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Filing Taxes as green card holder
Hi again...we planned to have my husband, the UKC, have his visa approved around August/September, convert to a green card in October during a visit to the US, then officially move around January. I just realized, however, that green card holders must file taxes on all income, even income earned abroad like regular USC do. So would this mean he’d have to file a return next year for 2019 and declare all his UK income and potentially pay a huge tax bill to the US? (I’m aware that you owe US taxes if you earn over a certain amount in the UK). If that’s the case we’ll just avoid him going to the US until January, but wanted to check if this makes sense. Thank you! |
Re: Filing Taxes as green card holder
As a US resident (which he is as a GC holder) yes he files taxes on his whole income for the year. There is a treaty, however, between the UK and US to avoid double taxation.
I would advise hiring a professional to do his taxes the first year rather than use something like Turbotax. |
Re: Filing Taxes as green card holder
Can he enter the USA as a visitor for our 5 day visit if his visa is approved at that point? Does he have to present it when he lands? |
Re: Filing Taxes as green card holder
He doesn't have to activate it if he doesn't want too, but will have to request entry under the VWP, and the Officer may not let him with a valid immigrant visa in his passport. No harm in asking though.
I don't think 'I want to avoid taxes for this year' will go down well as a reason if he's asked why though. |
Re: Filing Taxes as green card holder
The term is permanent resident vs green card holder. As a PR, you need to file US taxes, the same as you the USC spouse needs to do, but I believe it is not on monies earned for the time he was not a PR but only from the time his PR status started. I do suggest you contact a tax accountant who is familiar with foreign earned income once you are in the US.
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Re: Filing Taxes as green card holder
Once someone has lawful permanent resident status (green card) or meets the "substantial presence" test they are a "resident alien" and pay tax on worldwide income (but with credits/deductions for foreign tax paid, and the ability to rely on the US-UK tax treaty). A "non-resident alien" only pays US tax on US-sourced income.
For the first year, it is possible to be a "dual status" alien - nonresident at the beginning of the year, resident at the end of year. In this situation, you basically fill out two tax forms, one for the nonresident part of the year, one for the resident part of the year. The gory details are at https://www.irs.gov/individuals/inte...-status-aliens and https://www.irs.gov/publications/p519. My guess is this is only worth worrying about if the foreign income is large (>$100k) or there is a significant benefit to filing a joint return (usually if one person's income is much lower than the other). |
Re: Filing Taxes as green card holder
I triggered my Visa end of Oct and then filed taxes for that year. Mentioned in another thread you are then hopefully triggering your SSN or worst case the minimum waiting period. You also trigger the 3 year period on citizenship. So in my mind its good to do.
My tax return was interesting. I hired an HR Block advisor. In all it cost me $1000 - paid them $500 and $500 to the state of New Jersey for tax. Sounds bad so far :). However i ended up with a $5000 tax credit as i continued to work abroad in Nov/Dec. So each time i travel to Europe on business i can claim some of this back. Works out to about 30 days which i need to use i think over 5 years. Used a block advisor again this year as filing jointly, property disposal in UK, condo in SD, so not the easiest. |
Re: Filing Taxes as green card holder
A coupe of things for the OP to keep in mind. When looking at tax residence you have to look at the local rules for everywhere you may be considered a tax resident, it is possible to be tax resident in multiple places at once depending on your circumstances, being tax resident in 1 place does not mean you may not also be in another. As others note there is a DTA between the UK and US, this helps cap your federal / HMRC tax at the higher of the 2 if both apply, but take in to account that tax's paid in the UK can’t be offset / credited against state and city tax owed as a resident if applicable in the US, so you can end up with an unused credit to carry forward in the US at the federal level. Also make sure you understand how AMT works in the US. |
Re: Filing Taxes as green card holder
We just spoke to our tax people around specific questions related to our plans and income. Besides it being an expensive 30 minute phone call...I’m feeling much better. It doesn’t sound like we’d owe anything extra to the US if we trigger his permanent resident status in October. I’ve been using Taxes for Expats for several years for myself and have always had a good experience with them, in case anyone is looking! Now will schedule his medical appointment again after we canceled it this week in a panic! Thank you for all your advice. |
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