is GC imp????

[SamayDubey]

Been here for 10 years... deciding to file for AOS..;)

I still cant seem to understand the importance of GC?

Why do you need a GC when you have decided to R2i???


Any thoughts...or care to share your views..
:confused:

[willynilly]

The importance of anything is relative, what is most important for me might not be for you and vice-versa. Don't you think that, if you yourself haven't been able to understand the importance the GC, then why care for it ?
Usually people go for GC or USC like a kind of insurance, incase things go sour in R2I, they have a way of leaving the country without being at the beginning of the immigration line. But GC will only give you a 6 month buffer, before which you will have to return to US if you don't wanna lose it, in that case only USC is the true insurance.
If you wish to go for a 'Trial R2I' (whatever that is) then getting the GC beforehand might be useful. If you have no intention to return to US, then it'll be reduced just like any other piece of paper in your file .

[Sid]

Why do you need a GC when you have decided to R2i?

A GC allows you to spread out your IRA withdrawls for greater number of years, thus allowing you to take out more money, while paying less taxes.

[KirKS]

A GC allows you to spread out your IRA withdrawls for greater number of years, thus allowing you to take out more money, while paying less taxes.

But don't you think for someone with 10 yrs of stay abroad, using the 2 (or 3 in rare cases) RNOR period years, without GC, may actually help save more on US taxes?

I haven't done detailed calc for someone with let's say $100 K in IRA in US. But a quick glance tells me that a guy without any obligation to pay taxes to uncle Sam (when having no income) is better off than someone who has to pay taxes to uncle Sam (GC or USC). Using the RNOR efficiently, the NRA may be able to save more taxes compared to a GC.

[Sid]

But don't you think for someone with 10 yrs of stay abroad, using the 2 (or 3 in rare cases) RNOR period years, without GC, may actually help save more on US taxes?

I haven't done detailed calc for someone with let's say $100 K in IRA in US. But a quick glance tells me that a guy without any obligation to pay taxes to uncle Sam (when having no income) is better off than someone who has to pay taxes to uncle Sam (GC or USC). Using the RNOR efficiently, the NRA may be able to save more taxes compared to a GC.

As per long debates in the 401K withdraw thread, if one does not have a GC, they must file US taxes as a Non-Resident Alien from year 2 of R2I (could be year 1 as well, depending on which month of the year they R2I). This forces a flat 30% tax on IRA withdrawl, plus a 10% penalty. Besides, one won't be able to take exemptions for married-filing-jointly, and any kids they have. Its going to be a big loss.

When you are withdrawing money from your IRA, you are obligated to pay taxes to uncle Sam on that money (regardless of immigration status).

[Desi_Friend]

The importance of anything is relative, what is most important for me might not be for you and vice-versa. Don't you think that, if you yourself haven't been able to understand the importance the GC, then why care for it ?
Usually people go for GC or USC like a kind of insurance, incase things go sour in R2I, they have a way of leaving the country without being at the beginning of the immigration line. But GC will only give you a 6 month buffer, before which you will have to return to US if you don't wanna lose it, in that case only USC is the true insurance.
If you wish to go for a 'Trial R2I' (whatever that is) then getting the GC beforehand might be useful. If you have no intention to return to US, then it'll be reduced just like any other piece of paper in your file .

Actually with Re-entry permit (I-131) before leaving US, GC can be maintained for 2 years from the date of approval of Re-entry permit. So, in case if one changes the mind or if R2I plans go awry, they can always comeback to US without worrying about visa. also, it may help if you need to travel to US for some reason (job/personal)

"This forces a flat 30% tax on IRA withdrawl, plus a 10% penalty. Besides, one won't be able to take exemptions for married-filing-jointly, and any kids they have. Its going to be a big loss."

If withdrawn in phased manner, you dont have to pay taxes if the amount/year is =< min taxable incom. You can read more about 401K /IRA withdrawal strategy threads in this forum

[Sid]

If withdrawn in phased manner, you dont have to pay taxes if the amount/year is =< min taxable incom. You can read more about 401K /IRA withdrawal strategy threads in this forum

Not true.

IRA withdrawls are NOT considered ECI (Effectively Connected Income) for a NRA. So even if you withdraw just $10 in a given year, a flat tax of $3 (30%) will be applied, plus $1 fine.

[Desi_Friend]

Not true.

IRA withdrawls are NOT considered ECI (Effectively Connected Income) for a NRA. So even if you withdraw just $10 in a given year, a flat tax of $3 (30%) will be applied, plus $1 fine.

If you have valid GC, you are considered as Resident right? You can refer to this thread.


http://www.r2iclubforums.com/forums/showthread.php/20507-401k-Strategy-for-move2india?p=318221

[Sid]

If you have valid GC, you are considered as Resident right? You can refer to this thread.


http://www.r2iclubforums.com/forums/showthread.php/20507-401k-Strategy-for-move2india?p=318221

Please read the posts again.

In #3 - I mentioned that GC allows one to take advantage of graduated tax rates, so OP should opt for a GC.
In #5 - I mentioned the disadvantage of filing tax as a NRA (which stands for Non Resident Alien tax status).
In #7 - I mentioned again the disadvantage of filing tax as a NRA.

Now, where am I not clear?

Of course, if one has a valid GC, then the person is considered a RA (Resident Alien) and not a NRA (Non Resident Alien), and hence can take advantage of graduated tax rates (plus all the exemptions), and hence having a GC is better from financial perspective, hence OP should take a GC (if there is an option).

[Desi_Friend]

My bad.. Sorry for the confusion.. I got confused while reading #5