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Tax Question

Tax Question

Old Feb 11th 2024, 10:56 am
  #1  
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Default Tax Question

I was a GC holder and been living in US since Nov 2020, filed taxes each year etc...last year I got divorced in middle of October and moved back to UK end of October. Once I got back to UK I filed the for to abandon my GC and got confirmation of that in November.

Currently I am unemployed as finding a job is proving more difficult than it was in the US even basic mundane jobs, I have just received my W2 from my old US employer. I have read that because I was divorced before the year end I would file as single for the year but I am not sure if I would use a 1040 or a 1040NR and as I was in the US for less than 3 years I wouldn't have to file the expatriation form. ( just trying with turbo tax show I would owe tax due to my tax withholding being married filing jointly but having to file single due to divorce)

Another question when I file I know I put my new address on the form but on the W2 do I leave it showing my old US address?

I don't have many assets as most of that was spent on plane ticket and having to ship my belongings back to UK. I have a small 401k from last company it was only about 1k in it and when I explored a withdrawal of it that's when I found out I would only get around a 1/3 of it due to taxes and penalty fees etc, so should I just leave it for another 8 years or explore different options?
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Old Feb 11th 2024, 3:16 pm
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Default Re: Tax Question

Originally Posted by JonB 47
I don't have many assets as most of that was spent on plane ticket and having to ship my belongings back to UK. I have a small 401k from last company it was only about 1k in it and when I explored a withdrawal of it that's when I found out I would only get around a 1/3 of it due to taxes and penalty fees etc, so should I just leave it for another 8 years or explore different options?
For above, any harm in letting it grow?

For the rest, I would hire a CPA (if it were me)
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Old Feb 11th 2024, 4:17 pm
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Default Re: Tax Question

I am pretty sure that because you were single on Dec 31st, you have to file as single, and also because you were non resident on that date you have to use the 1040NR. Unfortunately using the 1040NR means that you are not entitled to any deductions whatsoever on earned income, so the fact that you were single versus married won’t change the tax due which will be more than if you could claim the single deduction. Only include your US income. Leave the W2 as is, no one cares what your address is.

On the 401K your choices are to leave it, or to pay the taxes and penalties for withdrawing before age 591/2. You are going to pay taxes anyway no matter what age you withdraw. However the tax rate should be in the 10% bracket for such a small sum if you have no other US sourced income (unlikely) and you are going to pay that no matter what since you are not allowed any deductions as a non resident alien. If you withdraw now (before age 591/2) you will also pay a 10% penalty, which may be worth it to tie up all your USA obligations now. Also, consider that tax rates may (likely will) increase going forward so the 10% rate may be higher when you do withdraw. None of us have a crystal ball on that one but I don’t think anyone foresees taxes decreasing!
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Old Feb 11th 2024, 4:34 pm
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Default Re: Tax Question

According to the Publication 519 section on Last Year of Residency, your residency termination date is by default the last day of the year (meaning you are a resident alien the entire year, and you file 1040), unless you choose to file a statement to establish an earlier residency termination date based on when you filed I-407 (meaning you would be a dual-status alien, resident for the first part, and nonresident for the last part, and you file 1040NR, with a statement of your income for the part of the year you were resident on a 1040). There probably isn't much benefit to making this choice unless you had lots of non-US income in between when you filed I-407 and the end of the year. Dual-status aliens cannot use the standard deduction, and have other downsides.

You would file your tax return with the address that you currently receive mail at at the time you file.
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Old Feb 12th 2024, 10:10 am
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Default Re: Tax Question

Thanks for the replies. I think I will just file the standard 1040 as there was no US income or UK income once I left..plus according to TT and other free filing places they all show I would only owe $58 federal tax anyway, I don't have to file a state one as I lived in Florida

As for the 401k I will most likely leave it for now and see what options in future
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Old Feb 12th 2024, 11:16 am
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Default Re: Tax Question

Originally Posted by JonB 47
Thanks for the replies. I think I will just file the standard 1040 as there was no US income or UK income once I left..plus according to TT and other free filing places they all show I would only owe $58 federal tax anyway, I don't have to file a state one as I lived in Florida

As for the 401k I will most likely leave it for now and see what options in future
For the 401k you may consider converting it to a Roth IRA, pay the regular income tax now (no penalty) and in future it will all be tax free including any earnings in both the USA and UK.
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