I am a long term US resident, but planning on quitting my job and returning to England for good later this year. I have been doing a bit of research on the web and although my finances are pretty simple, there are a couple of points I'm confused about.
I understand I will have to file a "dual status" return in the US for 2019 (hopefully my last ever US tax return). In theory, I could have no income in the USA after I leave and give up my green card when I'm back in the UK. I will close my US accounts and own no property. However, I have a modest former company pension in the USA of about $22,000 which I'd like to take as a lump sum, so I can have a clean break with the USA.
My question is how is gross income calculated for the dual status returns (which seems to be a non-resident return with a resident one attached to it)? It seems like the two are calculated separately according to the different sets of rules for non-resident and resident time periods. But do the gross incomes and various schedules then get added together? (so that the tax rates applied to my residency period, tests for deductions, or whatever else depends on calendar year income, would be based on the whole year's total income).
I've seen it stated apparently quite clearly that if I take the pension as a lump sum it wont be taxable in the UK, which is great. So all that would seem to matter is whether I withdraw the pension before or after I give up my green card. If I withdraw it after I am a non-resident, will that money be excluded from my gross income so far this year when US tax is calculated on the resident part of the return? If so, it seems like this year would be divided into two "mini-years" with lower tax owed in each part than if it were a single whole year and that sounds almost too good to be true!
thanks
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