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taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 342
Experience:  Licensed CPA, MA, MST with 29 year's experience. Teach Accounting and Tax courses at Masters level.
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My spouse entered the United States for the first time on a

Customer Question

My spouse entered the United States for the first time on a K-1 Visa in 1965. Because of my employment with the United States Government she only resided in the United States from 1965-1967 and 1974-1978. During the periods between 1967-1974 and 1978 to the current date (2013) she has neither returned to the United States nor been on United States terrority at anytime. During this 48 year period (1965-2013) she has taken no action to obtain United States Citizenship. Her original "Green Card" expired and was lost before a new one could be applied for. Coordination with INS (at that time) resulted in a "sorry but you will have to re-apply from the very beginning; implying that her official RA/LTR status was terminated."

Current Immigration web pages suggest "abandonment" status does not absolutely mean that previous RA/LTRs who want to return to the United States can only get back through the lottery. Those pages also suggest that until she makes out an official notification form and it is recieved by proper United States authorities her official RA/LTR status has not changed. Because my wife has submitted no formal notification her status is sttill that of RA/LTR.

For IRS tax purposes once an RA/LTR always an RA/LTR for at least 5 -10 years after their official departure date. This official departure date starts the day that official notification is recieved by proper United States authorities. Until such time RA/LTR's remain in RA/LTR status for tax treatment by the IRS. Because no formal notification ever been made her status remains that of RA/LTR for the IRS.

My Question: Based on the above background, my wife's official status remains that of RA/LTR. IRS form 8854 not only asks for information from RA/LTR's who have officially expatriated but as well those who have not. Are those person's who remain in formal RA/LTR status and not expatriated required to fill out form 8854? This would include those non-expatriated RA/LTR's who meet requirements to take tax treaty benefits.
Submitted: 7 months ago.
Category: Tax
Expert:  taxmanrog replied 7 months ago.
Welcome to Just Answers! Thank you for giving me the opportunity to assist you! I will do my best to help!

These rules have changed significantly over the 28+ years I have been working in international taxation! Many years go, simply getting citizenship from another country meant you automatically gave up your US citizenship. I had some clients who were US citizens, living in the Dutch West Indies for many years. They obtained their "Dutch Rights" or Dutch citizenship, simply to give them some benefits that were not available to non-citizens. They found out later that their Dutch passport automatically voided their US passport. This was in the 1980's. Things have changed significantly since then!

One question comes to mind. As a US citizen, you are required to file an income tax return every year, regardless of your work location, whether inside or outside of the United States. How have you been filing these returns over the past 40 odd years? Have you been filing as Married, Filing Jointly, and including her? Or Married, Filing Separate? I am curious as to that answer, and I believe that it is relevant to this discussion.

Does your wife intend to try to regain her RA/LTR status? Form 8854 is to be used by those US citizens and other long-term resident aliens individuals who have or intend to permanently end their residency. There are specific dates that are to be followed. In order to give up your residency, you MUST have done one of the following:

1. Voluntarily abandoned your lawful permanent resident status by filing Department of Homeland Security Form I-407 with a U.S. consular or immigration officer, and the Department of Homeland Security determined that you had, in fact, abandoned your lawful permanent resident status.
2. You became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order.

3. If you were a dual resident of the United States and a country with which the United States has an income tax treaty, you had to become once again treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and gave notice to the Secretary of such treatment. See Regulations section(NNN) NNN-NNNNb)-7 for information on other filing requirements if you are such an individual

Also, you are considered to be a lawful permanent resident if "you have been given the privilege, according to U.S. immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if you have been issued an alien registration card, also known as a “green card,” and your green card has not been revoked or judicially or administratively determined to have been abandoned, and you have not elected to be treated as a resident of a foreign country under a tax treaty between the United States and such foreign country. If you elected to be treated as a resident of a foreign country under a tax treaty, have not waived the benefits of such treaty applicable to foreign residents, and have notified the IRS of such a position on a Form 8833, you are not treated as a lawful permanent resident and you will be treated as having expatriated if you were a LTR at the time you elected to be treated as a resident of such foreign treaty country."

Everything seems to key on NOTIFYING the IRS that your wife intended to give up her RA/LTR status. Absent that intent, I believe that she is still, for tax purposes, considered to be a RA/LTR.

So, unless your wife lived in a country that had a tax treaty with the United States, and she affirmatively elected to be treated as a resident of that country, as far as I can tell none of these events has ever taken place! Depending on your answer as to how you file income taxes every year, at this point I do NOT believe that she is required to file a Form 8854. I also believe that she is eligible to gain her RA/LTR status back.

I look forward to your reply as to your filing status.

Thanks!

Roger
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 342
Experience: Licensed CPA, MA, MST with 29 year's experience. Teach Accounting and Tax courses at Masters level.
taxmanrog and 6 other Tax Specialists are ready to help you
Customer: replied 7 months ago.


Roger


 


Answer to question in your para 2:


 


insurance settlement because of a work related injury. While reviewing where tax filing has been submitted as married, filing jointly, and included her income included.Between CY 1964 and CY 2009 form 2555 was used for foreign wages as it was earned income. In CY 2010 form 1116 was used for foreign income as it was pension based not earned income. In CY 2011 I received a significant foreign insurance settlement because of a work related injury. While reviewing where and how this award fit into my return, I found “treaty based return” and how it appeared to be applicable to my wife’s foreign pension. Forms 8833 and 8840 were included as a part of CY 2011 Tax Package submision.


 



Further Discussion:


 


The Danish Government does not currently recognize dual citizenship. Danish citizens who leave Denmark sort of “sign out.” They no longer pay any Danish tax and they keep their passport. If and when they return, the Danish government revalidates their presence without any affirmative action’s being initiated by the returning Dane. This person is required to take certain actions without regard to how long they may be in country…. No one ask’s. They must register their address with authorities, obtain a local drivers license, register vehicles and property and fully pay back taxes on money earned outside the country. Before they can work if they must obtain a “tax card” which proves to a perspective employer that they are registered in the local tax office.


 


My wife has never filled out Homeland Security form I-407 and turned it in a Consular Official or Immigration Officer. The Department of Homeland Security has never determined in fact that she has abandoned her lawful permanent resident status.


 


My wife has never been subject to a final administrative order under the Immigration and Nationality Act and left the United States because of that order.


 


My wife obtained her “Green Card” in 1964. It has never been revoked or judicially or administratively determined to have been abandoned.


 


Ref(NNN) NNN-NNNNb) -7 and Dual Status: In our case my wife returned to Denmark for more than one reason; primarily to help care for her aging parents, not to avoid US tax law on average annual salary of less than $25,000 earned income. In our case to avoid US Tax is not plausible since all earned income subject to the US IRS Code would have been negated by submission of form 2555.


 


 


As written in my initial question the 5-10 year timeline on the IRS Code clock does not begin until after official notification is received by proper US authorities. Unlike Homeland Security, IRS does not identify “proper US .authorities” and how they are to be informed. My wife has never complete any forms for the IRS and sent them to any “proper authorities” concerning her change in status and initiate the starting of the IRS expatriation time clock.


 


Based on what I think I understand, my wife does not have to sign and submit the IRS form 8854, her pension income is excluded by the Tax Treaty and her status with both the IRS and Homeland Security remains RA/LTR.












Expert:  taxmanrog replied 7 months ago.

You are correct in your interpretation, or at least that is how I would interpret it. Especially since you have been filing your returns as joint, so the IRS would consider her to still be a RA/LTR.

 

It does not matter how Denmark treats you. Your wife is not a US citizen, she is a resident alien, so even though Denmark might "revalidate" her presence, she is still required to file a US income tax return with you, as the US still believes she is a RA/LTR.

 

I wish you the best with your parents! Taking care of parents is often more difficult than taking care of children.

 

If you have any more questions, please let me know! Thank you for the excellent rating! It was a pleasure to assist you!

 

Roger

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