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Tax questions

Discussion in 'Buying Overseas Property' started by kai, Sep 9, 2006.

  1. kai

    kai New Member

    Hey Guys,
    I'm still thinking over everything we would need to consider if we decide to return to the UK and I have just spent a couple of hours getting totally confused about tax stuff. I was wondering if anybody can let me know if I understand things correctly.

    I am currently a US permanent resident married to a US citizen. If I get my citizenship before leaving my wife and I will both have to file a tax return every year from the UK but will not have to pay any US tax unless our income is over $80,000. If I do not become a citizen and let my resident status drop, only my wife will have to file a return, but will not have to pay tax on income under $80,000. Is that correct?

    Also, I am assuming that my dual citizen children would also have to file returns from the UK once they start working.

    Thanks!
     
  2. ismael

    ismael New Member

    Hi Kai,
    If you are a US citizen you have to file a 1040 every year. You get an exemption of $80k for foreign income. Even then, because of the tax UK/US treaty there are ways to avoid double taxation.

    If you have a Green card and spend even one day in the US during the tax year you are liable to US tax. I think you have to actively renounce the Green Card to not be resident for tax purposes. However, I also believe that if the IRS thinks you are doing this to avoid taxes they might not let you do this and may still require you to file a 1040. In the UK you and your wife will be required to pay taxes per your UK status, i.e. as UK residents.

    I think the complications of dual citizenship and taxation is one situation where a qualified tax specialist is really useful. There are just too many potential pitfalls and a few hundred dollars spent on getting an expert to file your taxes is worth the saving in worry and the avoidance of dual taxation.
    See you again
     
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