Does my wife HAVE TO become a US Citizen?

[CalGreenCard]

It is not tax loopholes, these are tax laws.

The loophole comes in when it is sometimes possible to, legally, avoid taxation in either country by filing as a non-resident in the USA during the year of departure.

In this case it would depend, in part, on the laws in Korea and, perhaps, any third country of residence--and that is beyond the scope of my interest in this thread. The OP's wife needs to research whether there is actually a substantive advantage in her case.

Indeed this whole thread is in the wrong forum because potential US citizenship is not in play here--the issue is whether the spouse from Korea remains an H-1B or becomes a GC holder. This thread belongs in the "Family Based GC" forum.

 

[Jackolantern]

H-1B's can be extended more or less indefinitely if there is a GC application pending--and this COULD delay the process for longer than getting a GC through marriage.

That option probably isn't available to her, due to her H1B about to expire "soon" and the requirement to file a labor certification or I-140 petition when there is at least 1 year remaining on the H1B.

 

[Jackolantern]

If you are on green card and go back to your country for 2-3 years (on re-entry), you still need to file as resident and claim whatever exemptions they might give you.

But that's only if the green card is maintained through those 2-3 years when outside the US. If it is surrendered, US tax would be assessed for the year it was surrendered, but not in years after that (unless the individual was an 8-year LPR with high income/high net worth).

 

[TheRealCanadian]

Yes, there are lot of counseling we can do outside of immigration aspects, but the fact is that US comes on hard on GC holders in terms of taxation. If there is a genuine concern on that aspect, let's explore how he can keep his wife on H1.

Since she's already filing as a tax resident of the US, there is no difference in this regard.

 

[Jackolantern]

The loophole comes in when it is sometimes possible to, legally, avoid taxation in either country by filing as a non-resident in the USA during the year of departure.

H1B or GC wouldn't make a difference in the year of departure. In either case the individual would be classified as a "dual status" alien and take advantage of whatever exemptions are available for dual status.

 

[CalGreenCard]

H1B or GC wouldn't make a difference in the year of departure. In either case the individual would be classified as a "dual status" alien and take advantage of whatever exemptions are available for dual status.

For H-1B tax residency can be terminated simply by physically leaving. For a GC holder you need to file a Form I-407 with a consulate that has jurisdiction over your residence abroad. Establishing such a residence abroad may have tax implications in the country of that residence.

The difference may only amount to a few days, but the loophole is that if you get that window of a few days, you may be able to use it to execute an important transaction that will then not be taxable in either country.

 

[sanjoseaug20]

Since she's already filing as a tax resident of the US, there is no difference in this regard.

Please see the overall picture, not just one comment. The OP said
... She doesn't want to become a green card holder because she (we) may eventually go abroad to work and she doesn't want to pay US taxes...

It is not a question of current taxes, it is a question of future taxes.

 

[sanjoseaug20]

But that's only if the green card is maintained through those 2-3 years when outside the US. If it is surrendered, US tax would be assessed for the year it was surrendered, but not in years after that (unless the individual was an 8-year LPR with high income/high net worth).

We are debating too many hypotheticals. However, my assumption is that many families go through uncertain times. There have been so many posts here saying "went for 3 months, did not come back for 11". When you go abroad for a short stint, you do not know when you are going to get back. You can plan to surrender GC only if you know what you are doing. If you know for sure you are not coming back to US for 3-5 years, well, you will surrender GC. But if you believe you will be back in 3 months, but do not end up coming back for 11 (and even then you are undecided), then these 2 statuses do make a difference.

Again, while I see so many people in the world who know from get go where they are going to be in life, what they are going to do, where they are going to live, how they are going to get married and so on ... in real life there are so many people who have to go along with what life offers them ... I like the OP for seeking to know what problems he/family might face and preparing for that. See my thread "Why USC?" for a discussion of handling these issues under time pressure.

 

[TheRealCanadian]

Please see the overall picture, not just one comment. The OP said ... She doesn't want to become a green card holder because she (we) may eventually go abroad to work and she doesn't want to pay US taxes... It is not a question of current taxes, it is a question of future taxes.

And unless she has a really high net worth, she loses US tax residency when she abandons the GC.

 

[Jackolantern]

We are debating too many hypotheticals. However, my assumption is that many families go through uncertain times. There have been so many posts here saying "went for 3 months, did not come back for 11". When you go abroad for a short stint, you do not know when you are going to get back. You can plan to surrender GC only if you know what you are doing. If you know for sure you are not coming back to US for 3-5 years, well, you will surrender GC. But if you believe you will be back in 3 months, but do not end up coming back for 11 (and even then you are undecided), then these 2 statuses do make a difference.

Again, while I see so many people in the world who know from get go where they are going to be in life, what they are going to do, where they are going to live, how they are going to get married and so on ... in real life there are so many people who have to go along with what life offers them ... I like the OP for seeking to know what problems he/family might face and preparing for that. See my thread "Why USC?" for a discussion of handling these issues under time pressure.

We can debate all those hypothetical scenarios until the sun doesn't shine, but at this point it appears that she doesn't really have a choice. If she doesn't apply for a green card either through her spouse or employer, she'll have to leave by the time her H1B expires. Options like F1 or J1 are unlikely, and the OP hasn't given any indication that she would qualify for something more rarified like a diplomatic visa.

 

[Vorpal]

Even worse, some think that everybody in the US who isn't a citizen is an illegal alien.

You'd be surprised how many people there are who believe that. When I became a citizen, I've had a few close acquaitances say things like "Oh, good for you! Now that you're legal, you don't have to worry about being deported".

 

[cafeconleche]

Hehe, well, in a way, that's true- you don't really have to worry about being deported!