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
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:
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
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.
... continue reading
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?
Let’s talk about how a covered expatriate’s Roth IRA is taxed at the time of expatriation.Summary
A Roth IRA is treated as if there is a make-believe distribution to a covered expatriate on the day before renouncing U.S. citizenship or abandoning green card status.
The income tax cost of the make-believe distribution is zero if:
If those two conditions are not satisfied, part of the fictional distribution will be taxable.... continue reading
The net worth test is something that may cause an expatriate to become a covered expatriate. Instead of just having a paperwork problem (Form 8854, specifically), a covered expatriate has a paperwork problem plus a potential tax problem.
You become a covered expatriate by satisfying one (or more) of three requirements. Being rich ($2,000,000 or more in personal net worth) is one of those three requirements.
Our expatriation cases frequently require some financial engineering to reduce our client’s net worth to below $2,000,000 — in order to avoid covered expatriate status. And that frequently means shifting assets to the soon-to-be expatriate’s spouse.... continue reading