Hello.
I hope you are doing well.
I had lived and worked in US around 2.5 years with L1B working visa (resident alien status) and permanently relocated back to Europe this summer (beginning of August).
I know that I will still retain a tax residency status in US for some time and will have to pay taxes both in US and Europe.
Q1: I was not able to obtain a Sailing (Departure) Permit from IRS due to a long appointment wait time. I called them in the first part of July for the appointment and it was scheduled in the middle of September despite I had told about my plans to leave in 2-3 weeks.
Is it possible to obtain the Sailing Permit abroad?
How critical it is?
Q2: I'm planning to file taxes to IRS for 2024 and no more AS I'm not in US since the beginning of August 2024 AND I won't meet the substantial presence test for the 2025 year. Does it sounds correct?
Q3: I still have some money and stocks at US banks.
Will it be possible to sell those stocks at 2025+ being a tax resident of another country?
Do I have to sell OR transfer those stocks to Europe somehow this year?
Should I avoid any taxable income (interest, dividends, etc.) at 2025 for the money/stocks present at my US accounts if I won't transfer it to Europe?
Q4: How soon should I fill and submit a W-8 form since I left?
I need to submit it to every bank entity at which I have accounts, right?
Q5: Are there any possible issues with US credit cards usage once you become a non-resident?
Q6: Are there any other important tax points should I consider in my case?
THANKS!
You'll need to sign in or create an account to connect with an expert.
Q7: What options do I have with 401k funds now AND at 2025+?
Will I be able to withdraw those funds being a foreign tax resident? Before 59.5 years old and after.
Any advice here please?
Q1: Is it possible to obtain a Sailing (Departure) Permit from IRS from abroad?
A Sailing Permit from the IRS is basically a document that clears you from having a Tax Obligation with the US BEFORE you leave United States. It is ALWAYS a good idea to be in good standing with the IRS and The U.S. Customs and Immigration, thus you should inquire are your local US Embassy or Consulate.
On the other hand, some individuals are EXEMPT from requiring to get a Sailing Permit.
Q2: Substantial Presence Test vs Bona Fide Residence.
While the Substantial Presence Test focuses on the time spent out of the United States, the Bona Fide Residence Test is more concerned about your intentions and activities while out of the United States.
per IRS:
SUBTANTIAL PRESENCE TEST
You will be considered a United States resident for tax purposes if you meet the substantial presence test for the calendar year. To meet this test, you must be physically present in the United States (U.S.) on at least:
1/6 of the days you were present in the second year before the current year.
BONA FIDE RESIDENCE TEST
The bona fide residence test applies to U.S. citizens and to any U.S. resident within the meaning of IRC section 7701(b)(1)(A) who is a citizen or national of a country with which the United States has an income tax treaty in effect.
To see if you meet the test of bona fide residence in a foreign country, you must find out if you have established such a residence in a foreign country. If you go there to work for an indefinite or extended period and you set up permanent quarters there for yourself and your family, you probably have established a bona fide residence in a foreign country, even though you intend to return eventually to the United States.
Q3: Tax Treatment of US Investment Income
Capital Assets held for a year or less before disposition will incur either a Short-Term Gain/Loss. Short-Term Capital Gains which are taxed as ordinary income based on your tax bracket.
Capital Assets held MORE THAN a year before disposition will incur either a Long-Term Gain/Loss. Long-Term Capital Gains receive preferential tax treatment of 0%, 15%, and 20% depending on your tax bracket.
Also, depending on your immigration/visa status, Financial Institutions may required to apply Backup Withholdings of 24% to the proceeds of a transaction.
Lastly, transferring Assets to out of the United States may trigger a tax consequence at the time of withdrawal and depending on your circumstances, create an instance where you could be subject to taxation by other jurisdiction in addition the United States. (United State taxes Worldwide income). Please consult a Tax Professional about your particular circumstances !!!
** Say "Thanks" by clicking the thumb icon in a post
** Mark the post that answers your question by clicking on "Mark as Best Answer"
1/2
Q4: FILING IRS FORM W-8
IRS Form W-8should be filled as soon as possible. Precisely not filing IRS Form W-8 could cause delays in the processing of a Sailing Permit.
Q5: Are there any possible issues with US credit cards usage once you become a non-resident?
Please contact the Financial Institution in question. But I believe that it is safe to say that NO Financial Institution is going to take kindly anyone running away with said Financial Institution's money !!!
Q6: Are there any other important tax points should I consider in my case?
Yes. Taxation by OTHER Jurisdictions and Tax Treaties of OTHER Jurisdictions with the United States. United States Taxes Worldwide income on its citizens.
Q7: 401k funds withdrawal now and 2025+
401K funds withdrawn before 59.5 years are subject to a 10% EARLY WITHDRAWAL PENALTY.
(Some exceptions do apply. Exceptions to Tax on Early Distributions )
Once again, depending on your immigration/visa status, you may be subject to a backup withholding of 24%.
** Say "Thanks" by clicking the thumb icon in a post
** Mark the post that answers your question by clicking on "Mark as Best Answer"
2/2
Still have questions?
Make a postAsk questions and learn more about your taxes and finances.
shaunhamilton87
New Member
Sergey T
Level 1
expat23843
New Member
HonestAbe1
Returning Member
LinuxStar
New Member
Did the information on this page answer your question?
You have clicked a link to a site outside of the TurboTax Community. By clicking "Continue", you will leave the Community and be taken to that site instead.