penguinsix

Well, it's complicated.

Some states consider you resident even though you have left the country. Their attitude is you will eventually come back to that state and your absence was only temporary, even if for a few years. Thus you owe taxes for the time while you were away (seriously--some states do this). You have to actively cut all ties to the state--no more bank accounts, drivers license, property, etc and then make sure not to return to that state should you come back.

The exemption still exists for foreign income (I think it is about $92,000) and you can also get a deduction for housing expenses overseas, which varies by where you live.

Isn't there also an estate issue of gc vs. USC such that getting citizenship might be better for your kids.

paul32x

By the way you need to have six months on your green card if you're applying for citizenship, so it may be that you have to renew it rather than go down that route if you are that close.

Guindalf

Depending on where you are, the process is relatively quick, especially compared to getting other things done!

I applied on August 24th and had my interview and ceremony on November 9th (2010). This was in Atlanta.

I agree that there is a need to get the process moving if you only have six months left on the GC though. Better to be early than take a risk!

Michael

The foreign earned income exemption is currently $92,000 plus there is also a foreign housing exemption. If that is not enough, then you can use foreign tax credits to offset more income.

Unless things have changed, you don't file or pay state income taxes when you are not a resident of that state. If that were the case, then people like Romney and McCain would be paying state income taxes in at least a half dozen states. Usually they pick the state that has either no income taxes or the lowest income taxes as their primary residence so that they pay as little as possible in unearned income. As an example, George H. W. Bush used a mail drop in a hotel in Texas (no state income tax) even though he really lived in Washington DC and Kennebunkport Maine with on a few trips to Texas from the time he became CIA director in the 1970's through his presidency (he got caught doing that during his presidency and eventaully had to claim Maine as his primary residence). Also currently Romney primarily lives in California but I doubt that he claims California as his primary residence due to the high tax rate.

It is nice being King or just rich.

Uncle_Bob

Some other things that i considered when i applied for USC

-Cost. The one off cost of citizenship versus the green card renewal cost every 10 years.

-Employment. Being a citizen enables you to get military/security clearance. In my line of work this opens up more job opportunities which typically offer 10k - 20k more per year in salary.

Steve_

In which case there is no point to not getting US citizenship. If you ever left the US you could renounce US citizenship, but if you've been in the US for eight years as a citizen or LPR you are subject to the expat tax provisions either way if you give up LPR status/renounce citizenship.

So from a tax standpoint it is pretty much a moot point.

And given that you don't plan on leaving, it's moot anyway.

Steve_

Note that if you naturalize in the USVI, your estate will be exempt from estate tax. A little known tax tip.

sunnysideup

Word of advice son - don't ever say never. A lot can change in a very short time. When I was your age I said exactly the same thing. But now - I am planning to return to Europe. As others on here will tell you, as a US citizen tax complications when you leave to live somewhere else can be very messy. Add to that the FACTA and other bullshit from the patriot act and you will find that as a US citizen you are a pariah to overseas financial institutions. Does this country deserve to have you as a citizen? I am considering renouncing my citizenship.

datcha

Wise words indeed, thank you. I actually didn't want to complicate the matter by being wishy-washy in my OP.

If the balloon does go up here for whatever reason, I'll be fortunate to have a fall-back position for sure.

Steve_

And they're talking about some sort of tax punishment for people who do it purely for tax reasons, in addition to the 8854 provisions. Its so stupid.

There's a case in Calgary that I've related before of a developmentally disabled boy whose parents are both dead and a friend of his parents looks after him. Anyway the boy has US citizenship and cannot renounce it because the State Dept. has decided he lacks the mental capacity to do it. The Canadian govt. provides money to a disabled fund called an RDSP to help provide for his care - which is subject to reporting and a small amount of tax in the US.

MarylandNed

Never say never. Also, while you're not a USC, you can be deported if you get into trouble with the law - even if you're actually innocent. I say become a USC asap. I think the pros far outweigh the cons.

Ozzidoc

Wow! Really? Can any US permanent resident consider naturalizing in the USVI?

Any links please?

Thanks!

Hmmm. Looks like this is only the case if you also die in the USVI:

http://www.usvi.net/information/busi...nd-gift-taxes/

Uncle_Bob

Sounds to me like the best scenario for a couple is to have one a USC and one on a green card. At least for us it makes sense.

nun

If you are a LPR you file an 8854, the exit tax only becomes an issue if you earn more that $145k average over last 5 years, have a net worth more than $2M or at delinquent in your US taxes. Once that's done you will be taxed as a non resident alien, so only US source income will be US taxable and with the tax treaty you will probably have no US taxable I come and as an NRA you'll have minimal tax forms to file once the W-8BENs are done.

If you are a US citizen and move to the UK you will have significant administrative overhead in filing US and UK taxes and will be limited in the type of accounts and investments available to you.

Manc

actually, for me it was the other way around, if I plan to return to the UK get US citizenship