[pvoveris]

I doubt that my question is unique, but I am unable to find an answer.

I am a US citizen (UK as well now) and have been employed and working here in the UK as a computer software consultant (employee as opposed to freelance) for a company that has both UK and US offices. Recently it appears that I will need to travel to the US to perform my duties as my skill set is required there.

My question is will I incur tax liabilities to the US that need to be reported on the US tax return for performing my duties there?

As I am still receiving my wages from the UK office, will I need to break those days that I am in the US out and have to claim that as income earned in the US, even though the wages are taxed and paid to the UK? Depending on the number of days I am there working, will it break my bonafide foreign residency?

Thanks for any help.

Peter

 

[Bevdeforges]

Quick and dirty answer: it shouldn't.

Given that you have dual nationality, you should be claiming your earned income exclusion based on bona fide residence, not on the physical presence test. Assuming you don't change your residence during the time you're in the US (i.e. you still maintain your UK residence), you should be able to just report the time you spent over there (on the From 2555) and probably you'll have to apportion the income you earned while in the US - even if it's being paid from the UK.

Check publication 54 and the instructions for the form 2555 for details. But if you do wind up having to apportion your income for the time you are working in the US, there should be an offsetting credit on your UK taxes for any tax you wind up paying to Uncle Sam. (There are tax treaties that guarantee you that.)
Cheers,
Bev

 

[pvoveris]

Hi Bev,

Thanks for the quick answer.

No, I definitely would not be moving to the US, just performing my duties there as I would anywhere the company sent me. As I fill out the US forms every year, I know of that part of the 2555 and unfortunately Pub 54 doesn't really cover that bit of the form too well, neither do the instructions for 2555. It would also necessitate me starting to use the estimated tax payments to the US, which I do not need to do now, nor fill in tax returns for the UK.

Seems like it would create a whole lot of hassle for me then to do this.

Cheers,
Peter