In the past, British expatriates who have a UK pension, and Americans who have worked in the UK, have been subject to complicated and complex legal procedures in order to get a hold of their pension without having to pay exorbitant taxes. Hiring an independent pension advisor to discuss your options will ensure that you get the most for your money and potentially avoid excessive charges. So, if you have a UK pension and you are nearing retirement age (or 55) and are planning to start drawing on your pension then you need to speak to a UK pension expert who can provide you with all the facts.
Continue reading to discover our top ten tax tips for British expats living in the USA.
2. If you forget to fill in your P85 form and send it to the HMRC, then you will still be paying income tax to the UK government, as well as paying taxes to Uncle Sam in the USA. Let HM Revenue and Customs know that you have left the UK to avoid being double-taxed.
3. If you own property in the UK which is being let and managed by a letting agent, then fill-in an NRL1 form and your letting agent can collect your rent income gross.
4. If you are unsure about how to do US taxes when you have foreign income (which is understandable) then employing the services of a cross border tax accountant will make your life much easier.
5. Working out what your withholdings should be and correctly filing a W-4 form is an essential step in the US tax system. This form will tell your employer what they need to withhold from your salary. Estimating too little will mean a costly bill at the end of the tax year – too much, and you will have to go through the time-consuming process of applying for a refund.
6. When you receive a tax audit from the IRS, do not immediately pay the tax bill. Seek the advice of an independent investment advisor for your pension together with a professional accountant, who can probably help you fight a miscalculated tax audit.
7. If you are a resident alien (if you have a green card or meet the US Government’s criteria for resident alien status), then you will have to follow different tax rules than non-resident aliens.
8. Filling in forms 1040NR or 1040NR-EZ is essential if you are a non-resident alien.
9. If you are a resident alien, then you must abide by the same rules and regulations as US citizens. This means you are taxed on all sources of income either within or outside the USA.
10. If you are looking for an independent pension advisor near you, then look no further! Read our handy pension guides to understand the US tax and pension system better, or contact us for a free consultation.
**FFCM do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction, alternatively we can introduce you to the cross border tax consultancies we work with.
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