Applying for a China Residence Permit

[Randy W]

7 hours ago, rogerluli said:

I only have one worry in your response and that is that, yes my wife and yours under current SS laws can draw our SS account after we die...But the government has to look for ways to restore the entire SS system to solvency and what if one of those ways will be to cut off payments to non citizens and non permanent residents not living in the US...That, of course, is unknowable today...😶

Thanks very much for your responses...It is most appreciated....

I believe SS to be mathematically and actuarially sound - just not politically sound. It's not SUPPOSED to turn a profit.

Think about it - every dollar it takes in is immediately one dollar's worth of debt - a debt owed not just to the wage earner, but also their dependents. It is "insolvent" from the get-go, but as long as the politicians don't try to change the formulas, it will do just fine. The formulas are adjusted every few years as necessary.

I will break even on my SS investment (including the employers matching share) in the next year. A good investment in my book, even though I would have preferred to invest the money myself - I don't have any objection there at all. I've been drawing SS checks for almost 10 years now with VERY little to nothing in the way of COLA, but still a reasonable return on my investment.

Taxing billionaires to try to "close the gap" would MASSIVELY increase the debt. Think about having to fund retirement for those guys with 5 and 6 figure MONTHLY checks. Taxing them without providing benefits would likewise not be politically viable.

But no, Jiaying is NOT eligible to draw on my SS since she did not reside in the US for the 5 year minimum. I didn't realize that at the time, but I'm still not sure if that would have been 5 years after getting her green card (her green card was delayed by three years by a fingerprint snafu - the City of Houston didn't like her fingerprints since she still has a meat cleaver scar from her youth).

[Randy W]

19 hours ago, rogerluli said:

Hello all...

Haven't been on CFL for years but had several million posts in the old days...

This is post # 661,772, so CFL in its entirety (including your posts) has a LONG way to go to catch up to your millions.

But we're gaining on you!

[rogerluli]

Li has been in touch with the PSB in Hunan and Hainan and this is what she found out...For her to become a USC before we return to China is not a problem...We would just both have to get Q visas to enter...Then off to Hunan where they would issue what? a residence permit of some kind, and it would be for 1 or 5 years, a bit odd that choice but whatever...But in 2067 she will be 60 and then it becomes permanent...Or so they say...

Since she owns houses in Hunan and Hainan we can reside in either province...If we hadn't bought the Hainan place before then that would not be an option...For several years now only Hainan residents could buy in Hainan but that may change with this 2025 opening up...

 

[rogerluli]

OOps not 2067 when she would be 100...2027,,,😃

[Martin B]

19 minutes ago, rogerluli said:

Li has been in touch with the PSB in Hunan and Hainan and this is what she found out...For her to become a USC before we return to China is not a problem...We would just both have to get Q visas to enter...Then off to Hunan where they would issue what? a residence permit of some kind, and it would be for 1 or 5 years, a bit odd that choice but whatever...But in 2067 she will be 60 and then it becomes permanent...Or so they say...

Since she owns houses in Hunan and Hainan we can reside in either province...If we hadn't bought the Hainan place before then that would not be an option...For several years now only Hainan residents could buy in Hainan but that may change with this 2025 opening up...

 

Hi Roger, not really super related to the visa/permit issue, but if your wife is looking to naturalize, USCIS is now processing N400s lightning fast. Things can change in an instant, however. My wife's case from submission to oath was about 8-9 weeks.

There is a well-known China vlogger (Gweilo60) who was in a similar position as you - him and his Chinese wife bought a house in China before his wife naturalized, then would split there time between Canada and China using the Q visa + resident permit combo. 

Keeping the Chinese citizenship would make dealing with the China part of the equation easier, but there is always a small chance she'll run into issues re-entering on the US side depending on how long she is out, and if she decides to naturalize down the road, she may run into issues with the continuous residence requirement. Naturalizing now avoids that. There are some other benefits as well (e.g. taxes when leaving estate to a non-citizen spouse).

 

[Randy W]

Yes - my advice to NOT have her naturalize concerns the time in China - there will be advantages to having ONE Chinese citizen in the immediate family in Hainan.

Gweilo was eligible for residence permits through his Chinese wife - she naturalized as a Canadian only after she contracted cancer - she passed away just barely a week ago. Since she contracted the cancer, they have mostly been in Canada for the healthcare system there, while relying mostly on visas to occasionally return to China. They were eligible for "family reunion" residence permits through her family in Bobai. Gweilo is still in Canada, selling everything off and preparing to return to China with his wife's brother. He may or may not still be eligible for a "family reunion" residence permit through her family - I'd like to know that, since it might be pertinent to my own situation if something were to happen to my wife. But he may just have to rely on visas, unless his wife's family is still part of his "immediate family".

If you (Roger) are eligible for a family reunion residence permit in Hunan that would allow you to live in Hainan, that solves your issues (and also Li's as far as naturalizing). I wasn't sure that that would be the case - but if the PSB in Hunan only requires that you live in China - that you can live in Hainan and still renew the permit in Hunan - that would be ideal.

Yes - you enter on Q visas. But you will want to stay on a residence permit, unless making border runs every six months is acceptable. There is a topic somewhere where the American husband lived contentedly in China on his Q2 visa - until he needed to file for an IR1 visa for his wife. The American consulate told him he needed a Q1 visa to do that - I told him no, just go to the PSB and get a residence permit.

If Li DOESN'T naturalize, I expect that she could get her own hukou in Hainan, which would allow you to apply for a residence permit in Hainan.

Another possibility might be a residence permit for two foreigners based on your home ownership in Hainan. I'm not sure that that is possible. At one point, though, I was issued (at the PSB) an L visa with no length of stay limitation instead of the residence permit.

Another question I have about Gweilo concerns his home in Nanning - I expect it  was in his wife's name. Who owns it now? I expect his wife's family will let him stay there in any case.

Another thing to be aware of if Li decides to abandon her green card to live in China as a Chinese citizen - when an American citizen croaks, his Chinese citizen wife is automatically eligible for an American green card. We have a (Chinese) member who did exactly that.

The procedure for getting a residence permit involves getting a temporary household registration from the LOCAL PSB - this is why I'm not convinced that you can live in Hainan on a residence permit from Hunan, although perhaps the L visa issued by the PSB Entry & Exit Bureau in Hainan would be possible.

Your circumstances are definitely unique as far as I'm aware - good luck in sorting it all out. But I guess the important one is to decide whether Li will naturalize.

Edited November 16, 2023 by Randy W (see edit history)

[Randy W]

1 hour ago, Barfus said:

 There are some other benefits as well (e.g. taxes when leaving estate to a non-citizen spouse).

 

Explain this - property or money co-owned by a spouse is not "inherited", no?? Would there be any other tax than on withdrawals from an IRA?

Remember that Roger's spouse has an SS number.

Edited November 16, 2023 by Randy W (see edit history)

[Randy W]

 

I'll have to read through this later for understanding. My guess (and assumption so far), though, is that it does not apply to co-mingled assets. My sister had no husband, and had no estate taxes to pay, although her estate did pay taxes on withdrawals (within the estate) from her 401K's (I was the executor).

(I AM confused now, but still think I know what I'm doing).

US estate and gift tax rules for resident and nonresident aliens

 

Edited November 16, 2023 by Randy W (see edit history)

[Martin B]

1 hour ago, Randy W said:

Explain this - property or money co-owned by a spouse is not "inherited", no?? Would there be any other tax than on withdrawals from an IRA?

Remember that Roger's spouse has an SS number.

You'll have to do some research on this but it's not quite that simple from my understanding and people have spent lots of money on estate planning attorneys creating trusts, wills, other arrangements in these situations.

A 401k or IRA is not co-owned. There is an owner (you) and a beneficiary (your spouse). If something happens to you, your wife would "inherit" the account and become the owner. In your situation, if there were no tax for your wife inheriting the 401k or IRA, she in theory wouldn't even have to pay any US taxes on the withdrawals as a non-citizen/non-resident (she wouldn't be subject to the worldwide income rule). That's a big no-no from the federal government.  There's a chance that Roth accounts might be exempt from this as taxes were already paid when the money was put in, but you'd have to double check.

In your sister's case there was no federal tax because you are a US citizen my guess is the inheritance was below the exemption limit ($10-15million-ish). 

And my additional 5 minutes of research shows that a green card holder might be treated as a citizen for inheritance purposes, as they are subject to the same taxes as US citizens, specifically on worldwide income.

Good luck.

Edited November 16, 2023 by Barfus (see edit history)

[Randy W]

12 hours ago, Barfus said:

You'll have to do some research on this but it's not quite that simple from my understanding and people have spent lots of money on estate planning attorneys creating trusts, wills, other arrangements in these situations.

A 401k or IRA is not co-owned. There is an owner (you) and a beneficiary (your spouse). If something happens to you, your wife would "inherit" the account and become the owner. In your situation, if there were no tax for your wife inheriting the 401k or IRA, she in theory wouldn't even have to pay any US taxes on the withdrawals as a non-citizen/non-resident (she wouldn't be subject to the worldwide income rule). That's a big no-no from the federal government.  There's a chance that Roth accounts might be exempt from this as taxes were already paid when the money was put in, but you'd have to double check.

In your sister's case there was no federal tax because you are a US citizen my guess is the inheritance was below the exemption limit ($10-15million-ish). 

And my additional 5 minutes of research shows that a green card holder might be treated as a citizen for inheritance purposes, as they are subject to the same taxes as US citizens, specifically on worldwide income.

Good luck.

There would simply be withholding deducted on the withdrawal, which she would have to file a tax return to recover.

I inherited an IRA from my sister that way. That is not an inheritance tax. 

My own IRA paid foreign taxes on dividends from foreign stocks through withholdings. The amount paid was small enough that I never bothered trying to recover it. But I finally figured out that the best way to do that would be to move the stocks out of the IRA, so that foreign taxes paid are deductible.

Unless I'm misunderstanding something, this is not really much of an issue.

Edited November 17, 2023 by Randy W (see edit history)

[Randy W]

32 minutes ago, Randy W said:

There would simply be withholding deducted on the withdrawal, which she would have to file a tax return to recover.

I inherited an IRA from my sister that way. That is not an inheritance tax. 

My own IRA paid foreign taxes on dividends from foreign stocks through withholdings. The amount paid was small enough that I never bothered trying to recover it. But I finally figured out that the best way to do that would be to move the stocks out of the IRA, where foreign taxes paid are deductible.

Unless I'm misunderstanding something, this is not really much of an issue.

The other way to handle that would be to withdraw all money and pay all taxes within the estate. The problem with that is that the estate moves into the highest tax bracket with only $12,000 income. My brother and sister both "just wanted the money" AFTER taxes, so, by golly, the estate paid a 37% tax on the OTHER 401K withdrawals (my sister was already in that bracket with her own income, so she didn't care - my brother didn't want to have any impact on his own return).

This impact of the taxes within an estate can also be lessened through what's known as a "K-1" partnership among the beneficiaries, where the taxes are paid at the beneficiaries respective tax rate on their respective tax returns, but neither of my siblings were interested in this.

Edited November 17, 2023 by Randy W (see edit history)

[Randy W]

Basically, all property in an estate can be converted to cash, with no taxes paid by the beneficiaries on the cash they receive. The problem with that is that the tax is paid at the higher rate within the estate.

For an IRA or 401K, your best approach is to withdraw the money gradually at your retired tax rate while you are still alive. For those of us living the rest of our lives in China, convert ALL assets to cash at a reasonable pace to minimize your taxes. This is complicated ONLY for those of you staying behind (or maintaining a physical footprint) in the US.

Inherited cash is not taxable, up to the $12.92 million dollars limit.

Edited November 17, 2023 by Randy W (see edit history)

[Randy W]

US Citizen Leaving Assets to Non-Citizen Spouse

Remember, with the current high federal estate tax exemption, in 2023 a U.S. citizen can gift up to $12.92 million dollars during their lifetime or at their death to anyone, including a non-citizen spouse. It does not matter where the non-citizen spouse lives. Annual gifts to non-citizen spouse are limited to $175,000.00. But given the high federal exemption, the federal estate and gift tax only becomes an issue for US citizens if they leave more than $12.92 million in assets.

https://burnerlaw.com/blog/leaving-assets-to-a-non-citizen-spouse/

$12.92 million dollars is too far above my radar for me to acknowledge. "Gifting" money to my spouse doesn't seem to register, either.

Edited November 17, 2023 by Randy W (see edit history)

[Randy W]

So Roger needs to decide for himself whether Li naturalizing now is a good idea, based on his own circumstances and how much of a footprint, if any, he will maintain in the US. The advantages of maintaining her Chinese citizenship while living in China are there, but fairly minor relative to the tax issues regarding her potentially inheriting US property.

At no point during my sisters probate was there a question about the citizenship of a beneficiary. The tax consequences are either within the estate itself, or the responsibility of the beneficiary. That is, the estate does not pay taxes based on the status of a beneficiary, nor will it pay taxes on behalf of a beneficiary.

A "non-US person" conducting transactions in the US is simply subject to withholding.

That is why I mentioned the possibility of her obtaining a NEW green card after Roger croaks.

Edited November 17, 2023 by Randy W (see edit history)

[Randy W]

There is another aspect of inheriting property with a long term investment that bears consideration - adjusted basis cost.

From Investopedia -

Step-up in basis refers to the adjustment in the cost basis of an inherited asset to its fair market value on the date of the decedent's death. Cost basis is what determines the taxes owed, if any, when the asset is sold.

An investment with a high long term profit - I have one stock which has increased its value by over 3,000% - can be sold at a cost basis on the date of inheritance by the beneficiary who receives that stock. Thereby paying ZERO taxes on that profit. Unfortunately for me, that stock is in my IRA, which means that whoever withdraws it FROM the IRA will pay taxes on the entire value of the stock - no long term gains are allowed.

But of course people who are beneficiaries of an estate tend to prefer CASH no matter how much value was lost to taxes by selling it within the estate.

It's all a big juggling act that Roger gets to perform while we watch (or not - depending on whether he comes back).

Edited November 17, 2023 by Randy W (see edit history)