Middlemore

So I've been working for ten year in the US, and its time to renew my GC.
But I'm just a few years away from retirement now, and I will basically retire in whichever country my son is living in at the time.
He has an American employer, but is currently working at their offices in the UK, and will stay there for the foreseeable future.

Here's the dilemma -
if his work brings him back to the US sometime in the future, when I've maybe been retired back in the UK for a while, I won't meet GC residency requirements to return to the US with him.
He turned in his GC years ago, as he wanted to go to university in the UK and would not meet the residency requirement, and when he works in the US now, its on a temporary work visa from his employer.

But if I switch to citizenship, how can I find out about taxes if my retirement ends up being entirely in the UK?
I will likely be renting out my house here in the US and will be receiving a pension from here.
So I'm trying to retain the option of returning to the US if my family situation calls for it, but I'm also wanting to check out the tax implications.
Can you direct me to someone familiar with expat taxes who can advise please?

Rete

If he were to come back to the US to work and live for a while or even permanently (he did already give up his permanent residency in the US), why would you need to move back to the US? I

As a retired person you would probably qualify for a B visa to visit for up to six months at a time as you would be retired.

Won't you still be liable for US taxes for property/real estate taxes, income tax and rental profits and retirement monies? If that is the case, there is no reason not to become a US citizen.

Nutmegger

OP, don’t forget that permanent resident means just that. If you retire to the UK your residence could be considered abandoned. The only way to have the freedom to bounce back and forth is to become a US citizen.

RICH

Hi
Renewing GC then retiring to UK does not seem smart. Gaining US (dual) citizenship keeps options open, Costs about the same, and whilst I am not sure about tax implications, AFAIK it wont make much difference unless you have/earn enough to be able to afford it anyway.

I took US citizenship rather than renewing gc partly because if I have to go back to UK to look after old Dad, I wanted the option to return to US later. Its not everyone who even has the opportunity to have such an option!

neill

For most people, the only benefit NOT converting a GC to USC, and ultimately surrendering the GC, is not having to file US tax returns till you die.
And if you keep property in the US, that fringe benefit is gone. And also you have to deal with Visas or VWP to visit your property.
AND there's still 'exit tax' implications when surrendering a GC.

Glasgow Girl

As others have said the only way to keep your options open without restriction is to become a USC. That is a pretty straightforward process and costs less than $1,000. The only downside is that as a USC you will subject to US Federal taxes for the rest of your life, and all of the associated foreign income and savings reporting requirements.

If you stay in the US then nothing changes tax wise. If you move to the UK, then as a USC you will have to file both UK and US tax returns and your total tax bill will be equivalent to that of the highest country. Because of the tax treaty between the US and UK, you will only pay the difference to the country with the higher bill. In most circumstances UK tax obligations will be higher than US Federal obligations so if you live in the UK it is unlikely there will be further tax to pay to the US.

If you bounce between the two countries you could be required to file both UK and US taxes while residing in the US depending upon how the UK determines your tax residency status. In those circumstances you could end up paying some of the taxes directly to the UK and some to the US depending upon the nature of your income but as before your total tax bill would only be equivalent to that of the higher country because of the tax credits. No one knows how taxes will change in the future other than that they are most likely to go up. However historically the UK tax burden has almost always been higher than the US one.

You are going to have to pay your US property taxes regardless of where you live. You will also have to pay state taxes on your rental income and I believe you will be subject to 30% withholding from the iRS on that income so as niell above said you are going to have to file US taxes anyway to get that back.

In short, unless you sell your property you will have to file a US tax return and since your tax burden is unlikely to increase by becoming a USC, then for me it would be a no brainer to take out USC. Even if you sell your property you have to consider if the hassle of filing a US tax return outweighs the advantages of USC.

Middlemore

Thank you everyone, these are all aspects I was trying to figure out, and needed some unbiased input before reaching a decision.
I have lived in a different country to my son for over a decade, and we are trying to plan so that doesn't continue. I'm not a grandma yet, but the aim of all this is to ultimately living in the same country as my son and his family, wherever that will be!
I don't want to be a Skype granny!
It would be ridiculous if his job brought him back to the US after I retired in the UK and I was not able to join him back here, after being here all these years. I've always hesitated with citizenship because of the tax implications, but I think its the only way to go, when we are still unsure where his job will finally land.

Thanks again folks.

tht

The FEIE will also be a lot easier to use a a Citizen:

https://www.irs.gov/individuals/inte...come-exclusion

I commuted as a green card holder and will say the biggest tax issue was really the state tax.

I was working in the UK and resident in NYC, I got hit with higher taxes in the UK and could only use part of them as a credit against my US federal tax. I then had to pay my state and city tax out of pocket…. And now have only a few years left to Carey forward the credits (they expire after 10 years).

If you live in a state with state and or city taxes you may want to move states before you move states. Not sure what state if any you have to fiel if you move abroad, it probably depends if you own property etc.

Lion in Winter

I had understood that as a dual citizen resident in the UK, then the UK is basically where you pay income tax irrespective of tax rate or bracket in each country (no idea about property tax etc if you own in the US). As US citizen you have to file in the US, but you file with the foreign income exclusion which is currently at just shy of 109,000 USD income per year, meaning that under that amount you are not going to pay US income tax at all, only UK. If you make more than that, then you will pay some amount in tax of the excess to the US as well. Am I wrong? I often am.

Also, I believe there is an annual form to file with the US if you have an account in the UK containg 10k USD or more.

Middlemore

Thank you all again!
The taxes were the worrying part that made me hesitate about citizenship, but I think my retirement income will be low enough that it won't be a problem.
I own property in the US, so I'm thinking the main issue will be the rental income, or if I sell it, then tax on the income from the sale.
I'm in Chicago, so that in itself is a whole new headache!

Lion in Winter

Let me know if you find a good shipper for your stuff back to the UK, if you don't mind. I'm in a Chicago suburb myself.

Middlemore

It won't be anytime soon, as I still have a few years until retirement!
The reason I posted now is that my GC expires this year, so I need to make the decision regarding immigration status at this point.

I don't have any ideas regarding shipping. I used Anglo Pacific when I moved here, but some items were damaged and a couple of things vanished altogether. They weren't interested, they blamed the customs officials, so I didn't pursue a claim as it wasn't going anywhere.

RICH

I hope the tax issue is now clear as not a significant concern. Apply for US citizenship today!. Don't let GC expire in the meantime!

Middlemore

Thank you!

My GC expires at the end of this year, and I'm already in conversation with the lawyer that did my GC, so hopefully it will all go smoothly.

Nutmegger

Have you reviewed the forms? It is so simple to DIY naturalization. Save your money!