Leaving America - the tax side

[BritAmerican]

As a new member of this forum I am not sure if I am joining the thread in the right place but I wonder if anybody out there knows how a British Citizen currently living in America (having held a green card for the last 6 years) could leave America without being taxed indefinitely by the US? I recently read that if you are a green card holder for more than 8 years then you will be taxed by the US forever if you ever return. Could I simply give up my green card and return to being a British citizen living in another country such as UAE (Dubai)? My wife is an American citizen.
Thanks,
BritAmerican

[Bevdeforges]

Hi, and welcome. As you can see, I've moved your post over here to the America section, as I suspect we'll get more folks with information stopping by.

As far as I know, you are taxed by the US as long as you hold a valid green card. If you surrender your green card on moving back or moving on, your obligation to file US taxes will end. I haven't heard of the 8 year rule you mentioned, though I have heard that it can be more difficult to get a green card if you have once had one and then given it up. (But the rules say that you must give up your green card if you move out to establish residence elsewhere.)

Your wife, however, will still have to continue to file as a US citizen - which usually means she will have to file as "married, filing separately." There are distinct disadvantages to that - but in the case of your moving on to Dubai (or another country without income tax), she would only have to declare her own income and she would be entitled to the overseas earned income exclusion for her own earned income. (There is no presumption of income splitting, so if you are the primary breadwinner in the family, she would not have to declare any part of your income.)
Cheers,
Bev

[BritAmerican]

Thanks Bev,

I appreciate the quick and simple reply. From reading other posts, it is clear that you are a huge asset to this on-line community.

Cheers!

[synthia]

Bev is our tax and visa goddess!

I was just reading an article about a new bill that has been passed that will make it more difficult for people to give up their citizenship to avoid taxes. It used to be that if you became a citizen of another country you automatically lost your US citizenship. Now they are trying to make it difficult to do that so they can collect taxes forever.

[Fatbrit]

Originally Posted by synthia

It used to be that if you became a citizen of another country you automatically lost your US citizenship.

A long, long time ago......maybe!

The definitive guide to US dual citizenship is here:
richw.org/dualcit

[Fatbrit]

For natural born citizens, this went with a 1967 USSC ruling in Afroyim v. Rusk. For naturalized citizens (and natural born), the State Department guidelines of 16 April 1990 stopped loss of US citizenship.

[Bevdeforges]

>>It used to be that if you became a citizen of another country you automatically lost your US citizenship. Now they are trying to make it difficult to do that so they can collect taxes forever.<<

The catch with this one is that, although they have issued regulations and rulings saying that they will no longer automatically revoke your citizenship on taking another one, there are still laws on the books saying that they "may" under certain circumstances (most notably if you apply to take on a second nationality).

I guess they kind of want to keep all their options open.
Cheers,
Bev

[synthia]

The new law is designed to keep you from formally revoking your citizenship, even if you become a citizen of a country that requires revocation. Too many people with money are moving out.

The revocation thing is interesting, because the US requires that of all new citizens. However, if you are British, it doesn't matter, because they don't recognize revocation. It's a funny requirement to have since the control of whether a new American remains citizenship rights in the original country is a function of that country's laws, not US laws.

You can use your citizenship by enlisting in a foreign army too, but we did nothing about Americans who enlisted in the British and Canadian armed forces before we entered WWII. It depends on whether we approve or not.

[Bevdeforges]

For a long time, the laws on revoking citizenship were kind of arbitrary enforced, if at all. However there was some kind of ruling or announcement made in 1990 that basically said that they weren't going to bother anymore. What's worrying, however, is that lately those long-dormant laws have been referenced on various government websites - like maybe they are thinking of going back to them.

I don't think the US requires a formal renunciation of your prior nationality - it's just a line in the naturalization oath. I know a former American who took German nationality through marriage with a German and she was required to get a formal, signed renunciation statement from the US Consulate before they would accept her dossier.

Though, like you say, unless you're wealthy I don't think they really care one way or the other.
Cheers,
Bev

[Fatbrit]

Originally Posted by Bevdeforges

Though, like you say, unless you're wealthy I don't think they really care one way or the other.

I run a blue passport and a red one -- never had any problems at all.