Sailing permit before forfeiting green card

Forum|Forum|4 years ago
January 21, 2022
2 replies
18 views

I spoke to multiple accountants - none of them clear on this process. IRS told me they have cut the internal consulting arm on this topic. Resources are quite thin to know what one is supposed to do. Can you help me validate if I understand the process right.

Me and my wife got green cards in 2021 and will be forfeiting them and moving overseas for good in 2022 to our home country. I will have US sourced income up till mid 2022, which means we need form 1040C and then 1040NR when filing taxes for 2022 (in 2023 when we are no longer green card holders). I also have stock portfolio in US which I will not be cashing out but will transfer to an overseas broker at our new location. We then need to pay the amount from the output of the 1040C ahead of the sailing permit meeting with the IRS, and also bring proof of payment, together with some extra supporting documents. Is that the full process or am I missing something ?

What is the timing to file the 1040NR afterward ?

Is it straightforward to prepare these forms myself (assuming I have income from salary, RSU vesting with my employer, investment portfolio, cashing out 401K) or do you recommend using tax pro service ? I have been trying to find accountants to assist with this but have not been able to find anyone who knows this topic or is willing to help (before refusing service some ask me if I had the green card for 8+ years because then I owe a big "exit tax" and my guess is that they can charge me a hefty fee for the service, however I only had my card for 6 months).

Not A Product Question

DaveF1006

Level 15

It depends. Please read this IRS document that explains sailing permit regulations in detail. Ordinarily, all income received or reasonably expected to be received during the tax year up to and including the date of departure must be reported on Form 1040-C and the tax on it must be paid. When you pay any tax shown as due on the Form 1040-C, and you file all returns and pay all tax due for previous years, you will receive a sailing or departure permit. However, the IRS may permit you to furnish a bond guaranteeing payment instead of paying the taxes for certain years.

I assume you filed returns in previous year before 2022 and you will just need to pay the tax for 2022 on income earned up to your departure. Also bring all supporting documents that you think are pertinent to your case. Bring anything that you feel will make this process much easier for you.

As far as this being a straightforward process, I cannot comment on that. Filing a 1040C is a tricky process and I would suggest seeking professional help. If any errors are involved, let a professional be responsible for those so that no liability shifts to you. Make sure a Professional Tax Preparer or CPA prepares this for you to ensure your peace of mind for the move ahead.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

dn_ttaxAuthor

Level 2

Thank you for your reply, Dave! I have been looking for a CPA that can help me out with this but have not been able to find one. Most of them ask me if I have had the green card for more than 8 years (because in that case I owe 20% exit tax and they can charge me a fat service fee) and when they find out I have had it for less then that they refuse their services to me. Can you give me any leads on accountant or accounting firm that may be willing to help ?