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May 22, 2018 - Debra Rudd

How to Apply the Gain Exclusion for Covered Expatriates

We often mention that covered expatriates, who are subject to a deemed sale of all their worldwide assets (with a few exceptions), are permitted to exclude the first $700,000 or so of gains that arise from the deemed sale.

For someone hiring us to prepare their tax return, that is typically all they really want to know – “my exit tax is lower because I get to exclude some of this pretend income”.

It is rare that we talk about how to apply the gain exclusion, because that is the behind-the-scenes work that we do for our clients when preparing their tax returns.... continue reading

Expatriation
May 8, 2018 - Debra Rudd

How Expatriation Works: Just The Basics

How expatriation works is something we talk about with clients all the time, and it’s worth devoting a little blog space to a general description of the basic mechanics every once in a while.

Imagine we are now boarding an airplane and zooming up to 30,000 feet. Let’s see how the expatriation process works from 6 miles up.

But first… Some warnings

From this far up, we can see the mountains and oceans and rivers, but not the cars or trees or houses or people.

Because we are taking a very high-level view, we must ignore the details, the nuances, and all the little things that make this topic so complicated.... continue reading

Expatriation
April 24, 2018 - Debra Rudd

Do Non-Green Card Years Count Toward the 8-Year Long-Term Resident Test?

This week’s question addresses a common situation:

Do years that someone spends in the US on a non-green card visa count towards the long-term resident test?

For purposes of answering this question, I will use the following example:

A taxpayer lives in the US on an H1-B visa for 7 years, then gets his green card. He stays in the US on the green card 2 more years, then moves back to his home country. The year he leaves the US, he turns in his green card with Form I-407.

The question I will answer is: Did this person become a long-term resident, and is he an expatriate when he turns in his green card?... continue reading

Expatriation
April 10, 2018 - Debra Rudd

How the New Tax Laws Affect Low Income Expatriates

Today’s Topic: How the New Tax Laws Affect Low Income Expatriates

One of the much-touted aspects of the new tax laws that came into effect at the start of 2018 is the abolishment of the personal exemption and the increase of the standard deduction.

These changes are part of the “tax reform” bill passed in late 2017 whereby ordinary individual taxpayers are supposed to benefit from a simpler system and a lower overall tax bill. I put the words “tax reform” in quotes because, well, I have opinions.

In today’s discussion, I will examine how these changes will impact people who expatriate in 2018 and later years, and specifically, expatriates with low income.... continue reading

Expatriation
March 27, 2018 - Debra Rudd

Did you Expatriate if your Green Card Expired?

Today’s topic: Letting your green card expire as an act of expatriation?

This question is one that has come up a number of times in cases I’ve worked on:

If I allow my green card to expire, does that mean I have expatriated?

In my experience, this question is almost never asked. Instead, it is usually assumed that if your green card expires and you have held it for long enough to be a long-term resident, you must have expatriated.

I will take a look at whether it is true that you can expatriate by allowing your green card to expire.... continue reading

Expatriation