I have about $16,000 in my Rollover IRA account with Fidelity. I came back to my home country in 2009. I had a green card in the U.S. but since I've been here for over 3 years and I'm divorced from my American husband, I think I'm considered as Non Resident Alien. I have no plan going back to the U.S. I still have a bank account there for now. The last state I lived was Arizona. I have a friend in Floria who is saying I can use her address as my mailing address in the U.S.

I would like to take all my money out from my Rollover IRA account because I need some money. I understand the 10% penalty part, but I just don't know the tax part. If anybody can give me any advice, I really appreciate it!

You owe taxes to the US because the money was deposited in the account before taxation.

The administrator will withhold 20% against your tax liability before distributing. You will then need to file a return to report the income as well as pay the 10%.

If you withdraw only an amount that is less or equal to one personal exemption ($3800 for 2012), you would only owe the 10% penalty and no income taxes.

Also note that, unless you formally surrendered your green card, you are STILL considered to be a resident alien (filing Form 1040). Further, you were suppose to file tax returns for every year to claim your world-wide income. The Foreign Earned Income Exclusion probably meant you owed NO taxes, but a tax return was still required due to your green card status.

Thank you for the replies. They are helpful. After reading them, I have a few more questions. I didn't make any money in the year 2009, 2010 and 2011. Was I still required to file a tax return for these three years?

Should I send my green card to the U.S. consulate here as soon as possible? I didn't keep it thinking I'm going to use it someday, I just thought if I stayed out of the country, I'm considered a non resident.

So, let's say I turn in my green card and officially become a non resident alien. I won't have to file a tax return anymore? In that case, how do I pay tax on my early withdrawal? Also, if I only withdraw less or equal to one personal exemption every year, I never have to pay tax on my withdrawal and I can just do that until it runs out?

Sorry for asking many questions, but I'm really clueless and appreciate any advice you can give me. Thank you!

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Originally Posted by ScottGem

You owe taxes to the US because the money was deposited in the account before taxation.

The administrator will withhold 20% against your tax liability before distributing. You will then need to file a return to report the income as well as pay the 10%.

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Thank you for your advice! It was helpful!

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Originally Posted by taxesforaliens

If you withdraw only an amount that is less or equal to one personal exemption ($3800 for 2012), you would only owe the 10% penalty and no income taxes.

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Thank you for your advice! I have more question but I messed up and submitted my question as a reply to my original question. If possible, please read it and give me some advice!

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Originally Posted by AtlantaTaxExpert

Also note that, unless you formally surrendered your green card, you are STILL considered to be a resident alien (filing Form 1040). Further, you were suppose to file tax returns for every year to claim your world-wide income. The Foreign Earned Income Exclusion probably meant you owed NO taxes, but a tax return was still required due to your green card status.

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Thank you for your advice. I had more questions but accidentally posted it as an answer to my own question. If you can, please read it and give me some advice.

First, contact the U.S. consulate to find out HOW to surrender your green card.

If you had no income for tax years 2009, 2010 and 2011, you have NO requirement to file a U.S. tax return.

Once you revert to non-resident alien status, submit Form W-8BEN to the custodian to adjust the withholding rate on the distribution. Without the W-8BEN on file, the custodian will automatically withhold 30% for federal income taxes. If your tax rate is LESS than 30%, you will have to file Form 1040NR to recover the difference.

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Originally Posted by AtlantaTaxExpert

First, contact the U.S. consulate to find out HOW to surrender your green card.

If you had no income for tax years 2009, 2010 and 2011, you have NO requirement to file a U.S. tax return.

Once you revert to non-resident alien status, submit Form W-8BEN to the custodian to adjust the withholding rate on the distribution. Without the W-8BEN on file, the custodian will automatically withhold 30% for federal income taxes. If your tax rate is LESS than 30%, you will have to file Form 1040NR to recover the difference.

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Thank you again. Who's the custodian? People at Fidelity? Also where do I get Form W-8BEN and where do I submit it? So if I'm a resident alien, they will withhold 30%, but if I'm a non resident alien, it will be less or I don't know until I ask?

They withhold 30% based on your location overseas, not on your status as resident or non-resident alien.

You can get the Form W-8BEN at Internal Revenue Service.

Thank you again. I'm going to make a list of things I need to do.

Glad to help!