"I'm an American living in London and I am shortly going to launch my own part-time coaching business here, probably in April after I receive indefinite leave to remain. I'm looking for help understanding the tax implications in the US as well as the UK if I set up as an LLC or as a sole trader, and once that decision is made, ongoing support with filing tax returns in both places. Is this something you can help me with?"
As a sole trader, you will pay UK taxes on net income from your business. Additionally, you must charge your customers and subsequently pay Value Added Tax (VAT) to the HMRC. If you set up as a sole trader, you are personally liable for all business debts you may incur. Additionally, US expats must pay self-employment tax. This includes a 12.4% Social Security tax on income up to $124,000, and another 2.9% Medicare tax on all income.
If you choose to set up your business as an LLC, you will pay taxes in the same way you do for a sole trader. Income will simply flow through the business and be treated as normal income for UK taxes purposes, avoiding any corporate tax (be sure to file Form 8832 to take advantage of this). However, you will not be personally liable for any business debts. Once again, you will have to charge and pay VAT.
No matter how you set up your business, you must fill out both a UK and US tax return for their respective taxable years (UK is April 6- April 5, US is Jan 1- Dec 31). However, you can take a tax credit on your US return for the amount of tax you pay to the UK. So even though you report the income in both countries, you are only really paying UK tax.
Finally, you may be able to take advantage of the Foreign Earned Income Exclusion once you live outside the US for a full year. This allows you to exclude $99,200 from your taxable income on your US tax return each year (NOTE: you must calculate Self-Employment tax on income before taking this exclusion). This deduction combined with the Foreign Tax Credit mentioned above will greatly reduce the amount of US tax you will have to pay.
The Tariffs introduced on imported goods, by President Trump back in March, have shaken the fashion world.
US expats are required to file a US federal tax return in order to disclose their worldwide income. If you’re a US expat who lives in a low-tax country and earns above the Foreign Earned Income Exclusion threshold, you are likely to owe US tax.
Donald Trump's 2017 tax reform has had and will continue to have huge implications for US expats who have an investment in non-US businesses. The two main new laws in place relating to Controlled Foreign Corporations (CFCs): any non-US business that is at least half owned by US shareholders, each of whom owns at least 10%.
Many actors are considered self-employed when it comes to filing their taxes. When filing your regular year-end 1040 income tax file, you will also be required to file a 'Schedule C' and state all the 1099s you received throughout the year. There are many unique deductions actors are allowed to take advantage of - these should be reported on the 8829 form for home office deduction. Further to this, you will liable to self-employment tax in addition to federal income tax. Paying estimated quarterly taxes may be necessary on Form 1040-ES for some, but even if this isn't mandatory (your tax liability does not exceed $1,000), it can be a great way to budget throughout the year.
As said by the late, great Benjamin Franklin "In this world nothing can be said to be certain, except death and taxes." The tax system is a long-standing, ever-changing obligation for the majority of people. Understanding why you're being taxed and what you're being taxed on will help you see the bigger picture when it comes to your finances. Think of it like going to a football match and not understanding why everyone boos a red card. Better to be in the know so you can make well-informed decisions.
Gambling winnings obtained by casual gamblers are fully taxable and must be reported as income on your tax return. Whether your success is in lotteries, casinos, horse racing, raffles or other bets, the cash winnings or value of prizes won must be declared.
Cryptocurrencies such as Bitcoin became extremely valuable and popular investments during 2017. This raised a multitude of questions about how cryptocurrency transactions should be taxed in the US. Thankfully, the IRS has offered some guidance and accountants have quickly come up to speed on the treatment of Bitcoin from a tax perspective.
With US taxes done for another year, we thought it was a good opportunity to let you know about a few changes the Internal Revenue Service (IRS) are implementing as of 2018. The new figures released are what you'll need to prepare your 2018 tax returns in 2019.
Film and television producers in New York State (NYS) are able to claim back money on their projects in the form of a refundable tax credit. The tax credit hopes to encourage creative professionals to create film and television content in NYS to help the industry thrive and keep the State's economy healthy. The incentive is available to qualified production companies that produce a variety of media outputs such as feature films, television series or television pilots. They may also be able to claim credit on post-production costs that link back with the original project.