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April 25, 2017 - Phil Hodgen

U.S. Resident Status After Expatriation?

Becoming a Tax Resident Again

Sometimes people who expatriate — give up their U.S. citizenship or green cards — want to visit the United States. This might be for business reasons, family reasons, or just to have some fun.

Here’s how to keep that hard-won status of “not a U.S. taxpayer”, even if you return to the United States after expatriating.

Reader C inspired the topic in an email to me:

It was my understanding that once I have given up my citizenship I would be treated like any other foreigner ie I could stay in the US for up to 60 days assuming I had the appropriate visitors visa.

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Expatriation
April 11, 2017 - Phil Hodgen

Tax Filing Deadlines for Expatriates

Just knowing the paperwork you need to file with the IRS is not enough – you need to know when to file, too. Let’s talk about tax filing deadlines for Expatriates.

Here are the possible tax filings that you may need to do. Not all of these will necessarily apply to you.

  • Prior year amended tax returns. If you need to fix problems in order to pass the certification test, you will be filing remedial paperwork for one or more of the five calendar years before the year in which you expatriate.
  • Gift tax return. If you need to reduce your wealth in order to pass the net worth test, you may be making taxable gifts.
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Expatriation
April 5, 2017 - Phil Hodgen

A former green card holder’s post mortem on expatriation and U.S. tax law

We recently helped a green card holder clean up his tax situation so he could avoid covered expatriate status. This is his own post-mortem of the process.

It is a familiar story: green card holder returns to his home country but does not formally cancel his immigrant visa.  He does not know about the ongoing tax-filing obligations imposed by the U.S. on green card holders.

Eventually, he learns of the problem and wants to file Form I-407 and tie up his loose ends.  He is not rich enough to be a covered expatriate ($2,000,000 or more net worth) but his tax returns for the previous five years were not up to snuff.... continue reading

Expatriation
March 28, 2017 - Phil Hodgen

The Tax Liability Test for Covered Expatriates

You can become a covered expatriate if your average tax liability for the previous five years is above a certain amount ($162,000 for expatriations in 2017).

Calculating this average amount is a bit of a pain.

Covered Expatriate Status is Bad

Don’t be “covered expatriate”.

  • Covered expatriates pay income tax when they renounce U.S. citizenship or give up permanent resident visa status.1
  • Covered expatriates cannot make tax-free gifts or bequests to U.S. persons.2
  • They also risk being barred from re-entering the United States, because they might be considered tax-motivated. The dreaded Reed Amendment gives the State Department the power to exclude these people from entering the United States.
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Expatriation
March 14, 2017 - Phil Hodgen

Covered Expatriates and Nongrantor Trusts. It’s Probably Pointless.

Renounce, Receive Foreign Income and Get Tax Troubles1

Is it possible to renounce your U.S. citizenship, live outside the United States, collect 100% foreign income, and still be under the IRS’s thumb? (YouTube).

Yep. Or at least it looks that way.2 But who really knows?3

The Facts

Here is what it takes:

  • You are a covered expatriate.
  • You are the beneficiary of a foreign nongrantor trust.
  • The foreign nongrantor trust has no U.S. assets, and has no U.S. income.
  • You receive a distribution from the foreign nongrantor trust.

The Results

Here’s what happens to you:

  • No U.S.
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Expatriation