Exit strategy and/or anyone recommend a good tax advisor.
 

Currently an LPR since mid 2013 now retired to florida.

I want to inititate my UK pension in 2017 and take advantage of the 25% tax free lump sum. Something which I'm aware is fully taxable in the US under the treaty conditions & savings clause etc.

Is it as simple as giving up the green card to the US consulate in London (I408) this year and effectively start off 2017 as a non resident alien?

I have accrued a couple of small US pensions which will pay out for 5 years and I'm quite certain these will be taxable in the US, even with a NRA status.

As such I'll need to send a W8-BEN form to my US bank and pension providers and file a 8840 along with a 1040NR each year (2017 onwards) with the IRS.

Does my exit plan sound good or do I need that tax advisor???

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

Do you intend to leave the US and reside elsewhere? Or do you intend to return to the UK and apply for a B-2 in order to snowbird in the US? When you say you have retired to FL, but then you want to give up your green card, it's a little unclear what your intentions are.

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

I second Nutmegger's questions...I was also confused by the OP's intentions.

Rene

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

I understand the OP’s intentions.
He is giving up his GC so he will no longer be a US tax person and therefore will not be subject to US tax on the UK lump sum. Well that’s the way I see it.
I am doing a similar thing and giving up my GC.

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

So you plan to leave the US? That wasn't clear from the OP's post.

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

Just to clarify. I would like to hold onto the GC but that appears an impossibility if I am to avoid paying tax on the UK lump sum part of my pension.
As such my exit strategy is as per the original post....just want to make sure I've got it all covered.
I will snowbird, quite possibly with a B2 visa, but the important part is to loose the foreign tax liabilities associated with by LPR status.

Per original post..............Is it as simple as giving up the green card to the US consulate in London (I408) this year and effectively start off 2017 as a non resident alien?

I have accrued a couple of small US pensions which will pay out for 5 years and I'm quite certain these will be taxable in the US, even with a NRA status.

As such I'll need to send a W8-BEN form to my US bank and pension providers and file a 8840 along with a 1040NR each year (2017 onwards) with the IRS.

Does my exit plan sound good or do I need that tax advisor???

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

I was under the impression it was illegal to give up one's PR status for the sole purpose of avoiding paying taxes. Or maybe I'm thinking of giving up US Citizenship? Someone will clarify, I'm sure.

My understanding is that as soon as you file form I-408 and turn in your green card, you are no longer a US Permanent Resident.

I don't know about these parts.

Personally I suggest using a good tax advisor, since none of us are tax professionals.

Unless audio returns to give more details about what he did, since he says he did the same thing as you.

Rene

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

Assuming the OP will return to the UK when they give up the Greencard,
The OP should file an 8854 and if they are a LPR (see instructions to form 8854) determine if they are a "covered expatriate".

If the OP can become an NRA again and live in the UK there would not be any tax on a US pension (other than from the US government or a US sourced lump sum withdrawal). However, this all seems like lot of work just to avoid US tax on the 25% tax free lump sum, when if it isn't taken as a lump sum the tax can be avoided.

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

I thought this form only applies to Long term residents... LTR (8 years in previous 15) as opposed to the broader status of an LPR. I only got my GC in 2013. The instructions state only to be used by citizens and LTR's....correct me if I'm wrong.

I understood that the option to take the 25% lump sum tax free was a one time offer. I appreciate I could take instalments that are each 25% tax free, but that wouldn't help with the broader advantages of final salary ( defined benefit) scheme.

I'm regularly bombarded with emails from various parties suggesting QROPS are the answer to this lump sum tax issue but from what I've read these are expensive and unrealiable, given the relative security I'd enjoy with the defined benefit scheme.

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

It seems a reasonable plan to me, but I'd be wary of assuming that a B2 application would be successful immediately after giving up LPR status.

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

If you are not an LTR then 8854 can be omitted.

Definitely avoid a QROPS.

If you use the 25% tax fee UK amount to increase your defined benefit (ie pension payment) you will have a 25% US tax free basis.

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

Not sure I understand this statement. As far as I'm aware the option to take the 25% lump sum 'tax free' in the UK is a one time only option. The IRS do not accept the tax free aspect so as long as I remain a green card holder I am liable for the tax, hence my reluctant decision to turn in the green card at the end of this year and start 2017 as a UK resident.
If there is some other option available to me, that would be nice to know. I have tried to find a knowledgable tax advisor but they don't seem to exist, or are at least willing to entertain my questions.

Re: Exit strategy and/or anyone recommend a good tax advisor.
 

These people were helpful to me in the past, might be worth a try. If you find an answer, let us know.

US Tax and Financial Services Limited
Magdalen House, 136 Tooley Street, London SE1 2TU
Tel: +44 (0) 207 357 8220