Giving up Green card - exactly what are the impacts
 

After much thought and discussion along with some initial planning my wife and I have decided we want to return to the UK probably in Fall 2015 (or latest date February 2016). We are UK nationals and were issued green cards in March 2009. I believe on both our proposed return dates we would still be classed as short term residents.

If my assumption is correct is it just a case of filing the appropriate form to "give up" our green cards - is there anything else required. Would we need to leave the US basically that day or would or British passports allow some time for final packing.

If it were Fall 2015 and we file the appropriate IRS form and leave USA would 2015 be last year for filing US taxes

Given we have been in USA since April 2006 and have green cards from March 2009 what date would we be considered long term residents. I believe it is after 8 years but just wondered if it applies back to the first day of the year you got the green card or if the fact we were in US for three years prior to actually getting the green card has any impact. I don't think we want to get near this date even though I don't think I qualify under exit tax rules.

Thank you in advance for all your help.
P.S. - may reason to give up green cards is that we will never be back to work in USA and I have a considerable lump sum pension (although that is 10 years off).

Re: Giving up Green card - exactly what are the impacts
 

As long as you are GC holders, your status is the same - legal permanent residents. If you leave, then your status is considered abandoned and your green cards are, effectively, revoked. There are no forms you need to fill in, just leave.

However, if you think you may possibly want to return sometime later (as a resident, not for a vacation), you may want to consider obtaining citizenship. You can still keep your UKC status, but this would allow you to travel unimpeded for the rest of your lives. You would need to file tax forms every year, but nothing would be due as UK taxes would be paid.

I'm sure if I have any of this wrong, someone will chime in, but I think this is a good starting point for you.

Re: Giving up Green card - exactly what are the impacts
 

USC's are liable to file tax returns on worldwide income regardless of where they live. Whether they actually need to file a tax return or not depends on income.

Re: Giving up Green card - exactly what are the impacts
 

That's not necessarily true.

Re: Giving up Green card - exactly what are the impacts
 

Permanent residents are also required to file tax returns and just leaving opens you up to the whole "did you/did you not abandon status" issue so you may still need to file returns. If you formally give up your status then that's not an issue. For sine who really have no desire to return to the US other than on holiday every now and again, that's a good option. For others who are not sure of the ling term future may need to consider other options.

Re: Giving up Green card - exactly what are the impacts
 

I thought there was a form to revoke LPR status? We are in a similar position and planning to get a re-entry permit for daughter but give up ours.

Re: Giving up Green card - exactly what are the impacts
 

There is. Abandonment of Lawful Permanent Resident Status (I-407).

http://london.usembassy.gov/dhs/uscis/abandon.html

Re: Giving up Green card - exactly what are the impacts
 

Well, sort of. If a PR is liable to file a tax return and doesn't, PR status can be lost. Hardly a big deal if the person's intention was to abandon PR status in the first place. However, it is probably safer and cleaner to file I-407 (Abandonment of Lawful Permanent Resident Status).

http://london.usembassy.gov/dhs/uscis/abandon.html

Re: Giving up Green card - exactly what are the impacts
 

You can file the I-407 with the embassy after you leave.

Yes, but you would need to file dual status returns individually unless you leave on December 31st.

It's eight years from becoming an LPR, not entry. Read IRS publication 519, there is an example of how to do a dual-status return in the 2011 edition.

The usual trick in this situation is that one of you (the one who earns the least) applies for US citizenship and gets it before you leave, then the other one gives up LPR status.

That way you pay little or no US tax, plus the US tax filing is simplified, but you can still go back to the US e.g. to retire because you can be sponsored in.

Re: Giving up Green card - exactly what are the impacts
 

That's not right, only an immigration judge can determine if you have abandoned your status. You would get referred when you entered if the inspector thought you'd been out of the US too long.

Anyway, here's a story -

One of my relatives was an LPR back in the 1960s and 1970s, he left the US mid-1970s and didn't file I-407. At the time he was a high earner and worked for a large US corporation.

So couple of years later after he moved to the UK, he gets a letter from the IRS (I assume they got his new address from his former employer) saying he's going to be audited.

They sent a guy up from London, my relative didn't know how to fill in the forms, so the auditor helped him, they taxed him (large bill with penalties) - and he got a bill from the IRS for the help in filling in the forms.

Somehow I doubt nowadays they would be so fastidious but the moral of the story is - make sure you file the I-407!

They will always work things out in their favour. My relative told me he wouldn't have been so compliant if he knew how much he was going to end up paying.

Re: Giving up Green card - exactly what are the impacts
 

Which is why if one is sure about leaving, they should file to abandon their LPR status.

Re: Giving up Green card - exactly what are the impacts
 

Thank you all - great advice and gives us a few more things to think about. Just one follow up please on the dual returns. If we say left August 30th 2015 we would file jointly, as we do now, for that tax year but anything else. The citizenship option for one is interesting but would that have any impact on UK tax.

Re: Giving up Green card - exactly what are the impacts
 

Not really. You might need to file a US tax return on your worldwide income but you'd be able to deduct any tax paid to the UK. So you could end up owing no tax to the US.

Re: Giving up Green card - exactly what are the impacts
 

Does you comment refer to my point on keeping one US Citizenship. If we go for the clean break option (file I407 and abandon status) then am I correct in saying after we file US taxed for year ended 12/31/15 we would no longer have to file any US tax returns. Clean break is our preferred option.
(Sorry I think I confused the issue a bit!!)

Re: Giving up Green card - exactly what are the impacts
 

What do you earn? Ballpark? There is an exemption for US taxpayers till 97,000 per person

http://www.irs.gov/Individuals/Inter...come-Exclusion

Re: Giving up Green card - exactly what are the impacts
 

That's my understanding - we go back this year, give up the green cards and file US taxes for 2014 only.

Re: Giving up Green card - exactly what are the impacts
 

My favorite abandonment of LPR case is United States v Yakou.

An I-407 can be filed with the Embassy in London. OP appears to know about the expatriation tax but I've heard that seeking a "sailing permit" may not be such a bad idea.

[I like the idea of a "sailing permit" prior to boarding a turbo-fan airliner.]

Re: Giving up Green card - exactly what are the impacts
 

The sailing permit is very helpful advice. In reading the regulations am I correct in thinking that a tax year will be any time you are a resident in the year. So our clock started ticking in March 2009 and January 1st 2016 will then be 8 years??

Also my W2 is around $200k but net worth is certainly below $2mm. When the legislation states "Your average annual net income tax liability for the 5 tax years ending before the date of expatriation is more than the amount listed next.
a. $139,000 for 2008, etc, etc"
Does this mean W2 income of more than $139k or tax due of more than $139k. This will be important to know so any help appreciated.

Re: Giving up Green card - exactly what are the impacts
 

You can be sponsored in? But what happens if the U.S. citizen spouse has died, or there's been a divorce, or the immigration rules have changed (has happened in the U.K.), or there is some other reason why the person might have become inadmissible to the United States?

Re: Giving up Green card - exactly what are the impacts
 

We were sort of in the same scenario, so just took out citizenship and left. Have been out of the US for 3 yrs now.

Re: Giving up Green card - exactly what are the impacts
 

If you want to return to the UK and hold a GC I would get all your US finances sorted out. Sell things with the potential for capital gains and make sure you
understand HMRC's Reporting Funds rules for any US investments you keep. File a 2063 or 1040C and get a sailing permit if required.

Once in the UK I would complete I-407 and mail it to the US Embassy

http://london.usembassy.gov/dhs/uscis/abandon.html

then (if necessary) I'd file 8854 with the IRS. Finally I'd file a 1040NR as a dual status alien for the part of the year that you held the GC. If you have
US source income you will have to file 1040NR each year unless you can file a W-8BEN and avoid US filing using treaty provisions.