Being considered a tax resident in both the US and UK can lead to conflicting obligations. Fortunately, the US–UK tax treaty contains tiebreaker rules and reliefs that help dual residents avoid double taxation.
Treaty Residence Tiebreaker
When both countries claim you as a resident, you can invoke the treaty’s tiebreaker rules based on permanent home, centre of vital interests, habitual abode and nationality.
Foreign Tax Credits
Coordinating foreign tax credits properly ensures that tax paid in one country can offset tax due in the other. This may require careful sourcing of income and timing of payments.
Planning Tips
Maintain records to substantiate where you live and work, consider dual contracts for employment income and consult advisors to structure investments efficiently.