QUESTION:
Dear Sir,
My wife and I are relocating to Singapore. We are currently
PLR (green card holders) in the US. In order to benefit
from the lower tax rates in Singapore we are considering
that one of us would abandon our PLR status, while the
other would file tax returns in the US to minimize tax
burden while maintaining the possibility of coming back
in a few years. Does this make sense? Might we face
complications getting back a green card in a few years?
Also the company that I will be working for is not US
based and my activity will not be focused on Singapore
that I am using aolely as a base. They could probably pay
me in any country - any advice on where the best place
would be for my salary to go?
Thank you for your assistance,
=======================================
david ingram replies:
I want to say that I am NOT a lawyer and certainly NOT a member of the 60
year old AILA (American Immigration Lawyers Association www.aila.org). Your
question is important enough that you should consult VERY SENIOR counsel to
discuss your situation. I suggest that a good start would be Joe Grasmick
(www.grasmick.com) who has a sophisticated phone consultation where you pay
$285.00 in advance for your phone consultation. What this points out is that
he is set up and used to dealing with people at a distance.
Your Resident alien (green) cards will be / could be / should be officially
cancelled by policy because of your leaving the USA. Although many people
seem to maintain their Green cards by continuing to file US income tax
returns, there is no guarantee that the one who kept their green card would
not have it revoked arbitrarily by any official at a USA Port of Entry,
particularly, when the other partner had officially renounced or turned
theirs in.
Furthermore, on September 30, 1996 a law was passed that banned a US citizen
from ever re-entering the US if they abandon or revoke their US citizenship
to avoid income tax. I DO NOT KNOW for sure, but have reason to believe
that it could apply to those who abandon a Green card for the same reason.
You require counsel to determine your status.
A Possible exception could be that the one who is destined to keep the green
card files an I-131 BEFORE leaving the USA. The I-131 is effectively an
application to keep your green card alive for a year at a time while
sojourning outside of the US. Of course, one must still file a US tax
return while living abroad. Note that the I-131 does NOT need to be approved
before you leave, but MUST HAVE BEEN SUBMITTED "BEFORE" your leaving.
Another problem I foresee is that if the plan is to keep income in the name
of the one without the green card, the IRS could look at gift tax being
levied against the green card holder who has "given up" income to the one
without the green card.
So be careful/
---------------
However, Since the max tax rate in Singapore is a max of 28%, you should do
some dummy tax returns. As I see it, if your income is less than $100,000
US, each, after the $80,000 earned income exemption and the foreign tax
credit, your US tax would still be nil. Above that, the difference in tax
is not likely enough for you to put yourself in the position of having to
apply for and wait a couple of years to re-instate the green card for the
person who gave up theirs.
The official rule is no tax if there for less than 60 days.
a floating rate or 15% (whatever is more) if there for 60 to 183 days and
the floating rate to a max of 28% if there more than 183 days.
At the same time, if the money does not come from Singapore sources, there
is likely no Singapore tax, but there would be US tax.
Hoping this helps, I remain,
Yours truly
david ingram
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