LK & Associates provides specialist, tailored advice on all aspects of US personal tax legislation – helping to remove the stress and to make your US tax filing as simple as possible.
Our Senior Tax Advisor and resident US/UK Tax Specialist, Nicola Dunn, outlines some key facts and our solutions to common problems encountered with US Tax Returns.
The deadline for 2021 US tax returns is 15 April 2022
US citizens who have a tax home outside the US are granted an automatic two-month extension of time to file and pay their taxes, but interest will run on any tax from 15 April. It is therefore important that even if you do not file the tax return by the deadline, you should pay an estimate of any tax due by 15 April. Our specialist team can help you to meet this deadline and avoid any late filing penalties.
US based accountants may not be familiar with foreign aspects
If you are a US citizen based in the UK and paying tax here, the UK has the first taxing rights on most income sources. This means the income should be sourced as foreign on your US return. Dealing with foreign sourced income on a US return to claim the correct foreign credits and avoid double tax is a specialist area, and many US tax preparers just don’t see this on a day-to-day basis. We have seen many instances where individuals have paid double tax because their US return was not prepared correctly. Our experienced advisors prepare US and UK tax returns in the same team, so look at the overall picture and check that nothing has been doubly taxed.
There are ways to get caught up with US tax returns if you have fallen behind without incurring onerous penalties, but these may not be available indefinitely
The IRS allows US taxpayers living abroad to catch up on their tax returns by filing three back years and not assessing late filing penalties provided their failure to file is not wilful. The longer you delay in getting up to date, the less able you are to declare that your failure to file is not wilful. There is no guarantee that this favourable treatment will be available forever, so we recommend that you seize the opportunity now and work with us to file any outstanding returns, as the penalties for failure to file certain US tax forms can start from $10,000 each.
Tax returns for non-US residents
Non-US persons must also comply with the US tax rules, and file US Returns if they have certain types of US source income such as rental or business income arising in the United States.
LK & Associates can prepare these tax returns for non-resident aliens and assist with withholding forms W-8BEN.
Selling US property as a non-US resident
If you sell real estate in the US, you likely will suffer a 15% withholding tax on the gross proceeds unless certain actions are taken early in the process to avoid this. LK & Associates can help to prevent this and if necessary, file the correct tax return to reclaim this withholding for you. We also will file any relevant state tax returns.
HOW WE CAN HELP
At LK & Associates we understand the complex interaction between the US and UK tax systems so that your worldwide position is optimised, and you won’t pay more tax than you need to.
Based in Thames Ditton, our highly qualified and experienced advisors prepare US and UK tax returns in the same team so you can be sure everything has been considered. We pride ourselves on the personal, cost- effective service we can offer you as a small, local firm.
Call us now on 020 3915 8585 to discuss how we can help you.