nitenite

I am thinking of giving up US Green Card and need help in understanding the implications.

1. I've been a GC holder for 8 years. After giving up my GC, do I still have to file US taxes for an extended period and pay US taxes (as suggested by some of my friends)?

2. Can I take out my 401K before I am 59.5 years old without penalty now that I am no longer a resident alien? (US citizens and resident aliens currently would be fined 10% of whatever is taken out of 401K ahead of time.)

3. What happens to my pension (have paid years of taxes working for a US company) when I reach retirement age?

Thank you in advance for your help.

Ingo Pakleppa

I'm not a tax expert, but below are a few insights anyway.

On 4 Mar 2002 20:32:37 -0600, nitenite <[email protected]> wrote:

    >I am thinking of giving up US Green Card and need help in understanding the
    >implications.
    >
    >1. I've been a GC holder for 8 years. After giving up my GC, do I still have to file
    > US taxes for an extended period and pay US taxes (as suggested by some of my
    > friends)?

No. As soon as you give up your GC, you would again have to meet the same tests as
any other non-resident. That is, if you are in the US for less than 180 days per
year, you would generally count as a non-resident for tax purposes. In fact, you can
actually revoke your GC by filing a tax return as a non-resident.

Of course you will always have to pay taxes on income that originates in the US, such
as interests or dividends.

    >2. Can I take out my 401K before I am 59.5 years old without penalty now that I am
    > no longer a resident alien? (US citizens and resident aliens currently would be
    > fined 10% of whatever is taken out of 401K ahead of time.)

I doubt it; as far as I know, the penalty applies even to non-residents.

    >3. What happens to my pension (have paid years of taxes working for a US company)
    > when I reach retirement age?

You aren't talking about a pension but about your Social Security benefits. That
depends on your nationality. The US has a number of treaties with other countries
(mostly European) that provide for a limited crediting of these payroll taxes
towards your foreign benefits. However, don't expect it to count for much;
oftentimes, all it does is make it easier to qualify for foreign benefits without
adding anything to the values.

If there is no such treaty, you'll probably lose the benefit altogether. You may want
to remain in the US until you have at least 40 quarters of taxes - that may allow you
to get US social security benefits (although I'm not sure about that).

Go to http://www.ssa.gov for more information.

Ingo

I am not a lawyer and this is not legal advice. For reliable advice, please consult
with a professional immigration attorney.

For further information, check the following frequently-requested links.

For many questions, you may find answers at
http://travel.state.gov/visa_services.html (Department of State)

or http://ins.usdoj.gov (INS).

For consular policies and visa reciprocity fees, find your consulate in
http://travel.state.gov/links.html

For DOL Faxback status information: http://workforcesecurity.doleta.gov/

For information on affidavit of support for marriage to US citizens (I-864), go to
http://travel.state.gov/i864gen.html and http://travel.state.gov/checklist.html

For information on entering the US as a K-1: http://www.k1poelist.com/

For poverty levels, see http://aspe.os.dhhs.gov/poverty/00poverty.htm

For information on H/L/O/P visa extensions at Dept. of State in St. Louis, MO, see
http://travel.state.gov/revals.html

For non-official information, check:

(When using these sites, and any Web sites, please watch out for privacy, as I do not
know all site operators.)

http://www.visalaw.com http://www.shusterman.com http://www.immigration.com
http://members.aol.com/MDUdall http://www.murthy.com/ http://www.richw.org/dualcit/
(dual citizenship FAQ) http://www.ilw.com/pederson/visa.htm (dual citizenship info)
http://www.srs-usvisa.com http://www.getusavisa.com
http://greencard-lottery.virtualave.net/ http://www.jcvisa.com (H-1B)
http://www.h1bresources.com (marriage and fiancee) http://www.kamya.com/misc/
(marriage and fiancee) http://www2.apex.net/users/thehydes http://www.formshome.com
http://www.workpermit.com

This is not an endorsement of any of these Web sites. I am not affiliated with any of
the Web site owners and do not receive nor accept payment in return for listing them,
and typically don't even know them.

(if believe you have a good immigration-related Web site and want your Web site
listed here, please e-mail me).

Stuart Gill

In article <[email protected]>, Ingo Pakleppa
<[email protected]> wrote:

    > I'm not a tax expert, but below are a few insights anyway.
    >
    > On 4 Mar 2002 20:32:37 -0600, nitenite <[email protected]> wrote:
    >
    > >I am thinking of giving up US Green Card and need help in understanding the
    > >implications.
    > >
    > >1. I've been a GC holder for 8 years. After giving up my GC, do I still have to
    > > file US taxes for an extended period and pay US taxes (as suggested by some of
    > > my friends)?
    >
    > No. As soon as you give up your GC, you would again have to meet the same tests as
    > any other non-resident. That is, if you are in the US for less than 180 days per
    > year, you would generally count as a non-resident for tax purposes. In fact, you
    > can actually revoke your GC by filing a tax return as a non-resident.

Only partially correct. If you leave the US after having been a long term resident (8
of the last 15 years as a GC holder) you may be liable for US taxes for the 10 years
after you have left the US. This is called the expatriation tax - US citizens who
renounce their citizenships are also liable for this tax though the rules are
somewhat different. Check for more details here -
http://www.irs.gov/businesses/small/...,,i1=2&i2=23&i
3=37&genericId=79833,00.html

    > >2. Can I take out my 401K before I am 59.5 years old without penalty now that I am
    > > no longer a resident alien? (US citizens and resident aliens currently would be
    > > fined 10% of whatever is taken out of 401K ahead of time.)
    >
    > I doubt it; as far as I know, the penalty applies even to non-residents.

Actually, anyone can take out money their IRA earlier than 59.5 if they take
Substantially Equal Payment Plan (SEPP) - read about it here
http://www.irs.gov/faqs/display/0,,i...=16005,00.html You should probably
be rolling your 401k over into an IRA anyways (better control and accessibility after
you have left the US).

    > >3. What happens to my pension (have paid years of taxes working for a US company)
    > > when I reach retirement age?
    >
    > You aren't talking about a pension but about your Social Security benefits. That
    > depends on your nationality. The US has a number of treaties with other countries
    > (mostly European) that provide for a limited crediting of these payroll taxes
    > towards your foreign benefits. However, don't expect it to count for much;
    > oftentimes, all it does is make it easier to qualify for foreign benefits without
    > adding anything to the values.
    >
    > If there is no such treaty, you'll probably lose the benefit altogether. You may
    > want to remain in the US until you have at least 40 quarters of taxes - that may
    > allow you to get US social security benefits (although I'm not sure about that).
    >
    > Go to http://www.ssa.gov for more information.

Considering that the original poster has already passed the boundary of being
considered a long term resident for the expatriation tax this might be the best
course of action if a treaty solution isn't available. As to the treaties you are
mostly right about the qualifications part but the treaties also allow you to use
"credits"/"quarters"/whatever from your home country system to also qualify for US
social security. You can collect both.

Stuart