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married to USC tax implication if I move back to UK and relinquish greencard

married to USC tax implication if I move back to UK and relinquish greencard

Old Nov 21st 2013, 6:54 pm
  #1  
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Default married to USC tax implication if I move back to UK and relinquish greencard

If I am married to a USC and decide to move back to UK (or other country) and give up my greencard what does that mean for my wife's taxes? Of course she still has to file but would she have to follow as married or maybe married filing separately? Would she have to include my income in her calculations or just her own.
ie. since I am married to her are we always going to have to declare all my income/assets/accounts, FBAR form etc. for eternity regardless of my residency status.
My foreign accounts are all in my name currently.

Main reason I don't want citizenship at this time is I can't face the idea of having to deal with this US tax/FBAR crap for the rest of my life even if I leave the US. But maybe it's a moot point and I will have to do that regardless (in which case I will take the first train to US citizenship central!)
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Old Nov 21st 2013, 7:05 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

Your wife is free to file as married, filing separately. By doing so she does not have to list your income at all.

BTW you do know there is a tax treaty in place for the UK/US and you won't be taxed twice, i.e. pay US taxes on monies you paid taxes on in the UK.
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Old Nov 21st 2013, 7:07 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

Yes it's not the actual paying of taxes I am worried about it's just all the palavar of filing the damn things. It's really all the FBAR stuff that freaks me out the most. I have rental property in the UK and some savings account with fairly significant amounts of cash. The idea of having to deal with that crap in relation to US taxes just stresses me. It's bad enough now.
Maybe I am over thinking things but I struggle to find good financial advice especially tax related.
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Old Nov 21st 2013, 7:45 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

I agree with Rete. Your USC wife must file "married", but she can file "married filing separately" and does not have to include your income on her tax return.

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Old Nov 21st 2013, 9:43 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

OK thanks for your comments.
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Old Nov 21st 2013, 11:05 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

FBAR is not a good reason to expatriate. The reporting requirements need to be taken seriously, but as discussed elsewhere there is a lot of scaremongering with no basis in law/fact.

If you do choose to give up your greencard, then you need to understand carefully if you are a long term resident for the purpose of the expatriation tax and if so, whether you would be a covered expatriate.

There may also be estate tax implications since you won't be a U.S. citizen, although this is less likely since the federal estate tax threshold is currently over $5m.

Lastly if you give up your greencard, it's gone. If you later on want to return to the United States to live permantly you'd need a new immigrant visa. No guarantee that future law or your own circumstances would allow this.
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Old Nov 22nd 2013, 12:25 am
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

You have to be careful to avoid the 'exit tax' that goes with a Green Card, but whether that applies to you depends on your specific income levels and how long you have held a Green Card.

Also, if your wife has signing authority on your accounts, she is going to have to file FBAR anyway, so the overall reduction in paperwork family-wide is going to be rather minimal.

http://blogs.angloinfo.com/us-tax/20...pay-the-price/

http://blogs.angloinfo.com/us-tax/20...s-citizenship/
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Old Nov 22nd 2013, 11:36 am
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

If you were single and planning to settle outside the US permanently I'd say go ahead and get rid of the Green card as it will simplify your taxes and allow you to have a normal financial life.

If you have family who are US citizens then it's a more difficult choice as you you need to consider what would happen if they want to move back to the US.
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Old Nov 22nd 2013, 2:14 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

FBAR and tax isn't the reason I would leave and abandon my greencard. It would be more likely that I would move to another country, could be back home or some other country (due to work) and thus I would most likely abandon my residency and thus forfeit my greencard. I wouldn't necessarily be forfeiting out of choice. Ideally I would go and work in another country and keep the greencard but that is not always possible.

I am not currently considering actually doing any of this currently but I just want to be informed so that if I do lose my job here and have to move abroad I will know more what the implications of that would be.
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Old Nov 22nd 2013, 9:07 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

Originally Posted by angelman
FBAR and tax isn't the reason I would leave and abandon my greencard. It would be more likely that I would move to another country, could be back home or some other country (due to work) and thus I would most likely abandon my residency and thus forfeit my greencard. I wouldn't necessarily be forfeiting out of choice. Ideally I would go and work in another country and keep the greencard but that is not always possible.

I am not currently considering actually doing any of this currently but I just want to be informed so that if I do lose my job here and have to move abroad I will know more what the implications of that would be.
Given your family situation you should consider US citizenship.......although you'll then forever have to consider FBAR and US taxes.
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Old Nov 22nd 2013, 9:10 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

Yes nun that is it. I just wanted to check that if my wife couldn't file separate from me. ie. if my income was always going to be included in her taxes then it would be irrelevant whether I was a citizen or not we would still have to deal with all the FBAR/tax crap regardless. It also sounds (at least for the time being) that it would be better for me to keep my UK assets in my name.
This all being said the sensible option for me would be to get US citizenship although honestly the main reason to do so is to enable me to leave and work elsewhere which frankly is a pretty compelling reason.
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Old Nov 23rd 2013, 6:58 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

Originally Posted by angelman
Yes nun that is it. I just wanted to check that if my wife couldn't file separate from me.
The default filing status for a U.S. citizen married to a non-resident alien is "married filing separate", however in some cases, it's possible to file as "head of household." An election to file as "married/joint" brings all the non-resident's income into the U.S. tax system and generally would defeat the purpose of expatriation.

It also sounds (at least for the time being) that it would be better for me to keep my UK assets in my name.
Before you do anything, you'd need to take some U.K. tax advice (Inheritance Tax, specifically) as these assets are U.K. situate and a transfer to a non-U.K. domiciled spouse may not be tax exempt and could be chargeable to tax if you die within seven years. Also, since you've (apparently) not made a U.S. will and are not a U.S. citizen then there may be questions over whether you have shed your U.K. domicile and hence your entire estate could be at risk from Inheritance Tax. To the extent it exceeds the nil rate band, subject to the U.K./U.S. tax treaty, etc.

You'd also have to consider the U.S. tax implications, both for gift tax and the cost basis for capital gains tax.

This all being said the sensible option for me would be to get US citizenship although honestly the main reason to do so is to enable me to leave and work elsewhere which frankly is a pretty compelling reason.
Realistically - once you've held a green card for long enough to be covered by the expatriation tax if you leave, you need to think about your strategy long term. Which can be either, 1. leave the U.S. and expatriate, in which case you need to understand carefully what would make you a "covered expatriate" and take the necessary mitigation steps, or 2. Remain with the U.S. as your home, which generally means you should become a United States citizen.

How long do you need to hold a green card for to be deemed a long term resident? Eight out of the last 15 years. However, any part of a year counts as a full year, so if green card was received in 2007, an expatriation event in 2014 will normally trigger the expatriation tax provisions.

A general thought. Focus on where you want to be in life, and what life options you want to have. The citizenship/immigration and tax strategies you adopt should usually follow from this. Not the other way around.
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Old Nov 23rd 2013, 10:00 pm
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

Originally Posted by JAJ

How long do you need to hold a green card for to be deemed a long term resident? Eight out of the last 15 years. However, any part of a year counts as a full year, so if green card was received in 2007, an expatriation event in 2014 will normally trigger the expatriation tax provisions.

A general thought. Focus on where you want to be in life, and what life options you want to have. The citizenship/immigration and tax strategies you adopt should usually follow from this. Not the other way around.
There are also pretty high net worth and tax liability thresholds for the expatriation tax to be triggered. To be a covered expatriate one of the following needs to be true

Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than a specified amount that is adjusted for inflation ($147,000 for 2011, $151,000 for 2012, and $155,000 for 2013).

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

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

So if you are up to date with your taxes you'd need to be quite wealthy to worry about expatriation tax.
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Old Nov 24th 2013, 2:17 am
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

Originally Posted by nun
There are also pretty high net worth and tax liability thresholds for the expatriation tax to be triggered. To be a covered expatriate one of the following needs to be true

Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than a specified amount that is adjusted for inflation ($147,000 for 2011, $151,000 for 2012, and $155,000 for 2013).

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

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

So if you are up to date with your taxes you'd need to be quite wealthy to worry about expatriation tax.
Except that many people probably omit the form 8854 and become covered expatriates by default.

Also, since the $2m net worth is not indexed, it risks including more and more people in years and decades ahead, due to inflation.
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Old Nov 24th 2013, 3:29 am
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Default Re: married to USC tax implication if I move back to UK and relinquish greencard

Originally Posted by JAJ
Except that many people probably omit the form 8854 and become covered expatriates by default.
Very probably, but once again, filing the correct forms and a little planning can avoid a lot of difficulty and worry.
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