Samxboy

Recently posted about my situation in so far as being a LPR looking to retire and take out a UK pension. As I want to take advantage of the 'tax free' 25% lump sum, I will be giving up the GC at the end of this year, thereby avoiding any IRS taxation in 2017. Also concerned about the longer term expatriation tax issues if I remain a GC holder for more than 8 years.

However, over my 5 years here, I have built up a US pension which I will be taking out when I retire in the form of a fixed 10 year disbursement.

As a Non resident Alien with US 'taxable' income, is it justifiable to assume that it is only the US earnings which are taxable as an NRA. ie: they can't go after my UK assets.

I appreciate I may also have to demonstrate that the UK is my principal home (Closer connection) as I may potentially fail the substantial presence case. ie: 183 days over 3 years. I have a home in Florida which will resume it's intended purpose as a vacation home only with the UK home being the principal residence.

Basic question is then as a Non Resident Alien....can the IRS only claim taxes on US earnings or does it get more complicated? Knowing the IRS...it's bound to be!

theOAP

I see you've not had a response to this post. The subjects breached are outside my comfort zone to comment on, but I'll start the ball rolling and then those who are much wiser can come in and correct my blatant errors.

Start with the "substantial presence test". As you already seem aware, substantial presence IS NOT 183 days a year, every year. It's a total of 183 days over a 3 year period calculated by a special formula.

https://www.irs.gov/Individuals/Inte...-Presence-Test

You also seem aware of the "closer connection" exception. This is a hot topic amongst Canadian snowbirds.

https://www.irs.gov/pub/irs-pdf/f8840.pdf

There are also rules relating to countries with Tax Treaties with the US, of which the UK is one.

Next is your LPR designation. Again, I assume you understand that 6 years and two days, if they occur in the right sequence, makes you an LPR. It's any days WITHIN any year of the 8 year period.

HodgenLaw PC - International Tax

That leaves your primary concern: taxation of non-resident aliens.

As I understand, a non-resident alien is only subject to US taxation "on any income that is earned or otherwise realized from a U.S. source. They do not have to pay tax on any foreign-earned income."

Tax Rules For Resident And Nonresident Aliens | Investopedia

For a non-resident alien, the US can tax income from US sources, but not always all US sources. Can "the IRS only claim taxes on US earnings?" Generally, yes. UK sourced income is safe from the IRS, but not from HMRC.

Let the corrections begin.