heroquixote
Registered Users (C)
I have a technical question: I am a permanent resident who hired by an international organization through its US office to work on a China project, which involves frequently field work in China. However, my compensation is paid in the US with all the taxes withheld. I know that in my employment situation I could claim expatriat tax benefits for current tax year, so long as the total number of days I spent in the US do not exceed 35.
However, as I read 8 CFR PART 316 of Immigration and Nationality Act, I found following paragraph quoted ad verbatim below:
1) Preservation of residence under Section 316(b) of the Act.
(iii) An applicant whose Form N-470 application under Section 316(b) of the Act has been approved, but who voluntarily claims nonresident alien status to qualify for special exemptions from income tax liability, raises a rebuttable presumption that the applicant has relinquished a claim of having retained lawful permanent resident status while abroad. The applicant's family members who were covered under Section 316(b) of the Act and who were listed on the applicant's Form N-472 will also be subject to the rebuttable presumption that they have relinquished their claims to lawful permanent resident status.
My question is: if I claim income tax exemption for 2005, will the above highlighted part apply, or that purported expatriate tax benefit can still be claimed under some special tax code? It is clearly not a wise course of action to take if tax benefits have to be claimed at the expense of lawful permanent resident status.
I asked my CPA friend, and following is the answer (quote):
Regarding to the question you cited from Immigration Law, I just first want to bring your attention that tax law and immigration law always have different explanation about US residence. But from what I understand by reading the quoted text under 8 CFR PART 316 of Immigration and Nationality Act. I think you don't have to "voluntarily claims nonresident alien status to qualify for special exemptions from income tax liability". For claim Foreign earned income exemption, you can remain in your permanent resident status to be qualified under either "Bone Fide Test" (requires one calendar year oversea stay) or "Physical Presence Test" (requires 330 days oversea stay in any 12 month period).
Moreover, you are not asking US tax exemption because you are nonresident alien. You are claim foreign income exclusion as PR. In the other word, you are still reporting your worldwide income, but merely applying exclusion amount since you are qualified to do so.
Does this interpretation make sense? Thanks for your advice.
Chris
However, as I read 8 CFR PART 316 of Immigration and Nationality Act, I found following paragraph quoted ad verbatim below:
1) Preservation of residence under Section 316(b) of the Act.
(iii) An applicant whose Form N-470 application under Section 316(b) of the Act has been approved, but who voluntarily claims nonresident alien status to qualify for special exemptions from income tax liability, raises a rebuttable presumption that the applicant has relinquished a claim of having retained lawful permanent resident status while abroad. The applicant's family members who were covered under Section 316(b) of the Act and who were listed on the applicant's Form N-472 will also be subject to the rebuttable presumption that they have relinquished their claims to lawful permanent resident status.
My question is: if I claim income tax exemption for 2005, will the above highlighted part apply, or that purported expatriate tax benefit can still be claimed under some special tax code? It is clearly not a wise course of action to take if tax benefits have to be claimed at the expense of lawful permanent resident status.
I asked my CPA friend, and following is the answer (quote):
Regarding to the question you cited from Immigration Law, I just first want to bring your attention that tax law and immigration law always have different explanation about US residence. But from what I understand by reading the quoted text under 8 CFR PART 316 of Immigration and Nationality Act. I think you don't have to "voluntarily claims nonresident alien status to qualify for special exemptions from income tax liability". For claim Foreign earned income exemption, you can remain in your permanent resident status to be qualified under either "Bone Fide Test" (requires one calendar year oversea stay) or "Physical Presence Test" (requires 330 days oversea stay in any 12 month period).
Moreover, you are not asking US tax exemption because you are nonresident alien. You are claim foreign income exclusion as PR. In the other word, you are still reporting your worldwide income, but merely applying exclusion amount since you are qualified to do so.
Does this interpretation make sense? Thanks for your advice.
Chris