Us Citizenship - Beneficial For Wife?

[jetjock]

One of the positives of becoming a US citizen is that there would be no restrictions on social security benefits. We both wouldn't receive benefits for about another 30 years.

Thanks for help.

If she does not become a US citizen and if you should predecease her she will not be entitled to the spousal exemption under current US Estate & Gift Tax regulations. Whether this will be a large impact depends upon the size of your assets.

I believe that is after 1 million dollars. So in other words she can recieve up to 1 million without tax, after that taxes are levied. Now to avoid some of that becoming an issue, spread your assets around the globe. There are some tax benifits of you spouse revokeing her green card etc.

Not too woried about the spousal exemption. When we married, I was practically broke. Over the last 5 years I managed to save about $400k and plan to move to Thailand with $550. Hence no taxes would be levied.

Even though Siamamerican will apparently not be affected, as a point of correctness, the current US Federal Estate Tax Exemption is now actually 2 million dollars and will increase to 3.5 million in 2009. However in 2010 the tax law will be repealed and unless reinstated by Congress or it will then revert back to 1 million. I guess if you are a US citizen and have a lot of money which you want to protect from taxes, then the year 2009 would be a good year to choose to predecease your wife !

[archthai]

agreed...my wife knows all them perfectly now...just waiting for her interview letter. But, the test is changing and we won't know for sure what version they will be using. So, she has to study for both of the formats!

I made sure my did what ever it takes to get hers as well--- 1978 and the test was a bit harder as i recall. I had to look up some of the questions too. Its worth it!

[Padkapow Guy]

That test is hard. It has nothing to do with being proficient in English. My Mother failed and my father, who was in the air force and mastered in government, almost failed! Tough questions and it is suppose to change to a different format in the near future.

Also, the process is taking a lot longer now. They up'ed the fees a lot July 31st, so there was a huge flood of applications. The USCIS web site is now saying 16-18 months. Here is a quote from their website:

USCIS has received a significant increase in the number of applications filed. In July and August, nearly 2.5 million applications and petitions of all types were received. This compares to 1.2 million applications and petitions received in the same time period last year. This fiscal year, we received 1.4 million applications for naturalization; nearly double the volume we received the year before. The agency is working to improve processes and focus increased resources, including hiring approximately 1,500 new employees, to address this workload.

As a result, average processing times for certain application types may grow longer. In particular, naturalization applications filed after June 1, 2007 may take approximately 16-18 months to process.

If she studies the Questions in the Guide book she will have no problems, My wife did and she passed.

As you said you wife has been here 20 years before taking the test. They are alot easier on someone who has been here 20 years vs some one who has only been here 5 years. My buddies wife got her citizenship after 30 years in the U.S. and they only asked her one question. She got it right and passed and he said the apps fee are going up so you don't want to fail or it will cost you alot more money.

PKG

[corkscrew]

One of the positives of becoming a US citizen is that there would be no restrictions on social security benefits. We both wouldn't receive benefits for about another 30 years.

Thanks for help.

If she does not become a US citizen and if you should predecease her she will not be entitled to the spousal exemption under current US Estate & Gift Tax regulations. Whether this will be a large impact depends upon the size of your assets.

I believe that is after 1 million dollars. So in other words she can recieve up to 1 million without tax, after that taxes are levied. Now to avoid some of that becoming an issue, spread your assets around the globe. There are some tax benifits of you spouse revokeing her green card etc.

Not too woried about the spousal exemption. When we married, I was practically broke. Over the last 5 years I managed to save about $400k and plan to move to Thailand with $550. Hence no taxes would be levied.

Even though Siamamerican will apparently not be affected, as a point of correctness, the current US Federal Estate Tax Exemption is now actually 2 million dollars and will increase to 3.5 million in 2009. However in 2010 the tax law will be repealed and unless reinstated by Congress or it will then revert back to 1 million. I guess if you are a US citizen and have a lot of money which you want to protect from taxes, then the year 2009 would be a good year to choose to predecease your wife !

And if you do die and leave your wife a very rich woman (one, whose estate in turn will be subject to US estate tax when she dies) she can go to the US Embassy and renounce her US citzenship and her estate will then not be subject to the US ESTATE tax when she dies. This will be a boon for your children.

Remember that US citizens are subject to US INCOME tax wherever they live and from whatever the source.

Of course, you can make intervivos gifts to your wife without paying a US GIFT tax.

[SoCal]

I don't know how they prove it or what they could do about it, but it is against the law to revoke your citizenship to avoid paying taxes.

I question if I will ever have my wife become a US citizen due to tax implications.

[corkscrew]

I don't know how they prove it or what they could do about it, but it is against the law to revoke your citizenship to avoid paying taxes.

I question if I will ever have my wife become a US citizen due to tax implications.

Quite the contrary. Someone with dual citizenship (US and another...and it makes no difference which came first) can renounce his/her citizenship and that person will not be subject to US ESTATE tax. However he/she will still be subject to US INCOME tax on income from the US (subject to a credit if he/she pays income tax in the other jurisdiction).

[siamamerican]

SoCal,

What are the tax implications? From my understanding, you would still pay the death tax if your wife isn't a US citizen. If your wife is a citizen there would be no taxes if you died first. Taxes would be owed upon her death if her wealth exceeded 2 mil. It seems to me less taxes would be owed if she was a US citizen and , as someone else stated, she might be able to avoid these taxes also. Personally, I think it is only fair to pay the death taxes if the money was earned in the US and not rescind her US citizenship.

Edited December 6, 2007 by siamamerican

[SoCal]

I don't know how they prove it or what they could do about it, but it is against the law to revoke your citizenship to avoid paying taxes.

I question if I will ever have my wife become a US citizen due to tax implications.

Quite the contrary. Someone with dual citizenship (US and another...and it makes no difference which came first) can renounce his/her citizenship and that person will not be subject to US ESTATE tax. However he/she will still be subject to US INCOME tax on income from the US (subject to a credit if he/she pays income tax in the other jurisdiction).

Reread what I said, and assure you it is quite illegal to revoke your citizenship to avoid paying taxes. Google it.

I am talking about income tax on global non-earned income. She becomes a citizen and she must claim this.

[SoCal]

SoCal,

What are the tax implications? From my understanding, you would still pay the death tax if your wife isn't a US citizen. If your wife is a citizen there would be no taxes if you died first. Taxes would be owed upon her death if her wealth exceeded 2 mil. It seems to me less taxes would be owed if she was a US citizen and , as someone else stated, she might be able to avoid these taxes also. Personally, I think it is only fair to pay the death taxes if the money was earned in the US and not rescind her US citizenship.

I'm not a tax consultant, but imagine your situation is different than mine, and therefore what is best for me is not best for you.

I am concerned with global assets, of which I have none.

[corkscrew]

I don't know how they prove it or what they could do about it, but it is against the law to revoke your citizenship to avoid paying taxes.

I question if I will ever have my wife become a US citizen due to tax implications.

Quite the contrary. Someone with dual citizenship (US and another...and it makes no difference which came first) can renounce his/her citizenship and that person will not be subject to US ESTATE tax. However he/she will still be subject to US INCOME tax on income from the US (subject to a credit if he/she pays income tax in the other jurisdiction).

Reread what I said, and assure you it is quite illegal to revoke your citizenship to avoid paying taxes. Google it.

I am talking about income tax on global non-earned income. She becomes a citizen and she must claim this.

I was speaking of US ESTATE taxes that the estate of the decendent must pay (not US INCOME taxes that he/she must pay while alive or in the year of his/her death).

[siamamerican]

SoCal,

What are the tax implications? From my understanding, you would still pay the death tax if your wife isn't a US citizen. If your wife is a citizen there would be no taxes if you died first. Taxes would be owed upon her death if her wealth exceeded 2 mil. It seems to me less taxes would be owed if she was a US citizen and , as someone else stated, she might be able to avoid these taxes also. Personally, I think it is only fair to pay the death taxes if the money was earned in the US and not rescind her US citizenship.

I'm not a tax consultant, but imagine your situation is different than mine, and therefore what is best for me is not best for you.

I am concerned with global assets, of which I have none.

OK... It isn't your income. It is your wifes income taxes on global assets that are the issue. If I understand, your situation is a rare one in Thailand. Could expats avoid taxes by tranfering assets to the wife? Would the tranfers be subject to gift limitations?

[mouse]

My understanding is that a person cannot collect USA social security unless they are a US citizen, presuming it will be available in 30 years. If she pays nothing into it, she will get a portion of yours, if you preceed her in death.

Actually not true, difference being that persons that are not citizens are charged at a higher U.S. tax rate when deductions of any type are made.

Duel citizenship is allowed under U.S. and Thai laws.

My recommendation would be to get totally informed and then make a sound decision.

[jetjock]

Regarding US citizens versus non US citizens, I have just obtained some interesting information about US Federal Estate Tax (which can be as high as 55%). I am currently in the process of doing my estate planning and have learned that since my Thai wife is not yet a US citizen, it is going to make setting up my trust and will much more complicated at the current time until I can later change it when she becomes a US citizen in about a year. Since she is now is still a resident alien, the current 2 million dollar exemption for US residents will not apply. Here is the latest info I have obtained that may be helpful to those of you in a similar situation :

"US CITIZEN VS NON US CITIZEN: Under certain tax provisions enacted, only spouses who are US citizens can receive an unlimited estate. All others–including Resident Aliens–can only receive a maximum of $675,000. Thus, if your estate is over this amount, your non-US citizen spouse can get hit with a heavy estate tax under certain scenarios.

There are a couple of loopholes to consider in this regard to beat the system a bit. First, you can shift assets so each spouse owns less than $675,000. This can cut down on the potential tax problem, all other variables being equal. Under this tax act, you can shift assets by making a gift of up to $100,000 per year to a non US citizen spouse without running afoul of gift tax laws by filing a gift tax return citing certain code sections associated with non US citizen-spouses. Second, you can set up a Qualified Domestic Trust to preserve tax-exempt status on up to $1,350,000. This can be a very complicated part of estate tax planning, but it is a possible option. "

To sum it up, it can get quite complicated if you are married to a non US resident and have personal assets over $675,000 and will probably require help from a tax professional to avoid heavy estate taxes.

[CaptHaddock]

My recommendation would be to get totally informed and then make a sound decision.

My Thai wife is in the same situation. She has a green card and will apply for citizenship in March. The main drawback is that she will always have to file US income taxes and possibly pay, even if she moves back to Thailand at some point. The advantages, for travel and inheritance, outweigh this, but it will be a headache if she ever were to return to Thailand. I recently read an American expat complaining that his tax return to claim the Foreign Earned Income credit was 100 pages prepared by some professional.

By the way there is an additional restriction on an IRA when the beneficiary is an alien. In that case, I believe the alien is compelled to pay income tax on the entire value as a distribution when inheriting it. A spouse beneficiary who is a citizen can choose to keep the IRA as an IRA and take required distributions out over her lifespan. This represents a significant benefit to a citizen. The govt evidently fears that an alien beneficiary, with or without a green card, would just scoot home with the money without ever paying any tax.

[teacup]

I don’t know about your wife, as for me it’s not so much about the freedom of international travel but the benefits of getting into various government jobs.

I had to get the citizenship in order to get a job in the city’s regional planning department, it was required. What so strange when reading all these replies is that I didn’t have to go through any testing by the immigration at all, just went in there to be sworn in by the judge only.

Edited December 8, 2007 by teacup

[KhunG]

Most influential economists, scientists, geologists etc. state that we are post peak oil: my point is - in 30 years time 99% of the population will be fighting for gargage - most likley a lot sooner - so dont even consider social benefits etc. Live now!!

I'm old enough to remember in the 60s and 70s all the influential economists, scientists, geologists etc predicting the coming ice age, the earth torn apart by the Jupiter effect, mass starvation world wide due to over population, the exhaustion of fossil fuels, etc all this to happen before the 90s.

"Chicken-Little-ism" is an industry, its how these folks drum up their cash. According to them, the world as we know it is always on the brink of extinction. Thanks to the ingenuity of the human race, it never quite gets there.

Good point - however, peak oil is very inconveniently real! (off subject - i know)

Off topic, as you say, but as I'm in the industry; We keep revising the peak oil number upward as new technologies allow us to exploit more hydrocarbons every year. We are delivering vastly more product every year now than was imagined to even exist when J.Carter said that we would run out of oil before the 90s.

[NovaBlue05]

Regarding Social Security, my wife has been working regularly and paying into the system here in the US for the last 7 years. We plan to move to Thailand within the next 4 years. My understanding is that she could get SS from her work @ 62 yo if she continues living here but would require US citizenship to draw her SS if living in Thailand.

Has anyone had this experience? It would certainly be incentive to take the test before leaving.

[CaptHaddock]

Regarding Social Security, my wife has been working regularly and paying into the system here in the US for the last 7 years. We plan to move to Thailand within the next 4 years. My understanding is that she could get SS from her work @ 62 yo if she continues living here but would require US citizenship to draw her SS if living in Thailand.

Has anyone had this experience? It would certainly be incentive to take the test before leaving.

I don't believe that citizenship status has any effect on eligibility for SS payments. I have heard many stories here in New York of immigrants retiring back in the old country on SS. Not all of these were citizens.

[mogoso]

Wife has resided in the US for 5 yrs. Her current status is a "Permanent Resident". We will be permanently moving to Thailand in the next year. If she becomes a US citizen, will she still be able to purchase land in Thailand? Are there any other issues I should be aware of?

One of the positives of becoming a US citizen is that there would be no restrictions on social security benefits. We both wouldn't receive benefits for about another 30 years.

Thanks for help.

The USCIS is thinking of having permanent residents reapply every five years. Just another hassle for you and expense if they go through with. Once she a citizen no need to tell them if she changes residence(s)

[IMA_FARANG]

Thanks for the info. Nice to hear she can still own land and retain her Thai citizenship. I estimate my benefits will be roughly $1200 in todays dollars. Spouses that didn't contribute to SS, receive roughly 50% percent of the working spouse's benefit. Our benefit would be close to $1800. Good point a poster made about the death benefit. She would receive it if we lived in the US when I died, but it would be nearly impossible for her to receive benefit as a non-citizen living abroad. SS won't be a necessity, but it would be a nice extra.

I'm not sure about her not being eligible for Social Security even when she is a foriegn citizen. Granted it would probably be easier if she was a U.S. citizen. However, I once knew an American who had worked for many years until he was retired as ill and unable to work. He applied for his Social Security in Bangkok, and he recieved it. They also paid him dependifit benefits for his wife and aughter although they were Thai citizens. I admit that this was a good twenty years ago, and the law could have been changed.

[IMA_FARANG]

Regarding Social Security, my wife has been working regularly and paying into the system here in the US for the last 7 years. We plan to move to Thailand within the next 4 years. My understanding is that she could get SS from her work @ 62 yo if she continues living here but would require US citizenship to draw her SS if living in Thailand.

Has anyone had this experience? It would certainly be incentive to take the test before leaving.

See my comment in this thread. As I said I had an American friend, a good twenty years ago it was now. who was married to to a Thai citizen. When he retired to illness (about 63 yeras old) and applied for Social Security at 65 he also recieved dependit benefits for his wife and teen-age daughter. They were both Thai citizens.

[siamamerican]

Regarding Social Security, my wife has been working regularly and paying into the system here in the US for the last 7 years. We plan to move to Thailand within the next 4 years. My understanding is that she could get SS from her work @ 62 yo if she continues living here but would require US citizenship to draw her SS if living in Thailand.

Has anyone had this experience? It would certainly be incentive to take the test before leaving.

See my comment in this thread. As I said I had an American friend, a good twenty years ago it was now. who was married to to a Thai citizen. When he retired to illness (about 63 yeras old) and applied for Social Security at 65 he also recieved dependit benefits for his wife and teen-age daughter. They were both Thai citizens.

The laws have changed in regards to non-citizens social security benefits. The changes were made, in large part, because non-residents were working for relatively short periods and returning to their home country and receiving benefits.

Below is my understanding of the current social security benefit for non citizen spouses. The policy is different for countries that have a pension system that pays benefits to US citizens, but Thailand doesn't pay pension benefits to US citizens.

For applicant that applies for benefits after Dec., 1, 1996

* Resident aliens ( not citizens ) are eligible if the reside in the US and meet the residency requirements

* Non citizens living abroad aren't eligible for benefits

Edited January 12, 2008 by siamamerican

[NovaBlue05]

Regarding Social Security, my wife has been working regularly and paying into the system here in the US for the last 7 years. We plan to move to Thailand within the next 4 years. My understanding is that she could get SS from her work @ 62 yo if she continues living here but would require US citizenship to draw her SS if living in Thailand.

Has anyone had this experience? It would certainly be incentive to take the test before leaving.

See my comment in this thread. As I said I had an American friend, a good twenty years ago it was now. who was married to to a Thai citizen. When he retired to illness (about 63 yeras old) and applied for Social Security at 65 he also recieved dependit benefits for his wife and teen-age daughter. They were both Thai citizens.

The laws have changed in regards to non-citizens social security benefits. The changes were made, in large part, because non-residents were working for relatively short periods and returning to their home country and receiving benefits.

Below is my understanding of the current social security benefit for non citizen spouses. The policy is different for countries that have a pension system that pays benefits to US citizens, but Thailand doesn't pay pension benefits to US citizens.

For applicant that applies for benefits after Dec., 1, 1996

* Resident aliens ( not citizens ) are eligible if the reside in the US and meet the residency requirements

* Non citizens living abroad aren't eligible for benefits

That is what I was thinking....that she could recieve benefits from her work only if she stays in the States. I will contact the SS Admin for clarification but I think a goal for our final four years here would be for her to take the exam and get dual citizenship. Her verbal and written english is better than some Americans I have encountered so it should be just a matter of preparing for the exam......and hoping SS still exists down the road

[siamamerican]

That is what I was thinking....that she could recieve benefits from her work only if she stays in the States. I will contact the SS Admin for clarification but I think a goal for our final four years here would be for her to take the exam and get dual citizenship. Her verbal and written english is better than some Americans I have encountered so it should be just a matter of preparing for the exam......and hoping SS still exists down the road

Let me know if the SS admin tells you something different. Wife applied last week for citizenship and received a letter a couple days ago, stating that the interview would be scheduled in the next 16 months. I guess they are a little backed up. If it takes 16 months, the alien to citizen process will have taken 6.5 years. You can do it in 4 years, if don't procrastinate at any of the steps along the way.

[Heng]

With dual citizenship if anything you wouldn't have to wait in those annoying looking lines (made up of people who look rather bored and often annoyed) at Suan Phlu immigration for Thai immigration or ACS at the US Embassy. Not to mention one less flag at customs.

I just wish it were easier to obtain a diplomatic passport like (like Paradorn and the various Shinawatras STILL have... dunno about dad but Oak and Ing still have theirs as of late December last month).

Edited January 13, 2008 by Heng

[bri1guy]

She will Be A recieve Duel Citizenship which give her both benfits.. If you went this far aready, then its a another step which will make many things down the line even easier..

[Old Man River]

She will have the best of both worlds.

My wife got her citizenship last December. The test is not easy, most americans can not even pass it on ther first try.

I would say you should have her get it , definatly before you move.

best of luck

PKG

Congratulations to your wife. She should be proud (except that she is married to a Steeler's fan).

[Mike45]

Bump

[taxout]

"And if you do die and leave your wife a very rich woman (one, whose estate in turn will be subject to US estate tax when she dies) she can go to the US Embassy and renounce her US citzenship and her estate will then not be subject to the US ESTATE tax when she dies. This will be a boon for your children."

". . . it is quite illegal to revoke your citizenship to avoid paying taxes."

Neither of these statements is correct.

There's nothing illegal about revoking your citizenship to avoid taxes.

But if you do revoke your citizenship, then you'll be subject to a complicated set of expatriation tax rules for 10 years afterwards, and these rules apply not only to income tax but to estate and gift tax as well. They also apply in certain cases to foreigners who give up their green cards. Further, the rules apply regardless whether expatriation is tax motivated or not.

The rules mainly affect expatriates with somewhat substantial incomes or assets, and apply to non-US income and assets in limited cases.

There's no sense summarizing the rules here, they're far too complex, but anyone thinking of revoking citizenship or a green card needs to be familiar with them, especially the notice requirements and the possible limitations on future stays in the US.

[cathyy]

Those stating that a non US citizen spouse may not ever collect Social Security Survivor Benefits are wrong. Those stating that a non US citizen spouse is always eligible to collect Survivor Benefits are also wrong. A non US citizen Thai wife may indeed collect Social Security Survivor Benefits, but only in some instances. Here are the rules: Collecting Benefits While Out of Country

The OP may well find that his wife is not eligible under these rules, and getting her US citizenship would make her eligible. It's definitely something to think about. It's also a reason to maintain a bank account/credit Union account in the US, no matter how small the balance, to be eligible for direct deposit of those benefits in the unlikely and unhappy event that they become payable.