"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.
As a US citizen you have many tax obligations, such as reporting all foreign income and filing a federal tax return. We are regularly contacted by US expatriates based across the globe that are considering renouncing their citizenship. When you renounce your citizenship you are no longer expected to declare your worldwide income to the IRS. However, there are a number of reasons why renouncing your citizenship is not always the best decision as a US expatriate.
The MET Gala, formally call the Costume Institute Gala, is an annual fundraising event for the benefit of the Metropolitan Museum of Art’s Costume Institute in New York City. The proceeds of the event are mostly used to fund the museums exhibitions, acquisitions and capital movements.
The US expat community had huge press coverage last week; over 300 accidental Americans residing in France have filed a class act again banks that uphold the FATCA, citing discrimination. The act has been triggered by the accidental Americans difficulty receiving loans and opening bank accounts, due to FATCA.
A Foreign Bank Account Report (FBAR) is a form that must be filed with the Financial Crimes Enforcement Network (FinCEN) In order to report foreign financial accounts.
If you have made energy saving alterations to your home during 2017, you are able to claim costs of the alterations on a Form 5695.
As an American living abroad it is essential that you stay in like with your US tax obligations in order to avoid unnecessary penalties and stress. This article offers a guide on what documents American Expats need in order to file their US expat tax returns. These documents are not only necessary to finalize your US expat tax return, but also to protect yourself in the event of an Audit from the IRS.
As a American living in the UK it is normal and expected to become homesick from time-to-time. While the Americans and English have many similarities in terms of lifestyle and interests, there are always going to be some differences that are likely to make any American feel slightly homesick.
Britain may well have one of the best tea selections in the work, however many Americans wake up craving nothing but an an omelet and a hot cup of filtered coffee.
Below we have put together a guide on London’s top spots for any homesick American living in the London:
Under the Tax Relief and Job Creation Act of 2010, the energy efficient appliance credit was modified and extended. This means that tax credit can be claimed for each type of qualified energy efficient appliance produced by the taxpayer during the 2011 calendar year ending with or within the taxpayer’s taxable year.
As an SME in the Creative Industry in the United States, they are eligible to certain tax reliefs. Like all SME’s in the US, an enterprise is eligible to a tax deduction for qualifying charitable donations.
As a US accountant to creative industry professionals, we understand that travel and varying bases is a huge factor of many creative industry jobs. Whether you’re an actor who has had to move to the other end of the country for a production contract, or a musician that is touring the US, we are expert in your tax matters.
On May 25th 2018, the IRS announced several changes in the Tax Cuts and Jobs act that affect moving, mileage and travel expenses.