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January 16, 2018 - Phil Hodgen

Why (Some) Expatriates Cannot Own Guns

I want to give you a slight detour from tax law to see a little-known Federal law that applies to U.S. citizens who renounce their nationality.

The topic is guns–former U.S. citizens cannot (legally) own them. The topic is interesting in its own right, but it is meta-interesting too:

  • It shows how anti-expatriate fervor has seeped into Federal law generally; and
  • How few people have seen this and care about it, either in specific application or for its implications.

You might not care about guns. You might be violently anti-gun (haha see what I did there?). But the propensity for ever-extending tendrils of Federal legislation might be of interest to you.... continue reading

Expatriation
January 10, 2018 - Phil Hodgen

My desk has a hole in it from repeated blows received from my forehead

I received an email this morning from a correspondent: an Enrolled Agent working outside the United States.

Hope all is well. My new year was off to a good start until I had to call the IRS today regarding a client matter. They asked me for my SSN or ITIN. Told them I was a nonresident alien and did not have one. They said the new policy to combat identity theft is they cannot talk to me unless I have a SSN or ITIN. The fact that I have a PTIN, a CAF number and an EIN and have been an EA since 1996 did not matter.

... continue reading
Friday Edition
January 5, 2018 - Phil Hodgen

Foreign Earned Income Exclusion and Self-Employment Income

Self-employed people are enterprises engaged in commerce without using a business entity, like a corporation or limited liability company. Human-scale businesses can be large, and even be multinational enterprises: doing business within the grasp of multiple countries’ tax systems.

An American entrepreneur living and doing business abroad is by definition a multinational business: his country of residence and the United States both assert the right to tax him.

For purposes of demonstrating basic tax principles, let’s assume we have an American management consultant living and working in Dubai. No spy stuff, just commerce.

The Taxes

An American living and working abroad is fully taxable by the United States, simply because he is a U.S.... continue reading

Friday Edition
January 2, 2018 - Phil Hodgen

When Green Card Holding Minor Children Expatriate

How (Green Card) Kids Expatriate

Let’s talk about kids and expatriation. Specifically, let’s talk about kids who have green cards. The rules are a bit different from the expatriation rules that apply to U.S. citizen minors. The key difference:

  • A parent or guardian can terminate lawful permanent resident status for a minor green card holder.
  • A parent or guardian cannot terminate U.S. nationality for a U.S. minor passport holder.

The exit tax consequences are almost always benign for both categories of children, simply because minors usually do not have sufficient assets or income to become covered expatriates. Wealthy kids who give up green cards will, however, be covered expatriates: no exceptions exist to take them out of that status.... continue reading

Expatriation
December 19, 2017 - Phil Hodgen

Green Card Yanked at the Border but want to be a U.S. Taxpayer Anyway?

An email from a New York CPA I know (hi M.S.) raised an interesting procedural question. A green card holder is married to a U.S. citizen. The green card holder files Form I-407 but wishes to continue filing jointly with his wife.

A guy files the I-407 (forced to at border) on (Month) 15, 2017, but he is married to a U.S citizen and wishes to continue to file jointly as a U.S .resident alien for tax. He is living outside the U.S.

Does he have to by law file Form 8854 and file dual status for 2017 as at (Month) 15, 2017?

... continue reading
Expatriation