Our trusted servants in Washington DC blessed us with a new tax law, effective December 22, 2017. The new law–the Tax Cuts and Jobs Act of 20171 –did not change the expatriation tax rules, but it did make expatriation more attractive to a certain group of Americans abroad.Tax Cuts and Jobs Act of 2017
But Congress did not touch Sections 877A or 2801 of the Internal Revenue Code. Those are the two special-purpose statutes that impose tax on people who renounce US citizenship or abandon their green cards.... continue reading
We help many, many people with their expatriation, and the number 2 problem we fix is net worth. Bad tax things happen if a person is a covered expatriate.
A person is a covered expatriate if he or she has a net worth of $2,000,000 or more.1 An expatriate reports all assets and liabilities on Form 8854.
The planning question is simple: “How can I reduce my net worth so I can report a value below $2,000,000 on the Form 8854 balance sheet?”2 If you are able to reduce your net worth below $2,000,000, you may be able to avoid covered expatriate status.... continue reading
Sometimes people who expatriate become U.S. taxpayers again. This might happen because life intervenes (family or job reasons make a return to the United States necessary or desirable). Or, becoming a U.S. taxpayer again might be good for tax reasons.
Let’s look at this piece of the expatriate’s life after expatriation.Introduction
There are two types of “residents” for U.S. tax purposes:
Form 8854, I like to say, is how you log out of the U.S. tax system when you give up U.S. citizenship or permanent resident status. Let’s look at the procedural aspects of this mandatory paperwork:
Congress imposed the data collecting requirements for expatriates. The IRS took these instructions from Congress and, wielded its its general authority under 6011 to design forms and collect data. Form 8854 is the result. The IRS also took its authority under 6071 and set the filing deadlines that we work with.... continue reading
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:
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