Welcome to Just Answers! Thank you for giving me the opportunity to assist you! I will do my best to help!
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.