# New Green Card Holder offdhore income Tax Question



## rtho100 (Oct 21, 2009)

So I've married a US citizen, employed an Immigration lawyer to look after my Green Card application and have been approved on the first part and awaiting our interview in London. Have been told that we have a good case and should get an interview in Dec this year or Jan/Feb next year.

I am a UK citizen who has worked offshore since 1998. I have paid no tax to any country in this time period due to being out of the UK/Europe more than in, and alot less than 90 days in a year for the last 5 yrs.

I will continue to be paid offshore by a Cayman Islands company once I have my Green Card (fingers crossed!) but know that I will be taxed on my worldwide income. I will spend less than 183 days in USA per year and earn $85,000 per year approx gross. I own a house in the UK but it is not rented and I pay a mortgage on it. I am offshore as I speak and will be for a few years to come yet.

I understand that I will be a resident alien (Green Card test), but given that I'm not employed by a US company won't pay Medicare or social. Also i'll earning less than the $91,500 required for exemption.

Can someone please tell me whether I'll be expecting to pay tax, from when till when (now til I become s green card holder? Or after.) a

Can someone please tell me how much roughly I should hold onto for the taxman based on residing in Florida,and also if there is a good international tax accountant in Florida who could help me file my taxes. Given that I have never done this anywhere in the world, i'm a bit of novice!

Thanks in advance.

Rtho100


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## Bevdeforges (Nov 16, 2007)

Well, your tax obligation to the US begins with the issuance of your Green Card. And since the green card makes you a resident alien, it's doubtful you can invoke the overseas earned income exclusion to get out of paying US taxes. 

You certainly don't qualify under the "bona fide resident" test, since with a green card, you are considered resident in the US for tax purposes. The other option is the physical presence test - and for that, you must be physically present outside the US for 12 consecutive months. During this time, you only can be in the US for a total of 30 days. The 183 day rule doesn't apply here. There is also a reasonable chance you'll wind up having to pay at least your share of the social security taxes on your salary. 

Assuming your US spouse has any sort of income and has been filing taxes all along, you're going to want to file a joint tax return (many tax advantages to doing so) and frankly, you can probably get by with using a computer tax filing software and save the international tax specialist fees. As far as the IRS is concerned, you're a US taxpayer.
Cheers,
Bev


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## rtho100 (Oct 21, 2009)

Bevdeforges said:


> Well, your tax obligation to the US begins with the issuance of your Green Card. And since the green card makes you a resident alien, it's doubtful you can invoke the overseas earned income exclusion to get out of paying US taxes.
> 
> You certainly don't qualify under the "bona fide resident" test, since with a green card, you are considered resident in the US for tax purposes. The other option is the physical presence test - and for that, you must be physically present outside the US for 12 consecutive months. During this time, you only can be in the US for a total of 30 days. The 183 day rule doesn't apply here. There is also a reasonable chance you'll wind up having to pay at least your share of the social security taxes on your salary.
> 
> ...


Hi Bev,

Thanks for your reply.

So I don't have to pay any tax on foreign (worldwide) income until I have the Green Card? So all my savings that were earned prior to that would also not be taxable? Given that I will have no credit history in the US (another topic that I'm using your boards to research), I have saved everything offshore to put down as a deposit on a house and don't particularly want to pay tax on it when I transfer it across to a US account. Once I get a Green Card, would it make sense to get my salary paid directly into a US account so that there is a definitive line between pre GC and post GC? Is there any point in doing this? 

May I ask what the pro/cons are of filing with my wife? Whilst you have said that I can do a lot of this on a PC, I still think I'd like to seek professional tax advice at least for the first year. Can you recommend anyone in Florida?

Also if I pay more money into my mortgage at home to ultimately pay it off quicker as the rates are low, is it possible to off set it against any US taxation? Essentially my house in the UK is my pension!

I appreciate that I have asked alot of specialist questions, hence any recommendations people have regrading specialist advice. It seems I have a relatively unique situation, and it's bad enough trying to find tax accountants in the UK let alone in the US where the rules are very different.

Any help would be appreciated.

Thanks again.


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## MichaelS (Nov 8, 2008)

In addition to what Bev said, it's my understanding that you are only elligible for the earned income exclusion if you pay tax on that income in a foreign country (the first requirement is that your "tax home" must be in a foreign country"), if you aren't actually paying taxes anywhere, then I don't see how you could claim an exclusion from US taxes.

Regarding your savings outside the US, you will be required to report the values of all accounts held outside the US if they total more than US$10,000 in value during anytime in the year. You are not taxed on the value of these accounts though, you are only taxed on any interest or other income they generate, so the current value of them is irrelevant for tax purposes. You will have to start reporting that interest though, and paying taxes on it.

I don't think there are any tax implications to what you pay into your house in the UK. If you are renting it for profit, then you may be able to offset some of the taxes you will pay on that income, but you'd have to check with a tax attorney for that.

The pros/cons of filing with your wife are that usually married couples get a more favorable tax rate, but that is not always true. You would probably want to consult a tax attorney on that front too.


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## Bevdeforges (Nov 16, 2007)

More or less what Michael said, with a couple of caveats.

You don't actually have to be paying taxes anywhere to make use of the overseas earned income exclusion. Expats in the Emirates can still exclude their income up to the maximum, even though there are no income taxes in the Emirates (or so I've heard). But that's not your case, anyhow.

You will have to report your overseas "financial accounts" (i.e. bank or investment accounts) if they total over $10,000. Once you have your green card, you'll have to report the interest or other earnings on those accounts as part of your worldwide income. Any taxes you pay on those earnings can be taken as a tax credit against any US taxes on those earnings.

On the house in the UK - unless you can justify it as a primary or secondary residence, there are no tax offsets or advantages on your US returns. If and when you rent it out, the mortgage interest payments become part of the expenses of the property, and deductible from any income (i.e. the rent) from the property - along with depreciation and taxes, repairs, etc.

Rather than pay a tax attorney or accountant, you might want to start out looking for an "enrolled agent" - this is a tax preparer (often also an accountant) who is enrolled with the IRS (i.e. they have completed the IRS training and examinations). I don't know any tax people in Florida, but you can get a list of enrolled agents from their website NAEA : What is an Enrolled Agent? There is also information about enrolled agents on the IRS website. They are often a less expensive alternative for tax preparation.

As far as filing with your spouse, besides the beneficial tax rates, there are also considerations should you want to establish various sorts of retirement accounts or claim certain benefits. If you eventually draw US social security, filing separately will subject much more of your benefits to tax.
Cheers,
Bev


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