I am a British citizen with conditional permanent resident status in
the USA acquired recently after marrying an American. I currently have
no job based directly in the USA; instead, I do casual freelance work
solely via email for a company based in Denmark which pays me
electronically into my UK bank account (an arrangement predating my
move to the USA).

- Which country do I owe tax to on this income, and
why?

- Could an obligation to pay income tax to the UK or Denmark
prejudice my residence status in the USA?

- What steps should I take to ‘regularise’ my position?

---

Clarification of Question by dragoman-ga on 10 Oct 2002 03:24 PDT

- One potential complication relates to the differing limits of the
fiscal years. For instance, in the UK the tax year starts on 5 April,
whereas in the USA it follows the calendar year (and I'm not sure
about Denmark).

Hello and thank you for your question.

The US income tax rules for permanent residents (green card holders)
are the same as they are for US citizens, and as a provisional
permanent resident they apply to you too.  You are taxed by the US on
your world-wide income, unless there is a treaty provision that
compels a different result.

When Visa or Green Card Holders Must Pay U.S. Taxes
http://www.nolo.com/lawcenter/ency/article.cfm/objectID/329F8BA8-8D51-4BF5-92827BC9C0A67AE3/catID/C08A0295-9AFE-4F69-A9B7AEE732ECA9AB

The US has income tax treaties with both the UK and Denmark, but as a
practical matter they will only compel a different result in the case
of a person who has a stronger residency tie to the UK or Denmark than
he does to the US, and that is not the case for you.

US-UK Treaty
http://www.ustreas.gov/taxpolicy/library/uktreaty.pdf 

US-Denmark Treaty
http://www.ustreas.gov/taxpolicy/library/denmark.pdf

Based on tehuti-ga's comment below, which I know to be correct, you
will have no tax liability to the UK in this situation.  And since you
are neither a citizen nor resident of Denmark, you will have no income
tax liability there although it is possible that Denmark taxes are
being withheld from your pay.

If Denmark taxes are being withheld from your pay, then in filing your
US income taxes you can take a foreign tax credit for those taxes,
which is how double taxation is avoided in such circumstances.
Form 1116 - Foreign Tax Credit
http://www.irs.gov/pub/irs-pdf/f1116.pdf

So you are now a US taxpayer.  Welcome to the club!

Sincerely,
richard-ga

Search terms used:
UK income tax treaty
Denmark income tax treaty
foreign tax credit
green card income tax

If your duties for which you are paid are performed outside the UK,
and if you are not resident in the UK, you are not liable to UK tax on
your earnings.

"If you go abroad permanently, you will be treated as remaining
resident and ordinarily resident if your visits to the UK average 91
days or more a year"
"If you claim that you are no longer resident and ordinarily resident,
we may ask you to give some evidence that you have left the UK
permanently, or to live outside the UK for three years or more. ... If
you have left the UK permanently or for at least three years, you will
be treated as not resident and not ordinarily resident from the day
after the date of your departure providing
your absence from the UK has covered at least a whole tax year, and 
your visits to the UK since leaving 
- have totalled less than 183 days in any tax year, and 
- have averaged less than 91 days a tax year."

" You should let us know when you leave the UK. You will normally be
asked to complete form P85, which will help to determine your
residence status."

From a brochure on residence and domicile at the UK Inland Revenue web
site http://www.inlandrevenue.gov.uk/pdfs/ir20.htm#domicile

You need to make sure that you do not pay UK tax on your bank
interest. Most banks have a form to fill in for this purpose.

As for the Denmark/USA part of your query, you might need to find out
whether there is a double taxation agreement between these countries
to save you being taxed at each end.  Certainly the UK has agreements
with both countries, but I don't know if they have an agreement
between themselves.