When is the final 1040 Tax Return Filed for Expatriates?
For some US persons, when they are ready to permanently give up their US status, they may have to formally expatriate in order to accomplish their goals. Expatriation is a dual-status process involving both Tax and Immigration requirements. When a US person is either a US citizen or a Long-Term Lawful Permanent Resident (LTR), they cannot just give up their US status without going through the necessary tax and immigration hurdles. The formalized process of either relinquishing a green card or renouncing US citizenship is referred to as expatriation. And, the process of expatriation can be relatively complicated, depending on whether or not the person is considered a Covered Expatriate — and if so if they have an exit tax calculation to prepare. One common question we receive is when does a person have to file their last 1040 tax return?
Expatriate Final 1040 Tax Return Example
Janine is a Lawful Permanent Resident who lived in the United States for the past 11 years as a Green Card Holder. In 2022, she decides she wants to relinquish her green card and permanently give up her US Person status. Janine relinquishes her green card on August 1, 2022.
*Before relinquishing her Green Card, Janine should be sure that she is already in tax compliance to avoid automatic Covered Expatriate status.
Date of Expatriation & Tax Return FIling
Presuming that Janine files Form I-407 correctly and it is accepted by USCIS, the date of filing will be generally considered to be her expatriation date for expatriation purposes. Therefore, in 2023 she will have to file a dual-status tax return for 2022 status. For part of the year, she would be considered a US person and have to file a Form 1040 to report her worldwide income. Conversely, for the portion of the year, that she is not considered a US person she would file a form 1040-NR (or similar statement) to report her US-sourced income (not her worldwide income).
**Some taxpayers may simply file 1040 for the full year and attach 1040 NR or similar along with Form 8854.
This is just a brief introduction to illustrate Final tax year would go for a US person who formally relinquishes their green card — noting, that expatriation can be very complex for some taxpayers.
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