In a quick email exchange I had with Susan Brown Otto (hi Susan) we touched on a topic that deserves attention. The topic is not terribly difficult, but its existence points to a meta problem.
Susan’s question/comment was about the non-requirement of withholding that is required when nonresidents own U.S. rental real estate . . . sometimes. It’s counterintuitive, because the IRS loves withholding.
So often in tax law there is an answer that you know, intuitively, but you can’t put your finger on exactly why the answer is true. This is dangerous territory for tax advisors. I have done this: blurt out an answer only to find out my memory was faulty.... continue reading
How expatriation works is something we talk about with clients all the time, and it’s worth devoting a little blog space to a general description of the basic mechanics every once in a while.
Imagine we are now boarding an airplane and zooming up to 30,000 feet. Let’s see how the expatriation process works from 6 miles up.
From this far up, we can see the mountains and oceans and rivers, but not the cars or trees or houses or people.
Because we are taking a very high-level view, we must ignore the details, the nuances, and all the little things that make this topic so complicated.... continue reading
And the preparation for next Friday’s Section 962 workshop dragged my attention across a sleepy backwater of the Internal Code: Section 951A(f)(1)(A).
There we find a newly-minted (circa December, 2017) instance of “as if”, this time disguised by using the magic words “in the same manner”.
Everything works out in the end. We can figure out what the law is (more or less). Still, I wish the writers (let’s be fair to writers, like Sparky Anderson)2 had not introduced yet another fiction into the Code.... continue reading
This week’s question addresses a common situation:
Do years that someone spends in the US on a non-green card visa count towards the long-term resident test?
For purposes of answering this question, I will use the following example:
A taxpayer lives in the US on an H1-B visa for 7 years, then gets his green card. He stays in the US on the green card 2 more years, then moves back to his home country. The year he leaves the US, he turns in his green card with Form I-407.
The question I will answer is: Did this person become a long-term resident, and is he an expatriate when he turns in his green card?... continue reading
Sometimes you need to confirm situation normal. This is one of those times. Thanks to correspondent BZ for triggering the discussion of this topic.
Here is the conclusion up front, in case you want to go outside and have fun:
Americans abroad with tax caused by Section 965 (you know who you are) can pay that tax over eight years. The first installment is due June 15 — the regular tax payment due date.
That seems unremarkable.
Americans abroad have a June 15 filing deadline for their income tax returns, and can pay their tax due by that date without incurring late payment penalties.... continue reading