- UK citizen and tax resident gets invited to give presentation to US educational institution.
- No fee charged, institution proposes to pay a fixed amount just enough to cover tickets, stay, food, instead of them doing bookings directly.
- They say that tax has to be paid in the US and they keep 30%, indicating the money was for presentation.
What is the appropriate way to deal with this situation? HMRC suggested to:
- Declare gross earnings (prior to US tax reduction) and expenses in the self-employement section.
- Declare gross foreign earnings minus expenses in the foreign income taxable amount, and the tax paid in the US in the foreign tax section.
- Request foreign tax credit relief.
- After completing the self asssesment and with a Certificate of Residency provided by HMRC, apply to IRS to claim back the tax from the US based on the double taxation agreement.
- After tax is reimbursed by IRS, notify HMRC to make proper adjustments.
Are the above steps (particularly step 2) correct? For the foreign tax credit relief, do we input the entire amount taxed in the US? When trying to complete the foreign tax credit relief working sheet, in TC6 (income against which foreign tax credit relief is being claimed) do we specify the gross foreign earnings, or the gross foreign earnings minus expenses?
Thank you in advance for any help.