Foreign income after LPR activation

[heavily1121 0]

Hi all.

First of all - what an amazing forum and community this seems to be, I recently found this forum a few weeks ago!

I also have a question of course, and hope someone has some insight) 

I have an immigrant visa and intend to activate it in the next or month or so. I would then plan the actual move about 5 months later, and during this time I will continue to work in my home country.

I understand the income earned after activating LPR status means it also needs to be taxed. Does anyone know more specifically how to go about doing this?

 

I understand a tax professional is the way to go - so if anyone also has any tips for this, that would be highly appreciated. But 

I am residing in Sweden, and believe the US and Sweden has a tax treaty. 

 

Would be interesting to know if this is common (i.e. to go home after activation and work for a little more and then move back) and if someone has some general knowledge of how to go about it tax-wise later. 

[JeanneAdil 6,498]

Always refer to IRS site for best info

 

BAsically can be left up to you if u file using form 2555 for exculsion of us taxes as you pay in Sweden

 

https://www.irs.gov/pub/int_practice_units/JTO9431_01_02.pdf

under other considerations that impact 

 

TREATY IMPLICATION: An LPR may be a tax resident of both the U.S. and a country with which the United States has an income tax treaty (sometimes referred to as a “dual-resident” taxpayer). If so, the individual might be eligible to be treated as a resident of the other country under the residency “tiebreaker” rules of the treaty with respect to that taxable year (or portion thereof) during which the person was considered a dual-resident taxpayer. A dual-resident taxpayer may also elect not to be treated as a nonresident alien by not claiming treatment as a resident of a treaty country under the residency rules of an income tax treaty and continuing to file returns as a resident alien, i.e., Form 1040.

 

If u are coming under spouse visa ,  u will have a SS # and do need to file as MFJ or MFS

no timeline so no status to know if a spouse needs to file but if u come and return this year spouse would follow the IRS for nonresdient alien spouse for work outside the US for the entire year married 

 

 https://www.irs.gov/individuals/international-taxpayers/nonresident-aliens

 

 

Please do a timeline,  it helps 

[heavily1121 0]

Thank you for the advise. It's actually a DV Visa and I'm going as a single. I've read about Dual-resident taxpayer, but was not aware that you can apply for exclusion (does it mean you can be excluded from US taxes?). I'll look into it a bit more.

Appreciate the response.

[JeanneAdil 6,498]

13 minutes ago, heavily1121 said:

Thank you for the advise. It's actually a DV Visa and I'm going as a single. I've read about Dual-resident taxpayer, but was not aware that you can apply for exclusion (does it mean you can be excluded from US taxes?). I'll look into it a bit more.

Appreciate the response.

for the income earned outside the US you still file taxes and foreign income can be excluded with form 2555 

 

https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion

 

understand that our 1040 (or 1040x ) has a place for US resident to pay into medicare and Social security which are taxes other that federal withholding taxes that are excluded

and u will want to pay into these for future retirement benefits

[Redro 4,611]

On 9/14/2021 at 11:51 PM, heavily1121 said:

Thank you for the advise. It's actually a DV Visa and I'm going as a single. I've read about Dual-resident taxpayer, but was not aware that you can apply for exclusion (does it mean you can be excluded from US taxes?). I'll look into it a bit more.

Appreciate the response.

I'm not sure how much you earn but you can only exclude a certain amount per year  ($107, 600 for the 2020 tax year). It should go up for 2021. The tax year also runs from January 1 to December 31 so if you enter the States in 2021 to activate your card and continue to work in Sweden into 2022, you'll have to file the 2555 for tax years 2021 AND 2022.

To qualify for the FEIE you'll either use a physical  test or BONAFIDE resident test. The physical presence test is where you have to be in Sweden for 330 days in 12 months (and this doesn't have to start in January and end in December) so you unless you stay in the States for more than 36 days when you activate your residency you should be okay. 

[Locito 85]

Had loads of issues with IRS when filing for my first year of taxes in the US. Whole tax system is here is so unnecessarily complicated and difficult to understand, and then the pandemic greatly affected the processing of our paper return for 2019 taxes.

 

With Skatteverket, however, it was unexpectedly smooth sailing. After moving, I mailed in form SKV 7665 (https://www.skatteverket.se/privat/folkbokforing/flyttautomlands.4.18e1b10334ebe8bc80001591.html). Although I wasn’t registered as utvandrad until a couple of months later, haven’t had any issues filing Swedish tax returns with zero Swedish income. My address is shown as the US address on transcripts/other papers from Skatteverket. Only thing is of course that when visiting Sweden, we are no longer entitled to healthcare benefits, so travel insurance is a must in case of any trips to ER (I seem to be particularly injury-prone…).

[heavily1121 0]

8 hours ago, planningahead said:

I'm not sure how much you earn but you can only exclude a certain amount per year  ($107, 600 for the 2020 tax year). It should go up for 2021. The tax year also runs from January 1 to December 31 so if you enter the States in 2021 to activate your card and continue to work in Sweden into 2022, you'll have to file the 2555 for tax years 2021 AND 2022.

To qualify for the FEIE you'll either use a physical  test or BONAFIDE resident test. The physical presence test is where you have to be in Sweden for 330 days in 12 months (and this doesn't have to start in January and end in December) so you unless you stay in the States for more than 36 days when you activate your residency you should be okay. 

Thank you!

My income is below $107,600  (working part time during University studies). I will only be working in Sweden until end of December I believe, but will most likely receive a pay check into 2022 for work performed in 2021 (Swedish employers are usually one month "behind" on each salary, so for the September paycheck, you generally get paid for the work you did in August etc). I will most likely only be in the states for about 14 days when I activate my IV. 

Thank you for the detailed information, it was of great help.  

 

 

2 hours ago, Locito said:

Had loads of issues with IRS when filing for my first year of taxes in the US. Whole tax system is here is so unnecessarily complicated and difficult to understand, and then the pandemic greatly affected the processing of our paper return for 2019 taxes.

 

With Skatteverket, however, it was unexpectedly smooth sailing. After moving, I mailed in form SKV 7665 (https://www.skatteverket.se/privat/folkbokforing/flyttautomlands.4.18e1b10334ebe8bc80001591.html). Although I wasn’t registered as utvandrad until a couple of months later, haven’t had any issues filing Swedish tax returns with zero Swedish income. My address is shown as the US address on transcripts/other papers from Skatteverket. Only thing is of course that when visiting Sweden, we are no longer entitled to healthcare benefits, so travel insurance is a must in case of any trips to ER (I seem to be particularly injury-prone…).

Good to know. I have seen that document as well and will make sure to file it with SKV when I leave for the actual move. 
It's too bad about the health care benefits. Paying for visits that was free before will indeed sting. Btw if I may ask - did you use a tax professional for your first tax return? If so, was it someone with expertise in Swedish taxes or did you just look for someone with expertise in foreign earned income?

I've also seen there's plenty of tax preparing softwares out there. Any advise on one that has worked well? 

Turbo tax seems to be popular in other forums.

Edited September 17, 2021 by heavily1121