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January 3, 2017 - Phil Hodgen

How to Mail Your Form I-407 (And Why)


A joke should always be told punchline first. Right?

Here’s the conclusion of this little essay:

If you plan to file Form I-407 to abandon your green card, do it in person. If that is impossible, do not just mail in the form. Send it by certified mail, return receipt requested.

Tax Effect of a Green Card

The U.S. tax effect of holding a green card visa is that you are considered a “resident alien” until the visa status is terminated. This means you must file a resident’s income tax return every year (Form 1040). You are taxable on your worldwide income, and must satisfy all of the paperwork requirements imposed by the U.S.... continue reading

December 20, 2016 - Phil Hodgen

Make Big Gifts in the Year Before Expatriating

Bottom Line Up Front

If you make a large gift before expatriation and in the same year, you will pay a large gift tax. The unified credit does not apply to you.

Make your big gifts in year 1, and expatriate in year 2.

Objective: Avoid Covered Expatriate Status

A covered expatriate is someone who has a net worth of $2,000,000 or more when relinquishing U.S. citizenship (or giving up a long-held green card).1

If you have a net worth of more than $2,000,000 but less than $7,500,000, it is possible to give away enough assets — with no gift tax — to avoid covered expatriate status.... continue reading

December 6, 2016 - Phil Hodgen

U.S. Estate Tax After Expatriation

Hi and welcome to Expatriation Only, the newsletter devoted entirely to tax problems faced by people who give up their U.S. citizenship or green cards. You watched “escape” movies, right? This is all about the tax hurdles you face when escaping the U.S. tax system.

This episode was written in response to an email I received from reader D.O. Thanks for the questions. (Hint: you, too, can email me and I will answer your questions.)

Estate Tax After Expatriation

Let’s talk about estate tax. This is a tax imposed on what you own when you die. The tax rate caps out at 40%.... continue reading

November 22, 2016 - Phil Hodgen

Estate Tax for Noncovered Expatriates

Hello and welcome to Expatriation Only.

Noncovered Expatriates

Noncovered expatriates are people who – when they exit the U.S. tax system can answer “Yes” to all three of these questions:

  1. Is your net worth below $2,000,000?1
  2. Did you, on average over the previous five years, have a Federal income tax liability below $162,000?2
  3. Have you, for the previous five years, filed all of your required U.S. tax paperwork correctly and paid all of your U.S. tax?3

If you answer “no” to any one of those questions, you are a “covered” expatriate.4

Covered Expatriates and Punishing the Iniquitous

This discussion is only marginally accurate for covered expatriates – they face an additional bolus of tax rules designed to punish those who have sinned in the eyes of our Dear Leaders.... continue reading

November 8, 2016 - Phil Hodgen

Death and Taxes and Expatriation

I have not really focused on the estate tax side of expatriation in any great depth. This will be the first of several blog posts where you get 26 U.S.C. §877A and §2801 stuff every two weeks. Plus other bonus coverage of other §§ of the Internal Revenue Code.1

Why IRC Section2 2801 Exists

This week let’s talk about the unheralded PITA embedded in the tax rules that haunt covered expatriates.

U.S. persons who receive gifts or inheritances from covered expatriates will have the privilege of paying $0.40 of every dollar they receive as punishment for having been acquainted with someone who renounced U.S.... continue reading