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USTaxAdvising
USTaxAdvising, CPA
Category: Tax
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Experience:  US Taxation specialist.
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WE ARE UK CITIZENS AND VISIT USA UNDER 183 DAYS EACH YEAR.

Resolved Question:

WE ARE UK CITIZENS AND VISIT USA UNDER 183 DAYS EACH YEAR. ARE WE LIABLE FOR USA INCOME TAX ON OUR UK INCOME. WE DO NOT HOLD A GREEN CARD OR EARN ANY INCOME IN USA?


 


We are not USA expats. and have  USA visitors  visa that allows us to stay in USA under 6 months a year. But we are not allowed to work or claim any benefits.

Submitted: 1 year ago.
Category: Tax
Expert:  USTaxAdvising replied 1 year ago.

Hello,

 

Non residents who have to file U.S. tax returns are not generally subject on income that is not effectively connected with a U.S. trade or business or that is sourced in the U.S. "A nonresident alien (NRA) usually is subject to U.S. income tax only on U.S. source income. The general rules for determining U.S. source income that apply to most nonresident aliens are shown...(see link here - http://www.irs.gov/Individuals/International-Taxpayers/Nonresident-Aliens---Source-of-Income)"

 

But you need to determine if you pass the Substantial Presence Test to ensure you do not have to file a tax return. (http://www.irs.gov/Individuals/International-Taxpayers/Substantial-Presence-Test) If you pass the substantial presence test then you would not be subject to a filing requirement. If I count 182 days present in each year then you would fail the substantial presence test. I calculate the substantial presence test to be failed when the threshold of 122 days per year is passed (assuming 122 days per year in the US for three years).

 

Note that even if you fail the substantial presence test you may still not be subject if you can prove "a Closer Connection to a Foreign Country" (http://www.irs.gov/Individuals/International-Taxpayers/Conditions-for-a-Closer-Connection-to-a-Foreign-Country) Basically what this is saying is that your main residential establishment is in a foreign country and you maintain a closed connection to that country.

You will be considered to have a closer connection to a foreign country than the United States if you or the IRS establishes that you have maintained more significant contacts with the foreign country than with the United States. In determining whether you have maintained more significant contacts with the foreign country than with the United States, the facts and circumstances to be considered include, but are not limited to, the following:

So even if you have to file a tax return because you fail the substantial presence test you should are not subject to tax on the UK sourced income. Since you are not a U.S. citizen/green card holder.

 

Best regards,

Customer: replied 1 year ago.

Thank you.


 


We do own a condo in Florida which is furnished and have done since 2003. We do not rent it out either. At the same time we also complete a W8BEN form via our Bank in Florida each year.


 


When we applied for an extended visitors visa in 2005 we had to provide copies of all our investments, properties and details of our family in UK, as well as property title of our Florida property. This obviously satisfied them to issue us with the 6 month visitors visa, which does not alow us to work or claim any benefits etc. We always stay under the 183 days.


 


What is your opinion of this please?

Expert:  USTaxAdvising replied 1 year ago.

My thoughts really don't change as outlined above.

 

Although if you were to rent out the Florida property then this income would be considered FDAP income and would be subject to U.S. federal tax.

 

Remember though that the 183 day rule is not just for one calendar year it is for three years.(as noted above)

 

Best regards,

 

 

USTaxAdvising, CPA
Category: Tax
Satisfied Customers: 1105
Experience: US Taxation specialist.
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