ebstauffer[at]gmail.com wrote:

- quote -

I'm not familiar enough with UK tax law to answer this
question.

- quote -

Under the US/UK tax treaty, given the facts listed in your
question, it sounds like your tax home is in the US. If you
end up with dual US/UK citizenship, maintain a permanent
home in the UK, or if you spend more than 183 days per year
in the UK, the question gets more complicated.

- quote -

You are only eligible for the foreing earned income
exclusion if your tax home is outside the U.S. and live
outside of the U.S. at least 330 days in a 12 month period.
You are only eligible for the foreign tax credit if you pay
foreign tax on the income. It sounds like neither one is
true here.

- quote -

There's not enough information here to advise you (and this
is really a pretty complicated question). I'd take this
question up with a tax advisor who has some international
tax experience.

- quote -

You are going to be required to file Form 5471 and a bunch
of accompanying schedules to Form 5471.

- quote -

If you are being paid as an independent contractor for work
that you did while residing in the US, you are probably
going to have to pay self-employment tax on it. There is a
treaty between the US and UK on social security taxes
(called a totalization agreement). Under the treaty, if the
UK treats the income as eligible for the UK social security
system and taxes it as such, then you can apply to get an
exemption from the US self-employment taxes. Most likely,
the UK is not going to do this unless you are living in the
UK, because they UK would then be obligating itself to pay
you social security when you retire. If UK social security
taxes are being paid, however, this may be something to look
into.

- quote -

You're getting into some technical areas of international
taxation. You're probably going to have to go to a fairly
large firm in a larger city in order to find someone with
this sort of background. Depending on where in Indiana you
are, you will be able to find someone in Indianapolis,
Chicago, Detroit, or Cincinnati. You might also be able to
find someone in Ft. Wayne or Louisville.

--Chris Ballard

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Background

* I am a US citizen
* In 2005 I from Jan through Sep, I worked part time for a
UK company and full time for a US corporation
* The US corp. had provided me a W2 and withheld taxes
appropriately
* The UK company, from Jan-Oct paid me directly and withheld
no tax.
* From Oct 1 - Dec 31 I was paid me a salary -- approx
$4,200 per month +/- depending on exchange rate, again
nothing witheld
* In prior years the UK company has provided neither me, nor
the IRS any documention; I have declared all income on a
1099-MISC
* I reside in the US
* I travel to the UK approx four times per year for approx
4 to 5 days each
* I work out of my house
* I am both a director and employee of the UK company

Questions
* What reporting responsibilities of the UK company to both
the US IRS and me?
* Where is my "tax home"
* Can I take a foreign earned income exclusion or a foreign
tax credit? Which is better?
* For the last three months of 2005, should the UK company
pay me in dividends, salary, or a combination of both?
* Do I have a responsibility to report my directorship (33%
ownership) to the IRS?
* Do I own self-employment tax (FICA/Medicare) on my
foreign earned income?

I am not at all opposed to hiring an accountant/tax atty. to
sort this out. I have met with four here in the midwest
(Indiana) and both the arrountant and one tax attorney said
they didnt have expertise in this area.

Any help/guidance would be greatly appreciated.

Eric

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >