VegasVillan

Hello Ex-Pats,
My wife and I are entering the final year of our Green Card, my kids have 8/10 years remaining because new cards are required at 14th birthday. Is there a consensus on GC vs US Citizenship? We wish to remain in USA but I hear a few scare stories about taxation as citizens?

I'm sure this topic has been discussed many times and even some redirection to prior threads is welcomed.

Thanks Jeff

Bob

The wki up top has pro/cons.

As green card holders, there isn't really any tax differences to you in the negative for citizenship.

robin1234

Depends on your long term future plans. I know that is a difficult question, since your plans can change. But if you plan to live in the US for the rest of your lives, then citizenship may make sense for you. The tax related negative consequences of US citizenship are mostly related to living abroad (i.e. not in the US.). If you're living in the US, you are a US taxpayer anyway, so no negative tax consequences to being a citizen. If living in the US, there are of course positives to being a citizen.

Michael

The tax issues for US citizens are mostly due to additional paperwork (yearly tax filing) since there are exclusions and foreign tax credits that can be used to offset any US taxes owed when living outside the US. Also US citizens have to file FBAR and FTCA forms if they are living outside the US and have assets outside the US.

Another issue can be how pensions are taxed. By not becoming a US citizen and returning to live in the UK, there may possibly be positive tax benefits for pensions.

lansbury

If as you say you wish to remain in the US than one positive advantage of citizenship is that you are free to come and go as you please.

Also any future legislation which may be passed having implications to the rights of non citizens will not effect you. You just never know what changes to immigration law may come about in the future.

sergeyvo

+)More residence security. You can come back to the US after long term contracts overseas.
-)If you become a US citisen then you cannot skip jury duty

As far as I know, if you leave the country as a GC holder and loose you residence status, you will have to continue reporting IRS for 10 years..... I.e. the country doesn't need you as a resident anymore but you're very welcome as a taxpayer.

paul32x

Personally I chose the Citizenship route. Renewing your GC costs almost as much! You keep your British citizenship, so from that point of view it doesn't make any difference. As for taxes, presumably you're compliant at the moment, and if you ever decide to go back to the UK, as a US citizen you'd have to fill in a tax return, but providing your income isn't complicated it's not too hard a job and you wouldn't pay any tax anyway. I'd go for it!

nun

As a Green card holder you are taxed the same way as a citizen. The only difference comes if you ever decide to leave the US and give up the Green card. If there is any chance that you will move back to the UK permanently then I would probably not take US citizenship because of the taxation complications, but if you see your future and that of your kids in the US I would become a US citizen.

nun

You do not automatically lose your GC if you leave the US, but eventually your residence status will be questioned and you might have it taken away.

There is no requirement to pay taxes to the IRS for 10 years after you give up a GC. However, you must comply with the IRS expatriation rules as explained in the instructions for form 8854

http://www.irs.gov/pub/irs-pdf/i8854.pdf

nun

This is true. A NRA living in the UK and with US IRA and ROTH accounts can combine the US standard deduction and exemptions and the UK personal allowance along with the tax treaty to withdraw $24k tax free and up to $60k and only pay 8% income tax.

robin1234

Fair enough, but you qualify your statement; "..providing your income isn't complicated.."

The problem is, eventually most people proceed to retirement, and if all goes according to plan, income does become more complicated at that stage. There should be significant savings in place, including various tax advantaged plans, possibly from two or more different countries, as well as perhaps defined benefit plans, and of course old aged pensions and Social Security. I realise you can mitigate the tax complications of all this in various ways, but in general, income in retirement is more complicated than when working.

Now, if you have adult children and other family living in the US etc., then being a dual citizen may make sense for the retiree living in the UK ....

VegasVillan

Our situation is complicated (in a good way). We have a very generous UK defined pension due in about 10 years, a few UK properties plus numerous UK equities that I CANNOT liquidate because I am not a UK resident. We are completely tax compliant, but I don't believe we have received the credit due because of a lack of understanding around the UK/USA tax treaty.

I would appreciate a recommendation for a very good accountant who might simplify things for us.

I am grateful for every response.

nun

What are the UK equities, are they individual stocks? Why can't you sell them? Are you filing FBAR and 8938 if required. I find it hard to believe that you are tax compliant if you have UK investments and do not understand the US/UK tax treaty.

Yorkieabroad

What do you mean by this? I had some that were "stranded" when Etrade UK closed down, and others from previous employers share schemes that I was struggling to sell through UK routes as no other UK online broker would open an account for me as a US resident, and I didn't want to pay regular stockbroker commissions. My US financial adviser could have sold them for me, but again the commissions were excessive, so I just transferred them into an international account with Etrade US and now trade them from there. I believe there may have been a CGT implication at the time, but to be honest, can't remember. But if you are in the same situation, then it is possible to sell, it just may not be palatable!

IRJ

If you plan a long term stay in the USA Citizenship has benefits. Also while your kids are "minors" they can apply under your umbrella for Citizenship whereas if you wait until they are 18 they will have to apply separately as adults themselves.