Travelling and taxes...confused!

[oat12 29]

Hello everyone,

 

I have 2 questions that I am hoping I can get some help with or information from anyone who has been through a similar experience. 

 

I applied for my re-entry permit (i-131) in July and gave my biometrics in September (online status shows that my fingerprints were accepted). Once I had my biometrics appointment, I left the USA and came back to the U.K. I understand that a re-entry permit can take up to a year to be completed.

 

I wanted to know if I can still travel to and from the USA with this permit pending? Or should I wait until I have my re-entry permit in hand to be able to travel?

 

My next question concerns taxes. I became a LPR in May 2022. I have not yet moved to the United States (for various reasons) but I will be making the permanent move in 2023. Do I need to submit a tax return for 2022? Or do I only submit a tax return once I have officially moved and resided there for a longer period of time. 

 

Any answers would be massively appreciated. Thank you.

[OldUser 6,969]

As an LPR, just like US citizen, you need to file taxes on world wide income, no matter where you live.

 

For 2022 tax year, you need to file tax return by April 18, 2023.

 

Edited November 22, 2022 by OldUser

[oat12 29]

Just now, OldUser said:

As an LPR, just like US citizen, you need to file taxes on world wide income, no matter where you live.

 

Even though I do not meet the substantial presence test?

[OldUser 6,969]

13 minutes ago, oat12 said:

Even though I do not meet the substantial presence test?

You're LPR. US taxes based on citizenship / permanent resident status no matter where you physically live. 

 

Essentially, once you have your green card, you're a tax resident, until an immigration judge determines you're not LPR anymore. US is not like other countries in the world, spending time overseas does not free LPRs and citizens from filing taxes.

 

"An individual who obtains a green card is treated as a lawful permanent resident and is considered a U.S. tax resident for U.S. income tax purposes."

 

"You are a resident, for U.S. federal tax purposes, if you are a lawful permanent resident of the United States at any time during the calendar year. This is known as the "green card" test."

 

 

Read more: https://www.irs.gov/individuals/international-taxpayers/us-tax-residency-green-card-test

Edited November 22, 2022 by OldUser

[oat12 29]

5 minutes ago, OldUser said:

You're LPR. US taxes based on citizenship / permanent resident status no matter where you physically live. 

 

"An individual who obtains a green card is treated as a lawful permanent resident and is considered a U.S. tax resident for U.S. income tax purposes."

 

"You are a resident, for U.S. federal tax purposes, if you are a lawful permanent resident of the United States at any time during the calendar year. This is known as the "green card" test."

 

Read more: https://www.irs.gov/individuals/international-taxpayers/us-tax-residency-green-card-test

Thank you for this!
 

I contacted a tax lawyer and they emailed me with the below:

After our call, I did some research with regards the IRS legislation surrounding the Green Card and in particular if you can delay filing a return until you have actually arrived in the US.  The good news is that, assuming you do not go to live in the US until 2023, you will not need to file a 2022 US Federal tax return, even though you are now a Green Card holder.  Generally, a Green Card holder is treated in the same manner as a US citizen however, where you obtain a Green Card in one year but do not travel to the US until the following year, there is no need to file a US tax return in that first year.  Please see the link from the IRS code:-

 

https://www.irs.gov/individuals/international-taxpayers/residency-starting-and-ending-dates

 

This means that the first year you will need to file will be 2023 and the deadline for filing is not until April 2024.

 

This confuses me slightly because they told me I did not have to file a return.

 

[OldUser 6,969]

@oat12 You already entered the US this year with CR-1 / IR-1. You probably got a I-551 stamp in passport and / or plastic Green Card.

That's it, one day in US as LPR is enough for you to be a tax resident. 

 

[OldUser 6,969]

@oat12 I think this is your scenario:

 

"If you meet the green card test at any time during the calendar year, but do not meet the substantial presence test for that year, your residency starting date is the first day on which you are present in the United States as a lawful permanent resident."

 

 

 

[Crazy Cat 41,982]

7 minutes ago, oat12 said:

Thank you for this!
 

I contacted a tax lawyer and they emailed me with the below:

After our call, I did some research with regards the IRS legislation surrounding the Green Card and in particular if you can delay filing a return until you have actually arrived in the US.  The good news is that, assuming you do not go to live in the US until 2023, you will not need to file a 2022 US Federal tax return, even though you are now a Green Card holder.  Generally, a Green Card holder is treated in the same manner as a US citizen however, where you obtain a Green Card in one year but do not travel to the US until the following year, there is no need to file a US tax return in that first year.  Please see the link from the IRS code:-

 

https://www.irs.gov/individuals/international-taxpayers/residency-starting-and-ending-dates

 

This means that the first year you will need to file will be 2023 and the deadline for filing is not until April 2024.

 

This confuses me slightly because they told me I did not have to file a return.

 

I don't think this is accurate.  Green Card holders and citizens are required to report world-wide income regardless of where they live.  However, it is true that you could be classified as a dual-status alien for 2022.  You would then have to report all income from the time you became a legal resident. 

Edited November 22, 2022 by Crazy Cat

[oat12 29]

5 minutes ago, Crazy Cat said:

I don't think this is accurate.  Green Card holders and citizens are required to report world-wide income regardless of where they live.  However, it is true that you could be classified as a dual-status alien for 2022.  You would then have to report all income from the time you became a legal resident. 

Thank you! I really appreciate the responses. I am glad I asked because I was about to not submit a return at all.

 

Would Turbotax be a good place to submit a return? I am totally confused by all of this

[Wuozopo 4,293]

1 hour ago, oat12 said:

My next question concerns taxes. I became a LPR in May 2022. I have not yet moved to the United States (for various reasons) but I will be making the permanent move in 2023. Do I need to submit a tax return for 2022? Or do I only submit a tax return once I have officially moved and resided there for a longer period of time. 

 

Did you earn income in 2022? If so, you as an LPR file a US return. There are US/UK tax treaty measure that keep you from double taxation on the same earnings so you may not owe any US taxes, but you still file. You may also benefit from a joint US return filed with your spouse rather than each of you filing married filing separate returns. You report both incomes (earned anywhere) on the joint return, but again, the tax treaty keeps you from paying income tax on the same earnings to both countries.

 

I too think your tax lawyer is wrong. 

TurboTax is great and will handle it, but you will need to understand your options for excluding foreigner earned income or foreign taxes paid. If you are willing to study a lot of IRS publication to get a grasp of US tax laws, then TurboTax works well to do the math and create the Forms and Schedules. But TurboTax is not magic if you have no clue about tax rules/law. 

Edited November 22, 2022 by Wuozopo

[kzielu 1,149]

10 hours ago, oat12 said:

Thank you! I really appreciate the responses. I am glad I asked because I was about to not submit a return at all.

 

Would Turbotax be a good place to submit a return? I am totally confused by all of this

You will have to report your home country income and it gets little tricky with Turbo Tax but it's doable. I second or third to what was said above - you absolutely do have to file a tax return. Look up N-400 (if you ever want to apply for citizenship) and read one of the questions that's in it ("have you ever not file a tax returrn....")....

[SteveInBostonI130 3,470]

12 hours ago, oat12 said:

Thank you! I really appreciate the responses. I am glad I asked because I was about to not submit a return at all.

 

Would Turbotax be a good place to submit a return? I am totally confused by all of this

I would consult a tax professional. You do have to file taxes as a married LPR if you earned over some ridiculously low amount ($5, I think).  Filing taxes is different from owing taxes - that is where a tax professional could help.

Edited November 23, 2022 by SteveInBostonI130

[Mike E 11,741]

7 hours ago, kzielu said:

You will have to report your home country income and it gets little tricky with Turbo Tax but it's doable. I second or third to what was said above - you absolutely do have to file a tax return. Look up N-400 (if you ever want to apply for citizenship) and read one of the questions that's in it ("have you ever not file a tax returrn....")....

This is why you don’t ask tax preparers immigration advice. 

[oat12 29]

33 minutes ago, Mike E said:

This is why you don’t ask tax preparers immigration advice. 

To be fair, they marketed themselves as experts in filing tax returns for expats. Now that I know I have to file, I don’t know where to look. I’m hoping I can get some suggestions here if possible

[Wuozopo 4,293]

3 hours ago, oat12 said:

To be fair, they marketed themselves as experts in filing tax returns for expats. Now that I know I have to file, I don’t know where to look. I’m hoping I can get some suggestions here if possible

I can’t help with that because we have never used a paid preparer. But there is a tax  forum here on Visa Journey. It will get very active in Jan/Feb. Too early now to solve your detailed tax return issues because the IRS is still finalizing 2022.

There are some very knowledgeable persons who will help and some flakey ones too. Don’t think the first answer you get is the best one. Wait awhile, a day or two, and let the replies come in. You’ll recognize the ones that seem knowledgeable.  
Tips:

• Make a timeline so people know when you married, entered US, on what visa, etc. Give information about when you quit working in the UK, if you had an employer who paid a regular salary or if self employed. Did you work any at a US job in 2022.
• Use IRS.gov as a source of information. Publication 519 US Tax Guide for Aliens is a good starting place. https://www.irs.gov/pub/irs-pdf/p519.pdf
• Figure out your UK gross earnings in 2022. You don’t need any paper proof from HMRC. It is self-reported. 
• Don’t expect to use TurboTax free online. Your return is more complicated and they will add charges when you start needing the Foreign Earned Income Exclusion (form 2555). And you can only have one return going. I always recommend purchasing a CD or a download of TurboTax Deluxe to install on a computer or laptop. Big retailers start sales in January and are always cheaper that the TurboTax website. I paid $39.95 last year at Sam’s Club.  With TurboTax Deluxe installed, you can create many returns under new file names to compare…Married Filing Jointly, Married Filing Separately.

 

See you in the Tax Forum in late January if you decide to give it a go doing your own return or getting more information.

 

 

Edited November 23, 2022 by Wuozopo