U.S.-UK Dual Taxation Pitfalls: Reporting Issues and Planning Opportunities for U.S. Taxpayers

The economic and social ties between the United States and the United Kingdom are historically close and long-standing. The demographic similarities between the two countries contribute to the United Kingdom being one of the top trading partners of the United States, as well as the constant flow of citizens migrating between the two countries. Given these circumstances, UK citizens residing in the U.S. can frequently get caught up in both countries' income tax systems, and vice versa.

Among the planning challenges for cross-border activities is reconciling the U.S. and UK rules governing residence and domicile. UK domicile rules are complex, and even inadvertent failure to meet filing obligations due to a misapplication of domicile rules can be costly. U.S. tax advisers serving clients with presence both in the U.S. and the UK will need to understand the domicile rules to avoid expensive tax and penalties.

Another critical planning element is avoiding dual taxation on income and gains. The U.S. and the UK have a comprehensive tax treaty system that addresses most dual taxation concerns, but, as in all international planning, tax advisers must understand the particular provisions to avoid an unpleasant tax bill--or maybe two.

Other areas of concern in U.S.-UK tax planning include the treatment of passive income, tax considerations of cross-border pension ownership, and most recently, the departure of the UK from the European Union (EU). Companies relying on treaty benefits where a UK resident was also considered a resident of an EU member state may need to look at the treaty anew. Hovering over all these concerns is the extensive U.S. tax reporting requirements imposed on taxpayers with U.S. filing obligations.

Listen as our experienced panel provides comprehensive and practical guidance on navigating U.S.-UK cross-border tax planning and reporting issues.

1. The U.S.-UK income tax treaty overview and dual tax mitigation provisions
2. Domicile rules
3. Passive and unearned income treatment
4. U.S. tax reporting requirements of UK-sourced investments
5. Limitation of benefit provisions
6. The impact of Brexit on treaty benefits

The panel will discuss these and other important topics:

• What are the tax treaty provisions for mitigating dual taxation on ownership of cross-border pass-through entities?
• Limitation of benefits clauses and provisions in the U.S.-UK income tax treaty
• How treaty benefits may be affected by Brexit
• Key risks and challenges of passive/unearned income in cross-border situations
• U.S. reporting requirements of UK-sourced investments

Learning Objectives

After completing this course, you will be able to:

• Recognize U.S. tax reporting requirements for U.S. taxpayers residing in the UK
• Establish the domicile of the taxpayer and whether tax treaty benefits are available based upon the determined domicile
• Distinguish among the various tests used to determine whether a taxpayer is eligible for tax treaty benefits
• Identify opportunities to mitigate dual taxation
• Identify the limitations of benefits in the U.S.-UK tax treaty

• Field of Study: Taxes
• Level of Knowledge: Intermediate
• Advance Preparation: None
• Teaching Method: Seminar/Lecture
• Delivery Method: Group-Internet (via computer)
• Attendance Monitoring Method: Attendance is monitored electronically via a participant's PIN and through a series of attendance verification prompts displayed throughout the program
• Prerequisite: Three years+ business or public firm experience at mid-level within the organization, preparing complex tax forms and schedules, supervising other preparers/accountants. Specific knowledge and understanding of foreign information reporting requirements, including FATCA and FinCEN Form 114; familiarity with foreign income sourcing rules and tax treaty provisions.

Strafford Publications, Inc. is registered with the National Association of State Boards of Accountancy (NASBA) as a sponsor of continuing professional education on the National Registry of CPE Sponsors. State boards of Accountancy have final authority on the acceptance of individual courses for CPE Credits. Complaints regarding registered sponsons may be submitted to NASBA through its website: www.nasbaregistry.org.

IRS Approved Provider

Strafford is an IRS-approved continuing education provider offering certified courses for Enrolled Agents (EA) and Tax Return Preparers (RTRP).