Tax issue for lpr

[credzba]

My wife had some friends over this weekend, and one lady had an income tax issue.

She recently divorced in America, and is currently a permanent resident.

 

To make sure she had enough finances, she cashed in an insurance policy, and sold some business interests in China.

She asked me about taxation, and I told her I believe the USA taxes world wide income, and as a LPR she would have to claim the income from the sales on her taxes next year.

 

It is a significant amount of money, so I suggested abandon her green card to avoid taxes.

 

Do any of you know the tax situation with LPR?

Would it be a reasonable approach to avoid US taxes?

 

If she wanted to come back to USA, I told her she could get a 10 year visa, and if she ever met an American she wanted to marry, apply for another green card.

Would abandoning 1 green card cause issues for a future green card ?

 

 

[Randy W]

My wife had some friends over this weekend, and one lady had an income tax issue.

She recently divorced in America, and is currently a permanent resident.

 

To make sure she had enough finances, she cashed in an insurance policy, and sold some business interests in China.

She asked me about taxation, and I told her I believe the USA taxes world wide income, and as a LPR she would have to claim the income from the sales on her taxes next year.

 

It is a significant amount of money, so I suggested abandon her green card to avoid taxes.

 

Do any of you know the tax situation with LPR?

Would it be a reasonable approach to avoid US taxes?

 

If she wanted to come back to USA, I told her she could get a 10 year visa, and if she ever met an American she wanted to marry, apply for another green card.

Would abandoning 1 green card cause issues for a future green card ?

 

 

 

 

Tell her to talk to a tax professional (CPA). You can't avoid taxes by renouncing citizenship - I'm pretty sure the same would apply to an LPR.

 

As far as what she actually OWES, I'm sure the CPA would be best qualified to figure that out. But it might be best to find one that specializes in foreign businesses.

 

Yes, if she were to abandon her green card in order to avoid paying taxes, she might find herself in more trouble than just in getting another green card, ESPECIALLY if she were to apply for another green card.

 

I'm assuming that she's ALREADY sold the business (a taxable event right there), but even if she were to abandon the green card first, there might still be issues

[Randy W]

Google "abandon green card taxes" and you'll find a lot of potentially applicable information.

 

Even if she were to abandon her green card, it must be administratively approved, and would still fall under IRS regulations for a "dual status" tax year and "final returns".

[credzba]

I should have known the IRS would cover this case.

 

Thanks, I'll pass on the bad news

[jonathantwu]

In a very broad stroke: It is the profit from transactions that are taxable. If she can come up with enough records to show the investments, she may be able to substantially reduce her tax liability with IRS. She needs a CPA to give her good tax advice. This forum is way too casual and broad to discuss issue for the best tax treatment for the sale of a business.

 

Insurance payout is generally tax-free, but if it is an investment instrument then the profit/interest is the part that is taxable. Again, seek professional advice.