US-UK Tax Talk
Welcome to US-UK Tax Talk, brought to you by Collyer Bristow. Hosted by Aidan Grant, a Partner in our Tax & Estate Planning team, this series explores the complex world of cross-border tax and estate planning.
Aidan specialises in advising high-net-worth individuals with UK-US interests, including mixed-domicile marriages, UK-resident US citizens, and beneficiaries of US trusts. Named in Citywealth’s Top 100 Future Leaders, he brings expert insight and practical advice to every episode.
Join us as we engage with leading professionals across the UK and US, covering everything from wills and trusts to charity tax, and moving to the UK. Expect straight-talking discussions on English tax law - always with a US perspective.
Subscribe now and stay informed on the latest in UK-US tax and estate planning. For expert advice tailored to your needs, visit collyerbristow.com.
Disclaimer: This content is provided for general information only and does not constitute legal or other professional advice. Appropriate legal or other professional opinion should be taken before taking or omitting to take any action in respect of any specific problem. Collyer Bristow LLP accepts no liability for any loss or damage which may arise from reliance on information contained in this material.
US-UK Tax Talk
US Tax Residency Demystified: Citizens, Green Cards & the Substantial Presence Test with Alicea Castellanos
In this month’s episode, Aidan Grant is joined by Alicea Castellanos, Founder and CEO of Global Taxes LLC, to explore the complexities of US tax residency — including how individuals can unintentionally become tax residents and what this means for their global income, reporting obligations, and cross-border lifestyle.
From citizenship and green card status to the Substantial Presence Test, Alicea explains the different ways residency can be triggered and why it is so often misunderstood. We discuss how tax residency differs from immigration status, the potential pitfalls of failing to plan ahead, and the increasing compliance burden on those living and working between the US and UK.
Alicea sheds light on when US tax residency begins and ends, the nuances of first-year exemptions, and how certain visas, such as the F-1 student visa, can temporarily delay residency status. We explore the far-reaching consequences of becoming a tax resident, from worldwide income reporting and FATCA disclosures to the challenges of managing both federal and state-level residency rules.
The conversation also delves into the complexities of exiting residency and the formal processes required to surrender a green card or citizenship, including the risk of triggering an exit tax. For those living between the US and UK, Alicea highlights how the tax treaty can help resolve dual residency, while emphasising the importance of early planning to avoid costly mistakes.
Whether you are arriving in the US, preparing to leave, or dividing your time between jurisdictions, this episode offers clear, practical insights to help you navigate the rules and plan with confidence.
Join us on the first Wednesday of every month for a new episode of the US-UK Tax Talk podcast, brought to you by Collyer Bristow.
Key Takeaways
Paths to Residency: US tax residency is triggered by three routes: citizenship, green card status, or the Substantial Presence Test. Citizens are always tax residents worldwide, green card holders remain residents until they formally surrender the card, and the SPT counts days across a three-year period, with 183 days as the threshold.
First-Year and Visa Nuances: Arriving with no prior US days and staying under 183 generally avoids residency in the first year. Certain visas, such as the F-1 student visa, exempt days temporarily, but this protection has limits. Short trips under 10 days may also be excluded when calculating start dates.
Consequences of Residency: Once resident, individuals are taxed on worldwide income from day one. Filing is mandatory even if credits or deductions reduce liability. FBAR and FATCA reporting add further compliance, and FATCA rules often complicate opening or maintaining non-US bank accounts.
State-Level Complexity: Federal residency is only part of the story. States like New York and California apply aggressive residency audits, while others such as Florida and Texas impose no income tax. Demonstrating departure from a state typically requires clear proof, such as leases or employment records.
Exiting Residency: Giving up residency is rarely simple. While reducing day counts may end SPT residency, surrendering a green card or citizenship involves formal processes and may trigger exit tax. Long-term green card holders are especially at risk of being treated as covered expatriates.
Dual Residency and the Treaty: It is possible to be a tax resident of both the US and the UK. In these cases, the treaty offers tiebreaker rules to determine residency, but claiming them requires paperwork and is based on subjective judgments. Avoiding dual residency through advance planning is almost always preferable.
