Tax benefits of giving up Green Card

cmyk · Post by **cmyk** » Fri Jul 17, 2009 11:22 am

I'm a Canadian citizen with a US green card (obtained in 2005) who moved back to Canada September 2008. I work as a freelance contractor for a US company and filed Canadian as well as both US Fed and California State 2008 taxes.

My wife and I have no plans of moving back to the US since all our family is in Canada and we plan on living here the rest of our lives.

Would it be more financially beneficial for us to simply abandon our US green cards (using the I-407) so that we wouldn't have to pay for someone to take care of our US Fed and CA State taxes year in and year out? Or is there enough financial incentive to keep filing Canadian and US taxes due to a lower tax rate in the US that we could be taking advantage of?

Also, if we abandon our green cards at this point in 2009, would I still need to file 2009 US and state taxes for this segment of the year in 2010 even though we're no longer US green card holders?

Thanks.

nelsona · Post by **nelsona** » Fri Jul 17, 2009 11:54 am

By living in canada, there is no advantage you can gain from any lower US taxrates: you are taxable in canada on your world income.

I would question however why you would be filing california tax, if you live and work in canada. Even if the firm you work for is based in California, you do not work there so should not be paying state tax. Please explain.

I trust that you end paying no extra tax on your IRS return, due to foreign tax credits.

That said, the only advantage I can think of is if you have children, you are entitled to $1000/child in credit from IRS wether you live in US or not, simply by filing.

Whether you choose to give up the card or not may be moot, since at some point soon you will no longer qualify for it and it will be revoked at the border. Better in this case to give it up officially.

cmyk · Post by **cmyk** » Fri Jul 17, 2009 4:02 pm

Regarding the CA taxes... I read in some California tax code a while ago that it's very aggressive when assigning "resident/non-resident status", so even if one has moved away they still may consider it temporary if there are enough links back to the state (drivers license, bank accounts, etc.). Not sure if this still applies though...

I would rather give up our green cards the 'official' way for sure, even if it took sending notices to the IRS just so that they don't have reason to bother us in years to come. However, if we did go through with this immediately, would we still need to file 2009 US taxes?

nelsona · Post by **nelsona** » Fri Jul 17, 2009 4:22 pm

You aren't a CA resident, so stop filing CA taxes. Your acct should have figured this out. Make him fix your 2008 return to indicate that you have left.

audustdix · Post by **audustdix** » Sun Aug 02, 2009 10:53 pm

You are taxable in CAnada on your world income. You mean that is it..

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nelsona · Post by **nelsona** » Mon Aug 03, 2009 5:06 am

CA in this context is california.

A US citizen living in canada must report ALL world income to BOTH CRA and IRS, but not to any US state.