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Dual Taxation

Dual Taxation

Old Aug 19th 2012, 8:25 pm
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Default Dual Taxation

Hello Folks,

I have an existing CR1 Green Card application that expires in a month or so. I'm British and I've been married to my American wife for almost three years now (I believe the CR1 can be converted to an IR1 also).

Rather than having to start from the very beginning and go through the costs associated with it, we are looking to complete the process before the deadline. I did attend the interview last Autumn but because I had filled one form in incorrectly at the interview stage and they sent me on my way having to "courier" a fixed form to them and then they would courier back my visa package. In the end, we decided to stay in the UK a bit longer anyway so held back in sending in the fixed form.

Now, we're in the conundrum of whether to complete the process before it expires (next month) or restart the entire process sometime in 2013. My questions are as follows:

- If I complete the fixed form (and have another medical - it expired in June) and went to the US for collect my Green Card on entry, would I immediately be liable to taxes in both the UK and US?
- The plan would be to get the Green Card but realistically, with work etc., we wouldn't plan to move for another 12-18 months. What is the process (if there is one as such), that would allow me to keep the Green Card but allow me to live in the UK during the transitional time. Our ultimate aim is to definitely live in the US, but not for another year or so.

Thanks
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Old Aug 19th 2012, 8:38 pm
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Default Re: Dual Taxation

Originally Posted by stoke_bloke View Post
The plan would be to get the Green Card but realistically, with work etc., we wouldn't plan to move for another 12-18 months. What is the process (if there is one as such), that would allow me to keep the Green Card but allow me to live in the UK during the transitional time. Our ultimate aim is to definitely live in the US, but not for another year or so.
There really isn't any such process.

While you could make a couple of extended trips back to the UK once you became a US resident that does presuppose that you really have moved to the US, rented a place to live etc, and are just "visiting" the UK.

It sounds as if you just aren't quite ready to move yet and, in that case, you should probably just start the whole visa process again closer to the time that you actually want to move.
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Old Aug 19th 2012, 9:17 pm
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Default Re: Dual Taxation

Originally Posted by stoke_bloke View Post
...Our ultimate aim is to definitely live in the US, but not for another year or so.
Then you should have been applying for the visa towards the end of this year and saved yourself the money that you've just wasted if that was your plan.

Once you get the visa, you've got six months to use it and one of the things to show you're a US permanent resident is filing US taxes, but you generally don't get taxed twice because of the tax treaty, unless you're earning serious sums of money.

There are many threads on taxes in the main US forum.
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Old Aug 19th 2012, 10:42 pm
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Default Re: Dual Taxation

Originally Posted by stoke_bloke View Post
I have an existing CR1 Green Card application that expires in a month or so. I'm British and I've been married to my American wife for almost three years now (I believe the CR1 can be converted to an IR1 also).
You've been married to a USC for more than 2 years, you'll receive an IR-1 visa.


If I complete the fixed form (and have another medical - it expired in June) and went to the US for collect my Green Card on entry, would I immediately be liable to taxes in both the UK and US?
Yes... but that's not the same as having to pay taxes in both countries. Generally, the US/UK tax treaty helps you avoid double taxation.


What is the process (if there is one as such), that would allow me to keep the Green Card but allow me to live in the UK during the transitional time.
There isn't one. If you don't plan on moving for another 18 months, start over again in March 2013.

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Old Aug 19th 2012, 11:40 pm
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Default Re: Dual Taxation

Originally Posted by stoke_bloke View Post
If I complete the fixed form (and have another medical - it expired in June) and went to the US for collect my Green Card on entry, would I immediately be liable to taxes in both the UK and US?
In your case, you would become a US tax resident the day you enter the US on your immigrant visa, as you would from that day on satisfy the "Green card test".

In short, this means that in the USA:

1. You must declare all your income (worldwide income) to the IRS from this date up to the end of the tax year, usually 31 December. You would usually file form 1040 for this period. Overseas taxes paid can potentially be claimed to reduce your US tax liability, usually using form 1116.
You can also use form 2555 to claim an exemption for foreign earned income up to the threshold (2011=$92900).

2. From the start of the tax year (usually 1 January) up to when you became a tax resident you must declare your income from US sources only, if any. You would usually use form 1040-NR for this period.

3. File form 8938 if you have any Foreign Financial assets (see here).

4. File form TD F 90-22.1 if you have a non-US bank account (see here). This form is filed with the US Department of Treasury.

In your first year of residency you are usually classified as a dual-status alien, as you had both resident and non-resident tax status in that year. You can read more about dual status here and here. I strongly advise you go to the IRS website and read up on this topic. It can be quite confusing but it's all there.

Whether you would have to pay any more tax on monies that you've already paid tax on in the UK would depend on your specific circumstances. Suffice to say that the tax already paid would be given as a credit in the US, but it is quite possible that you could be liable for some additional taxes. I was.

PS: You would also need to register with Social Security to get a number. This number also serves as your reference number for tax purposes.

Last edited by superkruz; Aug 20th 2012 at 12:15 am.
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