Green Card holder - Tax Exclusion

[Powka 0]

Hello there,

I was wondering if anyone could answer a few of these simple questions.

I qualify for US Tax Exemption (I earn less than $80,000 a year abroad and am a resident of a foreign country) and want to sort this thing out now. Do I only need to fill in the Form 2555, and then send it over by post to IRS in US, or is there anything else that I need to fill and send over to them?

What is the difference between 2555 and 2555-EZ?

Also, WHEN do I need to send this form? Tax year in UK ends in April, is it the same in US?

Thank you!

Edited November 20, 2012 by Powka

[Brother Hesekiel 2,236]

Hello there,

I was wondering if anyone could answer a few of these simple questions.

I qualify for US Tax Exemption (I earn less than $80,000 a year abroad and am a resident of a foreign country) and want to sort this thing out now. Do I only need to fill in the Form 2555, and then send it over by post to IRS in US, or is there anything else that I need to fill and send over to them?

What is the difference between 2555 and 2555-EZ?

Also, WHEN do I need to send this form? Tax year in UK ends in April, is it the same in US?

Thank you!

If you are a Green Card holder, then you are a permanent resident of the United States. If that's the case, then you cannot be a resident of a foreign country at the same time as you have only one body.

[VanessaTony 3,567]

These are the requirements to qualify for the foreign income exemption: http://www.irs.gov/Individuals/International-Taxpayers/Foreign-Earned-Income-Exclusion---Requirements

Here is a link that explains 2555 vs 2555EZ: http://www.greenbacktaxservices.com/blog/expat-taxes-explained-form-ez-for-foreign-earned-income-exclusion/

The tax year in the US ends December 31st. You are required to file your taxes before April 15 (or the next business day if on a weekend).

I would personally file it via Turbotax if you can. I've never done it but that is my intent if/when we move back to Australia.

[Nich-Nick 3,354]

Hello there,

I was wondering if anyone could answer a few of these simple questions.

I qualify for US Tax Exemption (I earn less than $80,000 a year abroad and am a resident of a foreign country) and want to sort this thing out now. Do I only need to fill in the Form 2555, and then send it over by post to IRS in US, or is there anything else that I need to fill and send over to them?

What is the difference between 2555 and 2555-EZ?

Also, WHEN do I need to send this form? Tax year in UK ends in April, is it the same in US?

Thank you!

Need more details.

Do you live in the US now?

When did you get here?

When did you get the greencard?

Are you married to a US citizen?

Did you earn your money in the UK in the calendar year 2011?

Did you earn any money in the US in 2011?

And you don't worry about filing anything yet because the tax year doesn't end until Dec 31. The tax code and forms aren't even finalized yet. And it's way more complicated than sending in that one form.

[Powka 0]

Vanessa&Tony, thanks for the Turbofax link, I will check em out. Are they pricey?

Do you live in the US now?

When did you get here?

When did you get the greencard?

Are you married to a US citizen?

Did you earn your money in the UK in the calendar year 2011?

Did you earn any money in the US in 2011?

And you don't worry about filing anything yet because the tax year doesn't end until Dec 31. The tax code and forms aren't even finalized yet. And it's way more complicated than sending in that one form.

No, I don't live in the US now. I won't move there until the summer of 2013.

I first stepped onto the US soil on July 8th, 2012. That is when I completed my Green Card forms (at the JFK airport), and I received it by post in the end of August.

I got my 6 months visa approved after the Green Card interview in the embassy in February 2012.

No, I'm not married, never have been. I won my Green Card through DV Lottery 2012.

I'm not sure which year I should be filling tax forms for, but yes, I earned my money in UK in the calendar year 2010, 2011 and 2012; and will also be earning in 2013 until I move to US.

No, I haven't been to the US in 2011. And when I was in the US in 2012, for the short period of 12 days, I did not earn any money.

Thanks! Would it be possible to help me out now? How come it's not as simple as filling in the forms, and just sending them in - what else is there?

Thank you!

Edited November 21, 2012 by Powka

[aaron2020 11,651]

Vanessa&Tony, thanks for the Turbofax link, I will check em out. Are they pricey?

No, I don't live in the US now. I won't move there until the summer of 2013.

I first stepped onto the US soil on July 8th, 2012. That is when I completed my Green Card forms (at the JFK airport), and I received it by post in the end of August.

I got my 6 months visa approved after the Green Card interview in the embassy in February 2012.

No, I'm not married, never have been. I won my Green Card through DV Lottery 2012.

I'm not sure which year I should be filling tax forms for, but yes, I earned my money in UK in the calendar year 2010, 2011 and 2012; and will also be earning in 2013 until I move to US.

No, I haven't been to the US in 2011. And when I was in the US in 2012, for the short period of 12 days, I did not earn any money.

Thanks! Would it be possible to help me out now? How come it's not as simple as filling in the forms, and just sending them in - what else is there?

Thank you!

You've got a problem. A green card is for living in the US. When you activated your green card on July 8, 2012, you legally immigrated to the US and became obligated to live in the US to maintain your green card status. You cannot have a green card and live in another country as you are doing now with the intention to "move or immigrate" to the US in a future year. You should have applied for a re-entry permit if you wanted to stay out of the US for so long.

You need to get yourself moved to the US as quickly as possible or risk losing your green card.

Google "maintain legal permanent residency" to get more info.

http://www.uscis.gov/portal/site/uscis/menuitem.eb1d4c2a3e5b9ac89243c6a7543f6d1a/?vgnextoid=3f443a4107083210VgnVCM100000082ca60aRCRD&vgnextchannel=3f443a4107083210VgnVCM100000082ca60aRCRD

Maintaining Permanent Residence

You may lose your permanent resident status (green card) if you commit an act that makes you removable from the United States under the law, as described in Section 237 or 212 of the Immigration and Nationality Act (INA) (see the “INA” link to the right). If you commit such an act, you may be brought before an immigration court to determine your right to remain a permanent resident.

Abandoning Permanent Resident Status

You may be found to have abandoned your permanent resident status if you:

Move to another country intending to live there permanently

Remain outside of the United States for more than 1 year without obtaining a reentry permit or returning resident visa. However, in determining whether your status has been abandoned, any length of absence from the United States may be considered, even if less than 1 year

Remain outside of the United States for more than 2 years after issuance of a reentry permit without obtaining a returning resident visa. However, in determining whether your status has been abandoned any length of absence from the United States may be considered, even if less than 1 year

Fail to file income tax returns while living outside of the United States for any period

Declare yourself a “nonimmigrant” on your tax returns

[Hypnos 6,578]

Declaring you are a nonimmigrant on your US tax return after you have received a green card is a big problem, and can lead to your green card being revoked.

[Powka 0]

aaron2020, thanks, however, while I'm not going to get into details, I have researched this issue a lot before I entered the US and then left. In this case, you are wrong, and there are ABSOLUTELY no danger of me losing my permanent resident status if I stay out of US for less than 365 days, which was confirmed to me by more than a few US Customs officers and immigration lawyers.

I would appreciate if someone could help me out with my initial question though. I DO qualify for the tax exclusion; I just need to know why is it more complicated than just filling in Form 1040 and 2555 and sending them over to IRS?

Thank you!

Edited November 21, 2012 by Powka

[C-ma'am 684]

**Moved from AOS from work, student or visitor visa to Moving Here and Your New Life in America

[VanessaTony 3,567]

aaron2020, thanks, however, while I'm not going to get into details, I have researched this issue a lot before I entered the US and then left. In this case, you are wrong, and there are ABSOLUTELY no danger of me losing my permanent resident status if I stay out of US for less than 365 days, which was confirmed to me by more than a few US Customs officers and immigration lawyers.

I would appreciate if someone could help me out with my initial question though. I DO qualify for the tax exclusion; I just need to know why is it more complicated than just filling in Form 1040 and 2555 and sending them over to IRS?

Thank you!

The main reason it's more complicated is because there are forms you'll need to show to show your income, but also as others said, the whole giving up your GC thing. BUT by filing taxes you are doing what you're supposed to so that's all well and good.

Turbotax cost depends on what you file. Have a look at their website. I'm planning on doing it all online and it will cost $30 to file for my husband and myself (jointly). I'm not filing a 2555 though. The website will have the new turbotax for 2012 up and running after December 3rd (so says the website) and you're able to create an account and give it all a try, for free, before you have to pay/submit. So if it looks to be too hard, then you can go to a tax professional. I'm sure there will be someone in the UK who deals with US taxes.

[Nich-Nick 3,354]

aaron2020, thanks, however, while I'm not going to get into details, I have researched this issue a lot before I entered the US and then left. In this case, you are wrong, and there are ABSOLUTELY no danger of me losing my permanent resident status if I stay out of US for less than 365 days, which was confirmed to me by more than a few US Customs officers and immigration lawyers.

I would appreciate if someone could help me out with my initial question though. I DO qualify for the tax exclusion; I just need to know why is it more complicated than just filling in Form 1040 and 2555 and sending them over to IRS?

Thank you!

The reason I said more complicated is because you said "Do I only need to fill in the Form 2555, and then send it over by post to IRS in US, or is there anything else that I need to fill and send over to them?" You indicated you thought a form 2555 was a stand alone form. It is only part of filing a tax return.

There are different answers for married to USC people who can file jointly as a resident alien for tax purposes. So that's why I asked more questions.

You want to know why complicated. Start reading your tax filing requirements here http://www.irs.gov/publications/p519/index.html

Determine by the ridiculously complicated IRS tax code if you are a resident alien, non-resident alien, or dual status alien for 2012. The publication is for 2011 but it probably won't change much for 2012. Turbo-tax won't help much if you don't know how to answer the guided questions, so study Publication 519. There is also a printable PDF version.

You won't do anything until 2012 ends and you have until April 15 to file.

Your exclusion. Yes you qualify. It is confusing because it's written more from the viewpoint of Americans who have gone to work abroad. The IRS wants to determine that they really live and work abroad for a foreign company for the required length of time. They have to meet the bonafide residence test or physical presence test. In your case you truly did live in a foreign country legally and meet both tests because you were resident abroad from probably birth to July 2012.

Form 2555EZ is not available on TurboTax. It is a shorter form when you are not going to be claiming housing allowances, etc. You don't qualify for that so skip any parts asking about housing expenses.

So basically it works like this. The maximum exclusion for 2012 is $95,100. If a person worked abroad the entire year, they get to exclude their foreign income up to the full amount. If like most here on Visa Journey, they left their country to live in the US say July 1 ( about half the year abroad) then they only get to exclude up to HALF the amount or $47,550 because they only worked half a year abroad. The form 2555 breaks it down by counting days and you could end up with a 210/365 days percentage exclusion for 210 days abroad. It's that specific.

I don't know how it will shake out with your dates since you left again. I've haven't ever worked a tax return with that scenario. Likely all the days will count except the ones physically present in the US.

Next thing you need to know is where to report your foreign income. There isn't a 1040 out for 2012 yet, but looking at the 2011 http://www.irs.gov/pub/irs-pdf/f1040.pdf as an example. This has varied from year to year, but in 2011 your foreign income is reported on Line 7. Your foreign income exclusion is reported on Line 21--Other Income --as a negative number with "form 2555 or 2555EZ" written in on the dotted line. So add it in, then take it back out.

It is what you earned from Jan 1 to Dec 31 2012. You convert it to US dollars at the exchange rate at the time it was earned. Oanda.com has historical exchange rates for any given date. Just come up with a good average rate and report in US dollars. It is self-reported, meaning the IRS doesn't need to see any payslips or documented form of proof. Make up the best estimate and exchange rate you can and you're good to go.

I could fill out your tax return for you faster than trying to explain all the details, but this should help with the basics. And it's always a surprise just how the final tax code will come out each year. They change it up until the last minute and even after the last minute.

[NigeriaorBust 4,087]

Even though the code says you don't need a special permit for stays outside the US of less than a year you do have ti reside in the US. Which means filing taxes ( even if you don't owe anything ) Also the 365 day rule is good for a year but people who think 12 day visits every year maintain their green card frequesntly find they lose their green card. Better tracking has led to better enforcement. There are some special rules for DV winners about how long they have to establish their residence that gives you a little more wiggle room than others. Beware of the non US resident box, that is for USC's that have retired abroad. You are a resident ( of what state ? as you may need state taxes also ) It is probably best spending a bit of money on a tax preparer than try to figure out the right thing on you own. No normal person has the spare time to digest tax code.

[bigdog 376]

I would suggest you consult an immigration and tax professional to assist you with this.