Greetings:
I am looking for advice and/or first-hand knowledge for a possible upcoming scenario. I apologize for the lengthy description of our situation but I believe it helps to explain as much as possible if I expect to get a reasonably reliable response.
I am an American citizen; wife is a Canadian citizen; she lived with me in the US for 3 years while working on a TN visa as a non-resident alien; we got married and moved to Canada where she sponsored me for permanent residency in Canada. Due to the awesome housing market, we decided to take a huge profit on the house and move back to the US. She was admitted to the US (barely) with TN status, even though the intent to stay permanently seemed relatively obvious. While in Canada, we filed US joint tax returns.
Once back in the US, we filed for change of status concurrently with family-based sponsorship ( I-130/I-485). She is now a GC holder. We did not liquidate her sizeable Canadian tax-sheltered retirement accounts and we claim an exemption from Federal Tax status for by using the appropriate IRS form every year. She will also receive a small Canadian pension when she is 55.
We’ve decided we would like to move to Panama for an early retirement in a few years (or less). We’d probably go for 1 to 2 years and rent to ensure we like it enough to stay while maintaining US bank and brokerage accounts as well as storing all our possessions in the US (we’d sell our house as we’d need the proceeds to embark on this venture since we are both too young to use IRA’s/401k's without penalty and her US pension’s minimum age is likely to rise to 55 before she is able to begin taking it).
Given that scenario, I’m aware that we should obtain a REP before leaving and that would give us 2 years to decide and still maintain her LPR status. If we decide to stay in Panama, it seems that the legal and correct thing to do would be to relinquish her LPR using I-407 at a consulate since we can always reapply based on family-based GC if we ever decide to return. But, since she will be receiving US-sourced pension income at some point, it will always be necessary to file US returns. Here are some questions I have:
1) During the first 2 years, I assume it would be best to use a US address for tax returns? Not sure what to do since we have no intention of paying for an apartment or buying more property. Would using a foreign tax address matter as far as immigration is concerned? Can you use a PO box or other similar method?
2) She will be receiving US-sourced pension income in the future. If we file I-407, her status for immigration would change to non-resident alien but we’d still need to file US tax returns. I’ve been told there are serious adverse tax consequences for an LPR that relinquishes GC. Can anyone comment on this? Also, if you tell a US pension payer that you have a foreign address, they are required to withhold 30% and that is way more than the libaility we'd incur while in a low tax bracket. Does anyone know what is best?
3) Most immigration websites stress the importance of maintaining LPR status at all costs but that seems dishonest if you decide that the US is not your cup of tea anymore. Can anyone provide advice?
4) Regarding return visits to the US: I’ve read that you can apply for a B2 at the consulate when surrendering the GC and they will often allow multiple entries for a period of years. Or you can just re-enter using the Visa waiver program if you possess a passport from an eligible country. But my understanding is that Canadians enjoy special privileges that allow the equivalent of a B2 (visitor status) with no visa required for up to 6 months. Would there be any hassles for a Canadian citizen living outside of Canada to enter with their US-citizen spouse for all the purposes permitted under a B2?
5) I’m told you give up your right to collect Social Security if you relinquish GC. Given the state of America’s budget, I am not too concerned with this but wonder if there are any other financial ramifications?
6) Finally, (this may be for a tax specialist): If we continue to file US tax returns but she has relinquished her GC, is there any need to report Canadian-sourced retirement/pension income on future US tax returns?
Thanks in advance for all the advice
I am looking for advice and/or first-hand knowledge for a possible upcoming scenario. I apologize for the lengthy description of our situation but I believe it helps to explain as much as possible if I expect to get a reasonably reliable response.
I am an American citizen; wife is a Canadian citizen; she lived with me in the US for 3 years while working on a TN visa as a non-resident alien; we got married and moved to Canada where she sponsored me for permanent residency in Canada. Due to the awesome housing market, we decided to take a huge profit on the house and move back to the US. She was admitted to the US (barely) with TN status, even though the intent to stay permanently seemed relatively obvious. While in Canada, we filed US joint tax returns.
Once back in the US, we filed for change of status concurrently with family-based sponsorship ( I-130/I-485). She is now a GC holder. We did not liquidate her sizeable Canadian tax-sheltered retirement accounts and we claim an exemption from Federal Tax status for by using the appropriate IRS form every year. She will also receive a small Canadian pension when she is 55.
We’ve decided we would like to move to Panama for an early retirement in a few years (or less). We’d probably go for 1 to 2 years and rent to ensure we like it enough to stay while maintaining US bank and brokerage accounts as well as storing all our possessions in the US (we’d sell our house as we’d need the proceeds to embark on this venture since we are both too young to use IRA’s/401k's without penalty and her US pension’s minimum age is likely to rise to 55 before she is able to begin taking it).
Given that scenario, I’m aware that we should obtain a REP before leaving and that would give us 2 years to decide and still maintain her LPR status. If we decide to stay in Panama, it seems that the legal and correct thing to do would be to relinquish her LPR using I-407 at a consulate since we can always reapply based on family-based GC if we ever decide to return. But, since she will be receiving US-sourced pension income at some point, it will always be necessary to file US returns. Here are some questions I have:
1) During the first 2 years, I assume it would be best to use a US address for tax returns? Not sure what to do since we have no intention of paying for an apartment or buying more property. Would using a foreign tax address matter as far as immigration is concerned? Can you use a PO box or other similar method?
2) She will be receiving US-sourced pension income in the future. If we file I-407, her status for immigration would change to non-resident alien but we’d still need to file US tax returns. I’ve been told there are serious adverse tax consequences for an LPR that relinquishes GC. Can anyone comment on this? Also, if you tell a US pension payer that you have a foreign address, they are required to withhold 30% and that is way more than the libaility we'd incur while in a low tax bracket. Does anyone know what is best?
3) Most immigration websites stress the importance of maintaining LPR status at all costs but that seems dishonest if you decide that the US is not your cup of tea anymore. Can anyone provide advice?
4) Regarding return visits to the US: I’ve read that you can apply for a B2 at the consulate when surrendering the GC and they will often allow multiple entries for a period of years. Or you can just re-enter using the Visa waiver program if you possess a passport from an eligible country. But my understanding is that Canadians enjoy special privileges that allow the equivalent of a B2 (visitor status) with no visa required for up to 6 months. Would there be any hassles for a Canadian citizen living outside of Canada to enter with their US-citizen spouse for all the purposes permitted under a B2?
5) I’m told you give up your right to collect Social Security if you relinquish GC. Given the state of America’s budget, I am not too concerned with this but wonder if there are any other financial ramifications?
6) Finally, (this may be for a tax specialist): If we continue to file US tax returns but she has relinquished her GC, is there any need to report Canadian-sourced retirement/pension income on future US tax returns?
Thanks in advance for all the advice