Resident Alien is moving out

[Possi]

My resident alien is moving back to Aussie Land, and will not be a US taxpayer after August. How will I handle this return next year? Is it simply a regular tax return, as in the past, but using only his US earned income?
Where can I go to read up on this, early?

[MAMalody]

Try Pubication 54 and 519. They will have some info in them. I also seem to remember something about a tax clearance to leave that would need to be done this year.

[BP.]

Where can I go to read up on this

Pub 519

http://www.irs.gov/pub/irs-pdf/p519.pdf

[AZUKHiker]

Get all forms filed

Firstly, if they are a green card holder merely leaving the US does not terminate the green card. So, in the absence of physical termination by the US government or themselves they would remain a US Resident Alien for tax purposes and have a continuing requirement to file US tax returns in future tax years. For them to revoke the green card they need to complete from I-407 from the USCIS web site.

In the year they leave the US and have revoked their green card they will be a dual status alien. Pub 519 gives details on how to deal with this.

Finally they must complete form 8854 which is the expatriation tax form. Even if they are not a high net worth or high income person caught by the expatriation tax they are still required to file this form with their final US tax return to confirm that they are up to date with their US tax obligations. If form 8854 is not filed or is filed late they become subject to the expatriation tax charge.

[BP.]

Here's a twist that affected a repatriating resident alien client a few years ago: They sold their US home & deposited the proceeds into an account in their destination country, creating an FBAR filing requirement.

[AZUKHiker]

That is why the form I-407 is so important so that you get rid of the US tax reporting requirements.

Of course as a green card holder myself I would always counsel somebody to be really sure they wanted to revoke their green card given the time and hassle involved in getting one in the first place. It will all depend on their personal circumstances and whether they think they may ever return to the US. Personally if I thought there was any chance I might return to the US I would get US citizenship (assuming my home country allows dual citizenship) before leaving the US and take it on the chin that I would still have to file US tax returns. If I had lots of PFICs or other foreign entities that might get highly taxed in the US then I might not go down that road. :-)

[Possi]

Thanks

I will look there! Thanks!

[Possi]

Thanks

I am just getting back to this! Thanks for your help!

[Possi]

goooood grief, I'm glad I asked!

Wow, so much more than I anticipated!! I will call him right away. I'm not a lawyer, so I do not feel qualified to advise him on legalities, but as a tax specialist, I am forced to walk this road.