Is it true all the British actors/actresses in Hollywood like Hugh Grant, do not pay their tax to the IRS, but

Question

only to their own country, the amount subject to a deal

inc. British actors like Daniel Radcliffe, Daniel Craig, Cate Blanchett, Keira Kinghtly, Helen Mirren, Jude Law...well just about the whole Hollywood community...

Answer 1

If they are resident aliens, they pay tax on US income like citizens. If they are non-resident aliens the will pay more on US income.

Answer 2

No matter what you do, it's going to be complicated. I'm highly fiscally conservative, and I don't advocate those under a certain income level pay a dime. The best offset that I've heard to this is; every American receives a check at the beginning of every month for the poverty-level offset to the NST. For example; @ 10%, a single person making $12,000 a year would receive a check for $100 (or adjusted for whatever due to non-taxation of food, clothing, etc. I'll leave that to the financial gurus). For each child (ssn), another hundred, etc. Everyone would receive it.. but to someone making $250K, a Benjamin won't really make a difference. It's a good concept in theory, but avoiding fraud would be pretty tough. We've got to figure out how to get rid of the IRS somehow.

Answer 3

Probably not, at least not the big-name entertainers.

There is a tax treaty between the US and UK that addresses this specific issue. It's complicated to say the least. Here's a link: http://www.ustreas.gov/offices/tax-policy/library/uktreaty.pdf as well as a link to more on the tax treaties between the UK and US as well as technical explanations of the treaties: http://www.irs.gov/businesses/international/article/0,,id=169552,00.html

Generally they will pay US taxes on the income they earn here unless it's less than $20,000 (or the UK equivalent at the time) including expenses in any calendar year. There are exceptions for the $20,000 rule such as if the entertainer has a significant presense in the US (more than 183 days per year) or is a permanent US resident, of course.

The UK will tax any royalties resulting from the performance, if any.

Since most big-name entertainers would likely be paid well in excess of $20,000 in any one year, the income they earn here is taxable in the US.

The treaty doesn't appear to address tax rates for this type of earnings so it would be taxed at the same rate as if a US citizen or resident earned it in this country.