Chins

I have tried to search the forum with little joy - probably just crap at searching

Its still a little while before i can apply for citizenship, but my wife and myself are discussing the pro's and cons. Getting answers now may change our plans so advise appreciated. Its really down to taxation pro's and cons if there are any pro's

My wife is dual UK and USC. Her dad is also dual and living in CA and potentially in the future there maybe inheritance. We know that will be taxed here. In the UK we both have parents who again may leave money.

We think we may need to move back to the UK in about three years as our parents are knocking on a bit. Will we return, who knows. Obviously becoming a US Citizen will make returning easy and even if we have a second home here we could stay over 6 months no questions asked - however i know that would affect where we are resident for tax purposes.

If we go back to the UK, lets assume i am earning $150k and my wife $30k. I know that would trigger tax. We are filing jointly today, so would that be a benefit if we are in the UK or a negative ?
I think the rough figure i can earn is $102k before the US wants tax, but does that number change if filing dual ? What is the tax rate on the excess ?

What are the implications of inheritance received in the UK ? If we are married and filing jointly and my side of the family leave me money and I dont take citizenship ?

Finally if we did move back to the UK and then decided to retire out here and I take citizenship would i be entitled to Medicare if i had only lived here for say 6 years ?

All advise appreciated.

civilservant

These are not immigration questions

Mods - please move to the general forum!

Rete

Yup, lousy searcher. Many posts on this .... so many that there is a wiki article for the Pros and Cons of US Citizenship.

https://britishexpats.com/wiki/Pros_...US_Citizenship

Nutmegger

Don't forget that if you move back to the UK and are deemed to have abandoned your US permanent resident status, you will have to start again from scratch with your wife applying to bring her UK husband to the US again, and you can't think about citizenship until three years after achieving PR status. Then (I think, you'd need to check on this), it would be another five years before you could become eligible for any kind of Medicare benefits, based on your wife's contributions.

Chins

As i mentioned the big issue for me is the tax and maybe medicare. The Wiki article is so lightweight its untrue. I've read many online articles but most like the Wiki one are not that helpful when it comes to tax matters.

Chins

Understanding the medicare qualification is the other big one aside from tax for me.

Giantaxe

Are you a Green Card holder? What are the ages of you and your spouse? Difficult to fully answer your questions without that info...

Never read that FAQ before, but at first glance it seems ok. Medicare eligibility is almost certainly not a citizenship issue anyway.

Nutmegger

Chins

RICH

Fair questions. I have no answers. I think you earn enough it is worth seeking professional advice. Personally I take the horror stories of tax hardships on expat USC with a pinch of salt.

Giantaxe

Are you going to abandon your green card?

Take a look at the Medicare link. You don't qualify on your own record (that requires 40 quarters), but you will qualify on your spouse's record once she turns 62, assuming she has at least 40 quarters. There's someone on this board that immigrated and did precisely that. So with a spouse 5 years younger or so, you'd qualify on their record around age 67. Of course, you could add to your own credits if you came back and worked. That might allow you to qualify at age 65.

Glasgow Girl

This is actually a very simple decision. Because your wife is a USC she will be subject to US taxation no matter where in the world she lives. If she lives in the UK she will also be subject to UK taxation (more on that below). There is no federal income tax on an inheritance, and only six states have an inheritance tax. Of those, an inheriting child is exempt from those taxes, only NE and PA would apply them. So, unless you live in one of those two states there is no income tax on any inheritance from either set of parents, regardless of where you live or your citizenship. The inheritance in CA (or any US state) could be subject to estate tax, but that will apply no mater where you live, or what your citizenship is.The only income you need factor into your decision is your income. If you are a USC you will be subject to US income tax no matter where you live. If you live in the UK as a USC, you will be subject to tax in both countries. You will get credit in the US for any UK taxes paid, and the net result could well be that you owe nothing or very little. If you are a UK citizen only living in the UK then you have no US tax due.

With all that said, in your shoes, I would get USC before you leave. Who knows what the rules will be down the road. You have a clear path now, maybe not so much in the future. Financially, I don't think your tax situation is going to be a whole lot different whether you are a USC or not. You could calculate the tax due in the US based upon your projected income as you normally would, do the same for the UK, and see what the difference is. That will tell you how much you would owe the IRS, and like I said, it is unlikely to be much if anything.

What I would consider is that as a USC you will have to fill in FBARS and the Form(s) 8938 required with your income tax return which is a major pain, but since your wife is a USC, you are subject to those requirements on all assets that are jointly owned, so once again whether you are, or are not, a USC may not change your situation very much.

If your wife used to live in the UK, hopefully she filed IRS tax returns as well as UK ones. If not, you may have an issue there. Google, "accidental American" if that is the case.

Chins

Thanks for all the replies. The last two have helped tremendously. Yes my wife filed IRS returns - she had forgot but needed to for my visa.

I looked at the tax situation on earnings and filing jointly we have $138k allowance. Then add to that allowances and the impact wasnt too bad and it would be a nice problem to have. I maybe on the scrap heap if we go back anyway, so stacking shelves at the local supermarket maybe my only option

Looks like there are few downsides to going for USC.

Cheers

Jonathan

Rete

Honestly, I don't believe our members set it up to income US income taxes. Personally, I can't see why it would be necessary. There are other pages that tell how much UK earnings are exempt from US taxes if you are a US Citizen. This pertains if you are a USC or a valid PR. Medicare has absolutely nothing to do with US citizenship. It is available to any working US resident who has paid into the social security system for 40 quarters or has a USC spouse they can claim benefits from when the USC spouse.

If something is considered to be lightweight how in heaven's name does it make it untrue.

md95065

It doesn't make it "untrue" but it does make it "unhelpful" and "not useful" when it comes to the issuesthat the OP was concerned about.