Ask Me Help Desk - Dual status return and expatriation

Greetings,

I had question about giving up the green card and filing taxes for that year. If my residency termination date is June 2013 (i.e. I surrender my green card), do I have to file a dual status return for 2013? Can I file a regular 1040 instead for that year?

Thanks,
Ganesh.

I forgot to mention that I have been living abroad since Jan. 1, 2013.

You can file either dual-status or, by using the default termination date if 31 December 2012, file as a resident.

But if you file as a resident, you MUST declare all world-wide income.

Quote:

Originally Posted by AtlantaTaxExpert

You can file either dual-status or, by using the default termination date if 31 December 2012, file as a resident.

But if you file as a resident, you MUST declare all world-wide income.

Thank you for your reply!

Are you sure about this? I also need to file form 8854, annual expatriation statement, since I am a Long Term Resident - more than 8 years. The literature from pub 519 seems to indicate that I must file a dual status return.

I am unclear about what my residency termination date is - is it the day I give up my green card - say June 1, 2013 or is it Dec. 31, 2013.

I have also been living abroad since Jan. 1, 2013, so I don't know if I have a closer connection to a foreign country.

Thanks for your help.
Ganesh.

P.S. I am quoting some lines from the instructions for form 8854:

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Date of termination of long-term residency.

If you were a U.S. long-term resident (LTR), you terminated your lawful permanent residency on the earliest of the following dates.

1.
The date you voluntarily abandoned your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U.S. consular or immigration officer, and the Department of Homeland Security determined that you had, in fact, abandoned your lawful permanent resident status.
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From Pub 519:

Last Year of Residency

If you were a U.S. resident in 2012 but are not a U.S. resident during any part of 2013, you cease to be a U.S. resident on your residency termination date. Your residency termination date is December 31, 2012, 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 2012 that you are physically present in the United States, if you met the substantial presence test,

2.
The first day in 2012 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.

You can use this date only if, for the remainder of 2012, your tax home was in a foreign country and you had a closer connection to that foreign country. See Closer Connection to a Foreign Country, earlier.

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From pub 519 (under dual-status tax year)

Nonresident at end of year. You must file Form 1040NR or Form 1040NR-EZ if you are a dual-status taxpayer who gives up residence in the United States during the year and who is not a U.S. resident on the last day of the tax year. Write “Dual-Status Return” across the top of the return. Attach a statement to your return to show the income for the part of the year you are a resident. You can use Form 1040 as the statement, but be sure to mark “Dual-Status Statement” across the top.

I did not know you were a long-term permanent resident. That changes things.

I would have to research your specific case and all aspects of your situation before giving any advice, and I WILL charge for such research.

Email me if you are interested!

Quote:

Originally Posted by AtlantaTaxExpert

I did not know you were a long-term permanent resident. That changes things.

I would have to research your specific case and all aspects of your situation before giving any advice, and I WILL charge for such research.

Email me if you are interested!

I know for sure that I am not a covered expatriate (i.e. I don't owe exit tax based on the 3 conditions listed for a covered expatriate). If we ignore the rest (the 8854 and the long-term resident) can I still claim Dec. 31 as my residency termination date even though I might give up my green card earlier?

Thanks,
Ganesh.

If you were NOT a long-term permanent resident (LPR), I could say with confidence the answer would be YES, because that aspect of the Residency Termination Statement and use of the default date I have already researched and vetted with the IRS International Tax Hotline.

Your status as a LPR makes me unsure about whether you can file as a resident. My instinct says yes, no problem, but I do NOT know for sure, and I cannot advise you to do so without knowing for sure.

Unfortunately, I am SO BUSY right now I do not have time to do the requisite research. Even if you hired me to do it, I would wait until after the 15 April deadline when things settle down before doing the research and providing an answer, since you have until 15 JUEN 2013 to file.

Quote:

Originally Posted by AtlantaTaxExpert

If you were NOT a long-term permanent resident (LPR), I could say with confidence the answer would be YES, because that aspect of the Residency Termination Statement and use of the default date I have already researched and vetted with the IRS International Tax Hotline.

Your status as a LPR makes me unsure about whether you can file as a resident. My instinct says yes, no problem, but i do NOT know for sure, and I cannot advise you to do so without knowing for sure.

Unfortunately, I am SO BUSY right now i do not have time to do the requisite research. Even if you hired me to do it, I would wait until after the 15 April deadline when things settle down before doing the research and providing an answer, since you have until 15 JUEN 2013 to file.

Thanks for your time! This was only for the 2013 tax return which is due next year, but I thought I'd get it sorted out now. I wish I had a straightforward answer, but I seem to be out of luck. The only thing I do know is that from what I have read (8854 instructions and pub 519), there is no distinction between the filing requirements for a short term (< 8 years) and long term resident other than having to file the 8854 in the case of the latter.