Having dual citizenship has its pros and cons, and one of those cons is its taxes. How many times have you hated the process of having to pay your taxes? Well, you are not alone. If you are a dual citizen of the UK and the US, dual citizenship can have significant tax implications on income, and can be a bit complicated to follow along, or understand. If you don’t understand your tax info and obligations don’t worry since you’re not the only one. Keep on reading as we help you understand any complications with taxing in the UK or the US.
So, are you a dual citizen?
Every US citizen, no matter their location of living, has to file expat taxes. So, if you own a US passport and even with rare visitations to states you have to file a tax form and pay your taxes. Along with the typical tax return for income, many people are also required to submit a return disclosing assets that are held in bank accounts in foreign countries by using FinCEN Form 114 (FBAR). There is a ton of paperwork that comes into play, and terms such as ”accidental Americans” may pop up more than you may think. You’ll find all the answers to your questions down below.
FAQ about dual citizenships
Q1: Who can qualify as a dual citizen?
Under US tax policy, dual citizens are subject to taxation, even if they’ve never set foot in America. If you receive a call from an IRS you might be in trouble, but don’t freak out and rather try to get your information sorted out. In fact, think twice about your background and do a bit of research. In case you were born within the borders of the US or if one of your parents is a US citizen (or was during the period when you were born), you fall under this category. Even if you never travel to the US but you give birth either in the UK or US when on vacation, that child gets dual citizenship by default.
Q2: Do US-UK dual citizens have to file US taxes?
Yes, they do. All US citizens are required to file an annual tax return no matter where they live in the world. However and when it comes to UK citizens, their tax is only residence-based and is tied to their country and place of living. Only those living or receiving an active income on the UK ground will have to pay their taxes. In most cases, a UK tax return is filled up if you have employment income exceeding GBP 100,000 (including both salary and benefits), you are the director of a company, you have income from a non-UK source, etc.
Q3: Will US-UK dual citizens get taxed twice on their income?
No one wants to spend (or waste, better to say), their hard-earned money on taxes or anything as similar that can’t get them potential gain. Unfortunately, when filling out your documents and in this specific case and situation, you’re left at risk for double taxation from both countries and on both ends. US citizens are subject to US tax laws wherever they live in the world. If you are considered a US citizen you will have to file your taxes. Since each case is different and unique in its own way it may be best to ask and contact your government, city hall, bank, and IRS/biro for specific situations and exemptions.
What to know about accidental Americans
Remember how we mentioned a thing about accidental Americans at the beginning of this article? Well, here’s what’s the catch. If you have never visited the U.S, but have been born there the truth is that you will have to pay your taxes.
However, it may be possible that you have never filed a tax return in the US before, just like many Americans. This is why you might be defined as a delinquent filer, leaving you with an option to avoid any penalties, if your case is clean enough. To qualify, you must have lived outside the US for 330+ days in any one of the previous three years. You shouldn’t have a home in the US or any assets under your name. This way you can get your case handled fast, safe & risk-free, leaving you with minimal damage or potential high-risk payouts for penalties.
What to know about US tax affairs
If you are a US dual citizen, your worldwide income, inheritances, capital gains, investment income, savings, and other similar wealth and money profits are all subject to US tax rules. Receiving some money or a pension for instance from a US person while being in the UK can be tricky, and will require a lot of paperwork so that you can try to appeal for a tax-free pension. While it is possible to get yourself up to date, you might have the best & fastest chance of contacting the IRS yourself. Don’t be afraid of contacting them and making that first step. They are there for you and should help you out with your questions and queries.
How to pass your citizenship tests and how to be fully prepared?
Want to move to the UK and pass their citizenship tests? Do you feel like the future is a lot brighter with some English folks? Getting that fresh new start begins with you studying and preparing for the new chapter, while also thinking about your taxes, homes, tests, and paperwork. Check out this website and enjoy its easy navigation, along with fun and practical learning tests. Take each free life in the UK practice test as many times as you want till you get the hang of it. They are free to use and available to access anytime. You get clear explanations of each life in the UK test question and why the answer is correct. Give them a go and see for yourself!
