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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
March 13, 2018 - Phil Hodgen

The New Tax Law and Expatriation: New Reasons to Renounce

Our trusted servants in Washington DC blessed us with a new tax law, effective December 22, 2017. The new law–the Tax Cuts and Jobs Act of 20171  –did not change the expatriation tax rules, but it did make expatriation more attractive to a certain group of Americans abroad.

Tax Cuts and Jobs Act of 2017

The Tax Cuts and Jobs Act2 changed many, many parts of the Internal Revenue Code. The international tax rules, in particular, have been massively changed.

But Congress did not touch Sections 877A or 2801 of the Internal Revenue Code. Those are the two special-purpose statutes that impose tax on people who renounce US citizenship or abandon their green cards.... continue reading

Expatriation
February 27, 2018 - Phil Hodgen

Tax Liabilities and Your Form 8854 Balance Sheet

Net Worth Test and Covered Expatriate Status

We help many, many people with their expatriation, and the number 2 problem we fix is net worth. Bad tax things happen if a person is a covered expatriate.

A person is a covered expatriate if he or she has a net worth of $2,000,000 or more.1 An expatriate reports all assets and liabilities on Form 8854.

The planning question is simple: “How can I reduce my net worth so I can report a value below $2,000,000 on the Form 8854 balance sheet?”2 If you are able to reduce your net worth below $2,000,000, you may be able to avoid covered expatriate status.... continue reading

Expatriation
February 13, 2018 - Phil Hodgen

Strategic Reasons to become a US Tax Resident Again

Sometimes people who expatriate become U.S. taxpayers again. This might happen because life intervenes (family or job reasons make a return to the United States necessary or desirable). Or, becoming a U.S. taxpayer again might be good for tax reasons.

Let’s look at this piece of the expatriate’s life after expatriation.

Introduction

Two Types of Tax Residents

There are two types of “residents” for U.S. tax purposes:

  • Income tax. A nonresident noncitizen of the United States might become a resident of the United States for income tax purposes only. The result? Pay U.S. income tax on worldwide income, and file all of the tax paperwork that the United States demands of its residents and citizens.
... continue reading
Expatriation
January 30, 2018 - Phil Hodgen

The Consequences of Filing Form 8854 Late

Form 8854, I like to say, is how you log out of the U.S. tax system when you give up U.S. citizenship or permanent resident status. Let’s look at the procedural aspects of this mandatory paperwork:

  • Why you must file Form 8854;
  • When you must file Form 8854; and
  • What happens if you don’t file Form 8854 on time?
Why Form 8854 Exists

Overview

Congress imposed the data collecting requirements for expatriates. The IRS took these instructions from Congress and, wielded its its general authority under 6011 to design forms and collect data. Form 8854 is the result. The IRS also took its authority under 6071 and set the filing deadlines that we work with.... continue reading

Expatriation