tax deducted from their earnings can complete the 1040 S tax form to the IRS

You can deduct the part of your medical and dental expenses that is more than 10% of your AGI

Are you a resident or non-resident alien for IRS tax purposes?

To help you understand what your tax status is it may be useful to answer the below questions

1 – Were you a lawful permanent resident of the United States (had a “green card”) at any time during the current tax year?

YES – RESIDENT Alien for U.S.

N0 – Go to step 2

2 – Were you physically present in the United States on at least

31 days during the current tax year?

Yes – Go to step 3
No – Non resident alien for tax purposes

3 – Were you physically present in the United States on at least

    1. 183 days during the 3-year period consisting of the current tax year and the preceding 2 years,
    2. counting all days of presence in the current tax year,
      1. 1/3 of the days of presence in the first preceding year, and
      2. 1/6 of the days of presence in the second preceding year?

Purser tax: Deemed resident in the US and UK for tax purposes

Yes – Go to step 4
No – Non resident alien for tax purposes

4 – Were you physically present in the United States on at least 183 days during the current tax year?

Yes – Resident Aline for tax purposes
No – Go to step 5

5 – Can you show that for the current tax year you have a tax home in a foreign country and have a closer connection to that country than to the United States?

Yes – Non-resident alien for tax purposes
No – Resident Alien for tax purposes

IRS tax options for resident and non-resident aliens.

Resident aliens follow the same tax laws as U.S. citizens. A couple can elect to treat the non-resident spouse as a resident alien for tax purposes and file a joint return.

Resident aliens must report their worldwide income to the IRS. Non-resident aliens only have to report income earned in the US to the IRS.

It is possible that one person is a resident alien and the other a non-resident alien but still choose to file a joint tax return. This allows them to claim a greater standard deduction but must report all worldwide income.

We gave further examples of what makes a British person resident in the U.S  for tax purposes based on the days that they spent in the states.

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