abandoning green card and dual status alien

If I abandon my green card, will I be a dual status alien for that year's tax return? I live in my own country for two years and it is my tax home.

Reply to
HudRiv
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Yes, you would be a dual status alien. However, it looks like your entire worldwide income is taxable. Sounds a bit strange, but see the quote from chapter 6 below. Someone should verify my claims.

It might be good to talk to a pro to cover all your bases from filing with the Secretary of State and the IRS.

See publication 519:

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Dual-Status Aliens

You can be both a nonresident alien and a resident alien during the same tax year. This usually occurs in the year you arrive in or depart from the United States. Aliens who have dual status should see chapter

6 for information on filing a return for a dual-status tax year.

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Last Year of Residency

If you were a U.S. resident in 2008 but are not a U.S. resident during any part of 2009, you cease to be a U.S. resident on your residency termination date. Your residency termination date is December 31,

2008, unless you qualify for an earlier date as discussed next. Earlier residency termination date. You may qualify for a residency termination date that is earlier than December 31. This date is:
  1. The last day in 2008 that you are physically present in the United States, if you met the substantial presence test, 2.

The first day in 2008 that you are no longer a lawful permanent resident of the United States, if you met the green card test, or 3.

The later of (1) or (2), if you met both tests.

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Income Subject to Tax

For the part of the year you are a resident alien, you are taxed on income from all sources. Income from sources outside the United States is taxable if you receive it while you are a resident alien. The income is taxable even if you earned it while you were a nonresident alien or if you became a nonresident alien after receiving it and before the end of the year.

For the part of the year you are a nonresident alien, you are taxed on income from U.S. sources and on certain foreign source income treated as effectively connected with a U.S. trade or business. (The rules for treating foreign source income as effectively connected are discussed in chapter 4 under Foreign Income.)

And finally, be aware of the expatriation tax.

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Expatriation After June 16, 2008

If you expatriated after June 16, 2008, the expatriation rules apply to you if you meet any of the following conditions.

  1. Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than 9,000 (if you expatriated or terminated residency before January 1,

2009). 2.

Your net worth is $2 million or more on the date of your expatriation or termination of residency. 3.

You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency.

Reply to
removeps-groups

A lawful permanent resident (green card holder) who desires to abandon residency establishes the last day of residency on the day he/she submits the necessary document(s) to USCIS or a US consular officer. See page 4 of Pub 519.

This makes the individual dual status for the year (Resident @ beginning, Nonresident @ end). Filing instructions start on page

33 of Pub 519.

You would be subject to the expatriation tax rules if you are considered to be a long-term resident of the US. This would be the case if you were a lawful permanent resident (green card holder) for at least 8 of the last 15 years. See page 22 in Pub

519 for details.
Reply to
Alan

Just having a green card for 8 years is not sufficient. You also need to have a tax bill of 139k or more or a net worth of $2 million in order for the expatriation tax to apply.

Reply to
removeps-groups

Don't forget Line 6 in Part B of Form 8854. He has to have complied with tax filing and tax payment obligations for all of the preceding five years. Otherwise, the amount of his tax bills or net worth is irrelevant.

Reply to
Alan

The IRS has just issued (today) guidance on this subject:

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Notice 2009-85 provides guidance under section 877A, which was enacted by section 301 of the Heroes Earnings Assistance and Relief Tax Act of 2008 (the "Act") and applies to individuals who expatriate on or after June 17, 2008.

Reply to
Alan

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