Advice from Entertainment & Media Accountants
Working
in the USA
If you get the dream job in Hollywood then please do no’t just
go and live the high life without speaking to us first. It is essential
to consider the tax implications of your move before you go and this
could save you money in the long term.
In the
United States, income tax is deducted at source from all performers
and unless arrangements are made in advance, there is a flat rate
deduction of 30% and no allowance for expenses. However, it is possible
to register with the American Tax Authority (IRS) and obtain a Social
Security Number to enable a reduced rate of withholding. Even then
it is most likely that the amount of tax deducted which is both Federal
Tax and State Tax will be more than you should ultimately pay. Therefore,
it is usual for British performers working in the USA to file a tax
return there and claim a refund of the overpaid Federal and State
Tax.
However,
that is not the end of the matter. British entertainers are also taxed
in the UK on their worldwide income, so the same income and expenses
must be included in the UK tax return. We want to ensure you do not
pay twice. As US tax rates are currently lower than UK tax rates,
there may still be more UK tax to pay on the same income, but no more
than you would pay if you had done the work in the United Kingdom.
Social
Security rules are also different in the United States but it is possible
to apply to pay these at a reduced rate if you can show that you are
already paying National Insurance in this country. This is done by
obtaining a Certificate of Continuing Liability from the National
Insurance Contributions Agency. These will be given to a performer
as long as they are paying the flat rate self-employed contributions
and have been doing so for the three months before the application
for the certificate.
The
application for the certificate must be accompanied by a copy of the
contract and there are often considerable delays in getting these
certificates, so the sooner the application is submitted, the better.
For further advice on your specific circumstances when working in
the United States please contact a member
of our media & entertainment team
We also
work with appropriately experienced associate firms in America who
can ensure that your US tax is properly dealt with both in the United
States and in the United Kingdom.
