WhoFan63

Hiya everyone, I've started this new thread because of something I read and it seems important, at least to me, so I am hoping someone out there has experienced this or IS experiencing this.

I'm a permanent US resident, but not a citizen and hoping to return home to the UK in April. But now it's been brought to my attention that just by leaving the country it doesn't exempt me from being responsible for paying tax in the US on any money I earn in the UK, in effect paying TWO lots of tax.

If I am in effect renouncing my US permanent resident status by no longer residing here permanently...is there something I should do, or BE doing so that the IRS don't start looking for me for further tax responsibilities?

I have checked the IRS web site and numerous other sites, but can't seem to find something that explains it in terms I can understand..lol. I haven't worked here in the US since October 2012, but I did file my tax return in January this year for income earned last year.

So now I don't know if this exit tax I keep hearing about, is something that will prevent me from leaving the country next month????

From all the confusing bits I've been reading there's been talk of being exempt because I haven't sold any assets or have income in excess of $600,000.00, but that was all on a web page dated 2009 so I don't know how up to date it is and the IRS web site doesn't seem to have anything that relates to this either.

I just want to make sure that I am doing everything right and not suddenly finding myself with a letter from the IRS while living and working in the UK, asking for money.

So....does anyone know anything about this and can provide more up to date information???

Perth

Found this article for you. Legit newspaper, article written in 2012, seems very informative - specifically:

If you renounced your US citizenship or Green Card, you would have to pay an exit tax or expatriation tax if you fulfill any of these 3 conditions:

* Your average annual net income tax liability for the 5 tax years ending before the date of your expatriation is more than $151,000 if you expatriated in 2012.

* Your net worth is $2 million or more on the date of your expatriation.

* You fail to certify on Form 8854 that you have complied with all of your federal tax obligations for the 5 tax years preceding the date of your expatriation.

http://articles.timesofindia.indiati...ry-citizenship

WhoFan63

Thank you... I've read everything and from what I can gather I can renounce my US permanent residency once I get back to the UK.... THEN I also have to file Form 8854, but I can't find a 2013 version of that form anywhere. If I look at the 2012 version, everything it asks relates to 'expatriating' in 2012 and earlier.

I gather the Form 8854 HAS to be filled in, because it's not as simple as renouncing residency, even if I don't fulfill the first two conditions.

But does Form 8854 have to be filed BEFORE leaving the US??? Okay...I can feel a headache coming on....lol

ldollard

I honestly think you should hire an accountant and ask him or her this question. i personally wouldn't go off a newspaper article or be too hasty to renounce anything.

lgabriel73

The US and UK have a tax treaty so you will not be taxed twice on your income.

WhoFan63

I did read that . So would I still need to file a US tax return and declare UK income?? If that's the case then I don't really need to worry about renouncing or filling out tons of forms lol

nun

When you return to the UK you file an I-407 with INS to renounce your Green Card and also file the 8854. This will remove your obligation to pay US tax on your worldwide income. You will still have to follow IRS rules for any US assets you own.

windsong

I thought that if you had resided in the USA longer than 8 years you had to pay US taxes for life. I just read that somewhere this morning in one of the threads - not saying it's true, of course.

dunroving

I thought that too (not for life, but for a certain period after leaving the US if you were a GC holder), but apparently it no longer applies.

WhoFan63

Hi windsong....I did read that on a web site yesterday. If you have lived in the USA for 8 out of the last 15 years you are responsible for paying taxes (universal), no matter where in the world you are living, unless of course you are living in a country with a tax treaty or some similar wording.
Dependent of course if you choose to give up your citizenship or permanent residency and file the appropriate forms.

windsong

I am doomed to file USA tax returns for live, I think, even if I move to the UK, simply because I am a US citizen I could be wrong but I think it is for life.

WhoFan63

Unless of course you renounce your citizenship and file two forms (both of which were I think mentioned at some stage during this thread), but that is the 'drastic' option.

ldollard

Hope this might help.

I've specifically contacted an accountant in the UK to deal with this.

I'm working for a US company but being paid into my UK bank account. And i am paying taxes only to the HMRC. The accountant assures me treaties are in place that prohibit double taxation. I believe I still fill out a tax return, but that i'll owe nothing in US tax.

I think it would be foolish to renounce your green-card.

WhoFan63

I am 'slightly' confused about these tax treaties..because even though I am a US permanent resident, I also hold both a UK AND an Australian passport, so would the tax treaty still apply to me? Probably would wouldn't it (answering my own question..lol), because I would just lodge a US tax return every year showing my UK income, but not paying an US tax.

Am I getting closer to understanding this?? LOL

ldollard

I could give you my accountants email address, i dont feel comfortable giving such important advice and honestly i dont think you should listen. haha.

Its all too important for people to just throw an opinion out there. i pm'ed you his email address.