billyeasy

I am 48, have a UK passport and a Green Card, have held a green card for 15 years.

In the US, I have a 401k, savings, stocks, in total around $400k - $500k, and my social security is paid up where I can make withdrawals when I retire.

In the UK, I have a flat that I rent out worth around 300k GBP, 48k GBP in the bank and a small private pension worth 20k GBP.

I am considering moving to Germany within 2 years.

Assuming I want to relinquish my Green Card, do I need to pay an 'exit tax'? If so, how is it calculated? Is there a method to calculate it? Additionally, does it encompass foreign assets such as property in the UK?

Noorah101

No exit tax.

Rene

Rete

However once you have left the US for good, it is my belief that your investment accounts for retirement will need to be transferred to overseas.

Jerseygirl

I don’t think you have to, but if you receive any income/interest from the US, US taxes must be filed each year.

newacct

Read the section on Expatriation Tax in Publication 519 to see if it applies to you.

S Folinsky

Might want to check on collection of social security. AmCits can collect benefits abroad, former LPR canno.

wisygreen

It depends where you you move to as a former LPR. You can check on eligibility here: https://www.ssa.gov/international/pa...outsideUS.html

S Folinsky

On a pedantic note, the thread caption does not match the body of the inquiry.

”Rescission” of LPR status is not the same as abandonment or relinquishment. Rescission is a procedure instituted by the Government under section 246 of the Immigration & Nationality Act. The legal effect is as if LPR never existed at all.

Take a note of DHS form I-407. An interesting case on abandonment is US v Yakou.

tht

most retirement accounts can’t be transferred internationally, and lots of non US persons keep assets in the US.

destone

Why not get the passport prior to breaking your residency?

ckusa

Exit taxes only kick in above $2M (I believe), although you have to make sure that all your 'regular' tax payments are up to date. Timing might be important for filing due to differences in the tax year.
Re. US social security pension - we had a meeting a week ago with a US/UK tax person who 'seemed to suggest' that LPRs could have a US SS pension once they have left the US (assuming that they have the minimum level of contributions). I believe that this did come up in another thread (will search for it). Mrs ckusa has a US final salary pension which, can be paid directly into a UK bank account, and therefore (tax advisor says) would not be treated as US income.

durham_lad

Not heard that one before, not saying it isn't true. Does that mean the US provider will not be providing a 1099-R to the person and the IRS showing how much pension was paid during the year? I have a US final salary pension and if I know that having it paid directly into my UK bank instead of my US bank will avoid IRS taxes then I might press my pension provider on the matter.

My wife is receiving Social Security benefits directly into her UK bank account but still receives the SSA-1099 tax form each year showing how much, in USD, she has received. That SSA-1099 is also sent to the IRS, and listed on her IRS return, although because of the tax treaty the amount taxable is shown as zero.

Glasgow Girl

As far as I am aware the same rules apply to the taxation of US SS and US pensions regardless of where the money is paid. I know a lot more about taxes for US residents than those living elsewhere but in any case, here is how I understand the rules:

The US UK tax treaty gives the UK the exclusive right to tax UK residents on US SS, or US sourced pensions, regardless of citizenship or LPR status, provided that income is reported to the UK and any tax due is paid to the UK. However if the receiver is not subject to filing an IRS tax return (usually because not a US citizen or a non resident alien) then a 30% withholding tax should be automatically be applied to that income. That can then be reclaimed from the IRS, and future withholding avoided by filing a a W-8BEN form, although of course UK tax is still payable.

As a UK/US citizen durham_lad should not have any automatic withholding tax applied to US SS or pension payments (and no need to file a W8) but is still required to report that income on his IRS tax return (even though no tax is payable on it). If payment is made directly to a non US bank, I think that could trigger the pension provider to require a W-8BEN form to avoid automatic withholding.

As (presumably) a non resident alien, US SS and the US pension provider should automatically apply a 30% withholding tax to all payments made to mrsckusa until a W-8BEN form is filed with each provider which would then allow for zero withholding.

Because both are UK residents durham_lad and mrsckusa will pay tax on that income to the UK and not the IRS, although mrsckusa will have to file with the IRS to reclaim any withholding tax prior to filing the W-8BEN.

ckusa

Thanks GG - my summary was a bit too brief (!).
An added complication is that Mrs ckusa's pension is a government one, which I understand also has it's own set of regulations if being paid abroad.

durham_lad

I am not a tax expert so can only report what my London based dual qualified tax preparer does for my tax returns. My wife and I are dual citizens living in England. I think the “saving clause” in article 1 allows the IRS to tax my US private pensions, overriding that part of article 17, and so when filing our return my US pensions are listed on the 1040 and US taxes applied. Our SS payments are also listed on the 1040 but the taxable portion is shown as zero, with the treaty cited as the reason. We recover the taxes paid on the US pensions using form 1116 with the “Resourced by Treaty” box checked so the US pensions are treated as foreign income. My UK private pensions are also taxed by the IRS and those taxes are claimed back using another form 1116.

No automatic withholding was applied to the SS payments and I stopped the withholding on the US pensions by sending in form W4 marked as no withholding, exempt by treaty.