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Giving up green card and filing taxes

Giving up green card and filing taxes

Old Oct 12th 2009, 8:13 pm
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Default Giving up green card and filing taxes

Hello all,

I was made redundant after 6 years with the same company in the US last October and given that the missus was pregnant and that we felt we'd had a good run in the US we decided to pack up and head back to the UK in late November '08. We filed our 08 US taxes and I (eventually) found work over here in blighty and all's well (although I do still pine for VT!!)

Now for the tricky bit...we have been out of the country (USA) for 11 months now and we won't be going back for the foreseeable future. Should I file an I-407 to give up the green card officially or should I just leave it? I intend to file a tax return for 2009 because Uncle Sam has almost half of my redundancy payment. If I officially give up my green card can I still file that tax return or will I have given up the right to claim that money back? Any advice or ideas on how I should proceed?

Thanks.
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Old Oct 12th 2009, 8:24 pm
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Default Re: Giving up green card and filing taxes

I've moved your thread to the USA forum for the tax information. But as I think about it, I strongly encourage you to start a new thread in the immigration forum that is focused on your potential I-407.
It's quite a big deal and some of the folk who post in Immigration don't come over here.
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Old Oct 12th 2009, 8:33 pm
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Default Re: Giving up green card and filing taxes

Thanks for directing me to the right place.
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Old Oct 12th 2009, 8:47 pm
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Default Re: Giving up green card and filing taxes

My guess is, since you will effectively be abandoning the "PERMANENT RESIDENT" card by not having any plans to return soon, you'll be giving the card up. It's not for the purpose of "keeping it open" in case you change your mind.

Originally Posted by vtscot View Post
Hello all,

I was made redundant after 6 years with the same company in the US last October and given that the missus was pregnant and that we felt we'd had a good run in the US we decided to pack up and head back to the UK in late November '08. We filed our 08 US taxes and I (eventually) found work over here in blighty and all's well (although I do still pine for VT!!)

Now for the tricky bit...we have been out of the country (USA) for 11 months now and we won't be going back for the foreseeable future. Should I file an I-407 to give up the green card officially or should I just leave it? I intend to file a tax return for 2009 because Uncle Sam has almost half of my redundancy payment. If I officially give up my green card can I still file that tax return or will I have given up the right to claim that money back? Any advice or ideas on how I should proceed?

Thanks.
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Old Oct 12th 2009, 8:48 pm
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Post Re: Giving up green card and filing taxes

My husband gave up his green card in late December 08 as he had taken up a new expat posting 3 months beforehand in Singapore (I'm currently splitting my time between the US and Singapore.....)

AFAIK there is a dual tax agreement with the US & UK and as the UK tax rate is higher then I assume that you should still be entitled to at least some kind of refund from the US? Did you sell any property and made a lot of money where you may have to pay Capital Gains Tax? (think it's $250k for one person or $500k for a couple joint filing).

However......did your employer pay for your stuff to be shipped to the UK or any other expenses? My spouse recently had to write out a cheque for US$40,000 (which was most unpleasant..) as Uncle Sam taxed him on shipping stuff out to the Far East, rental payments on the apartment there, car etc. which the company had paid for but was taxable).

By the way, he had to go in person to the US Embassy; they 'interview' you as to why you are giving up your green card and you have to sign a form; he told me that it took less than a minute as he had a good enough reason as to why he was giving it up. I think it's more complicated if you've had the GC for 8 years or more as I think they still want you to pay US taxes/file a US tax return for good, but this didn't apply to my spouse. He gave up his green card before submitting his tax return.

Hey, you can still go to VT but of course it would be on a visa waiver. My spouse has had a couple of trips to the US and is in fact in the mid-west right now so he's had no problems coming back in to the US (in any case you have to complete an ESTA on line form for visits to the US prior to travel).

It may be worthwhile engaging a tax specialist whom is experienced in filing US tax returns when one has left the US...perhaps there may be some threads or suggestions regarding this on the UK-Yankee website?
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Old Oct 12th 2009, 8:53 pm
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Default Re: Giving up green card and filing taxes

If you have had a green card for over 8 years (more or less) and if your salary in the US was over a certain amount than abandoned or not, you will have to file taxes for a few more years (they treat you as a tax cheat, because no one in their 'right mind' would give up a green card, so they think).

More here:
http://britishexpats.com/wiki/Green_Card_Abandonment

And here:
http://www.irs.gov/instructions/i8854/ch01.html

You said 6 with the same company so I wasn't sure if you've been here longer or not. Might want to consult a professional on this though.
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Old Oct 12th 2009, 8:55 pm
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Default Re: Giving up green card and filing taxes

Immigration (AKA the Green Card) isn't really the bother of the IRS. In fact, people illegally in the USA can happily pay taxes. If you can use the green card status as a way to "save" paying tax through the Tax Treaty then that's fine but the USA can only and ALWAYS will tax you on world-wide income ONCE you become a citizen.

The tax treaty only means you don't pay tax twice (or if you do, you get it back).

Anyway, whether you file (or don't) US taxes shouldn't and probably won't effect your green card status. In fact, if you are living in the UK, the Inland Revenue might have a good case for you to be paying their tax rates and not the USA's - OR they might come after you for the difference since you are living in the UK as a "current" permanent resident (remember, they can come after you later if you don't declare it).
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Old Oct 12th 2009, 8:56 pm
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Default Re: Giving up green card and filing taxes

Makes sense. Delicate balance and International Accountant might be in order.

Originally Posted by penguinsix View Post
If you have had a green card for over 8 years (more or less) and if your salary in the US was over a certain amount than abandoned or not, you will have to file taxes for a few more years (they treat you as a tax cheat, because no one in their 'right mind' would give up a green card, so they think).

More here:
http://britishexpats.com/wiki/Green_Card_Abandonment

And here:
http://www.irs.gov/instructions/i8854/ch01.html

You said 6 with the same company so I wasn't sure if you've been here longer or not. Might want to consult a professional on this though.
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Old Oct 12th 2009, 9:25 pm
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Default Re: Giving up green card and filing taxes

thanks for the flurry of responses.

EnglishMum : I did sell property but that was in the previous year's return and has been dealt with. We paid to move ourselves back to the UK so there is no liability there. Thanks for recommending UK-Yankee....I'll have a dig around there later.

Penguin6: Sorry I should have made that clear, I was in the US for 6 years...I was a permanent resident for 4 of these. Thanks for the links.

franc111s: You're right I realise I am giving up my permanent residence card, I just really want to do it correctly and hopefully get the rest of my redundancy money in the process.
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Old Oct 12th 2009, 9:39 pm
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Default Re: Giving up green card and filing taxes

Originally Posted by vtscot View Post
thanks for the flurry of responses.

EnglishMum : I did sell property but that was in the previous year's return and has been dealt with. We paid to move ourselves back to the UK so there is no liability there. Thanks for recommending UK-Yankee....I'll have a dig around there later.

Penguin6: Sorry I should have made that clear, I was in the US for 6 years...I was a permanent resident for 4 of these. Thanks for the links.

franc111s: You're right I realise I am giving up my permanent residence card, I just really want to do it correctly and hopefully get the rest of my redundancy money in the process.
Shame you didn't quite make Citizen because you could have flitted and chosen where you lived for the rest of your lives..
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Old Oct 12th 2009, 9:53 pm
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Default Re: Giving up green card and filing taxes

A couple of thoughts....

If you file a 1040NR, you are taxable in the US on only your US-sourced income. But you will have fewer deductions than if you file a 1040.

If you file a regular 1040, the US will want to tax you on your worldwide income, and you'll probably have to invoke the tax treaty.

Which one makes more sense for you, and whether you will have the ability to steer the form selection to your benefit, I cannot tell you.
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Old Oct 12th 2009, 10:09 pm
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Default Re: Giving up green card and filing taxes

I take it that to file the 1040NR I would have to give up the permanent resident card before the end of the year. That's an option I hadn't thought of.
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Old Oct 12th 2009, 10:21 pm
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Default Re: Giving up green card and filing taxes

If you are aiming for a part year residence be sure to note the rules of different states, which may not accept part year if you meet certain conditions (i.e. if you own property for 12 months but only live there 6 months and 1 day, you are still considered a permanent resident of that state, not a part year resident). Varies by states.
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Old Oct 12th 2009, 10:30 pm
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Default Re: Giving up green card and filing taxes

Originally Posted by franc111s View Post
Shame you didn't quite make Citizen because you could have flitted and chosen where you lived for the rest of your lives..
.. and, as you already mentioned, file US tax returns for the rest of your lives ...
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Old Oct 12th 2009, 11:12 pm
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Default Re: Giving up green card and filing taxes

Originally Posted by vtscot View Post
I take it that to file the 1040NR I would have to give up the permanent resident card before the end of the year. That's an option I hadn't thought of.
Couldn't tell you for sure. You might want to go to irs.gov and get yourself a copy of publication 519 (I think) - Tax Guide for Aliens. You may find some of the rules in there. You may also have to read the section on determining residency several times for it to make sense. In some cases you may be able to request NR status from IRS based on a closer connection to the UK. Again, it's not obvious to me whether you would want NR status or not - you'll have to do the math and see for yourself.
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