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August 14, 2018 - Debra Rudd

Dual-Status: Expatriation Year Tax Returns when US Income is Zero

This week we are talking about dual-status returns. An email reader sent us this question, asking what his income tax return should look like in the year of expatriation:

I file 1040 covering income up to the date of renunciation. Do I have to file 1040NR from the date of renunciation to the end of the year if I don’t have any US source income at all for either before or after renouncing?

The expatriation year income tax return is a little more complicated than that. It is slightly difficult to figure out whether you need to file Form 1040NR or Form 1040 as your tax return.... continue reading

Expatriation
July 31, 2018 - Debra Rudd

Treaty Elections, Long-Term Resident Status, and Expatriation

The impact of treaty elections on long-term resident status and expatriation

Over the course of two days last week, I received three questions about the interaction of treaty elections, long-term resident status, and expatriation.

It seems there exists some confusion about what happens when a lawful permanent resident makes a treaty election to be taxed as a resident of another country: Does it cause you to expatriate? Does it prevent you from becoming an expatriate?

I am not surprised this confusion exists. Depending on when the treaty election is made, it could either cause you to expatriate or prevent you from becoming an expatriate.... continue reading

Expatriation
July 17, 2018 - Debra Rudd

Certification Test Basics

Of the three tests that an expatriate must meet to be non-covered, the certification test is the most difficult to understand. It is also the only test to which there are no exceptions – fail this test, and you are a covered expatriate.

Today’s topic will be limited to a general discussion of what it means to pass this test.

Expatriation and the three tests

Expatriation occurs when a US citizen or “long-term resident” terminates his or her citizenship or permanent residence. 1

If the expatriate meets certain thresholds for net worth and the amount of tax they have been paying over the last five years, he or she will be what is known as a covered expatriate.... continue reading

Expatriation
June 19, 2018 - Debra Rudd

Do Covered Expatriates Get to Use Their Suspended Passive Activity Losses?

Today’s topic: Do covered expatriates get to use their suspended passive activity losses?

Let us imagine that you are planning to expatriate in 2018, and that you will be a covered expatriate. You have a number of rental properties in the United States. Those rental properties have accumulated a substantial amount of passive activity losses (PALs) during the time that you have owned them. Because you are a covered expatriate, you will need to pretend you sold all those properties at fair market value on the day before your expatriation and report the gains or losses on your tax return as if you really sold the properties.... continue reading

Expatriation
June 5, 2018 - Debra Rudd

Tax Return Filing Deadline for Expatriates

Filing deadline for expatriates is approaching

We are just a few short days away from a very important date. If you expatriated during 2017, chances are you need to file your tax return and Form 8854 by June 15, 2018. You also need to make full payment of any tax due by that date.

If you need more time to get the tax return ready, you can file for an extension to December 15. However, the payment due date remains June 15, 2018.

Today’s topic will be limited to a description of the filing and payment deadlines for expatriates and how to get an extension to file your tax return.... continue reading

Expatriation