Say a foreign citizen comes to work in the US in the 1950s, gets a green card, and leaves the US in the 1970s. Does the green card they used during their employment here ever time out on its own, or only if it is explicitly handed back to immigration? Would such a green card still be valid if not surrendered in all this time?
Not a tax-related question per se, but the GC is invalid if the holder was out of the country for longer than 180 days AND it's only valid for 10 years anyways. So, basically you'd get it suspended for both reasons by now.
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Well, "revoked" is the word I was looking for rather than "suspended". Makes for a tearful scene at the point of entrance...
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I should have stated the relationship to tax, sorry. If the green card holder still had a valid green card, it would certainly affect their tax filing status with the US.
I'm not sure about the 180 day rule. There is also a one year rule.
International Travel Less than 6 months: You are allowed to travel freely outside the U.S. and return to the U.S. You will need to have your passport from your country of citizenship and your green card to travel. Traveling outside the U.S. for less than 6 months in a year (continuous or frequent trips) is not a problem. Staying outside more than that has consequences on retaining the green card, naturalization eligibility as explained in other sections.
6 months to 1 year: If you are returning to the U.S. from a visit abroad of less than 1 year, you may apply for readmission by presenting your green card to the immigration authoritites at a port of entry.The 1 year time limitation does not apply to the sposue or child of a member of the Armed Forces of the United States, or of a civilian employee of the U.S. Government stationed abroad pursuant to official orders. In this case, the spouse or child must present the green card, not have relinquished residence, and be preceding or accompanying the member or employee, or be following to join the member or employee in the U.S. within 4 months of the return of the member or employee.
Reentry Permit: If you wish to remain outside the U.S. for more than 1 year, but less than 2 years, you require a Reentry Permit.
Returning Resident (SB-1) Visa: If you are unable to return to the U.S. within the travel validity period of a green card (1 year), or a Reentry Permit (2 years), you may apply to the nearest U.S. consulate for a Returning Resident (SB-1) visa.
To answer the original question, your green card may be revoked, but I'm sure if you make a gazillion dollars, your US tax liability is not revoked :).
Well qualify that statement. If your green card is revoked after one year, and you don't have residency in the US for the next 20 years, can the US government ask you to file a US resident tax return on your gadzillion dollars? There has to be a limit to that.
A green card may *expire*, but that does not mean that permanent resident status has been *revoked*.
What an absolutely bad-faith system that is: INS quickly revokes the green cards so the holder cannot benefit from it, but the IRS pretends like that never happened and continues to require tax filings as if you are a US resident unless you go out of your way to get an official statement from INS that the card is revoked?
Congress enacted §877 to tax people who give up US citizenship or residence for the purpose of avoiding US income tax. It applies to green-card holders who have lawfully lived in the US for eight of the prior fifteen years. They will continue to be taxed as US residents for ten years.
It's more complicated than that, but that's the basic rule.
The law says
For purposes of this subsection, the term ''long-term resident'' means any individual (other than a citizen of the United States) who is a lawful permanent resident of the United States in at least 8 taxable years during the period of 15 taxable years ending with the taxable year during which the event described in subparagraph (A) or (B) of paragraph (1) occurs.
So you have to be a lawful permanent resident for 8 years. If you were an F-1 holder for 6 years, and a green card holder for 3 years, then from my reading of the law it looks like the expatriation tax will not apply because you were a lawful permanent resident for only 3 years.
On the other hand why would they say 8 of 15? Is it possible to get a green card, give it up, then get it again?
Yes. Residence is an attribute, not a fact. One can gain it, yield it, regain it. There is even an immigrant visa (Returning Resident) (see 9FAM 42.22) for someone who lost their residence through no fault of their own and later wishes to regain it.
Doug
This is the old, bad rule.
The new, worse rule is 877a, effective June 2008. It replaces the ten year shadow period with an immediate tax on unrealized gains and on the balance in most tax deferred and retirement accounts, requires a covered expatriate to waive tax treaty rights, and imposes a transfer tax on the US recipients of gifts/bequests from covered expatriates. The minimum qualifying period is six years and two days, because of the odd way the IRS counts years.
| > It's more complicated than that, but that's the basic rule. | | This is the old, bad rule. | | The new, worse rule is 877a, effective June 2008. It replaces the ten | year shadow period with an immediate tax on unrealized gains and on | the balance in most tax deferred and retirement accounts, requires a | covered expatriate to waive tax treaty rights, and imposes a transfer | tax on the US recipients of gifts/bequests from covered expatriates. | The minimum qualifying period is six years and two days, because of | the odd way the IRS counts years.
I asked this the last time it came up, but it sounds like it still might not be clear. Does the new, "worse" rule _replace_ the ten year shadow period or is it in _addition_ to the ten year shadow period. Personally, if it is a really a matter of _replace_, I like the new rule better. :)
Dan Lanciani snipped-for-privacy@danlan.com
Any preference here would have to be based on individual circumstances, and therefore subjective.
Given the choice between a future decade of bureaucratic harassment but no tax cost, or being stripped of one third of retirement savings built up over the preceding decade but without the future harassment, would you choose the latter? If so, why?
My reading of the law is that both rules are present because when I go to
When a law is repealed, it says repealed in law.cornell.edu. For a random example:
§ 1471. Repealed. Pub. L. 94?455, title XIX, § 1901(b)(13)(A), Oct. 4, 1976, 90 Stat. 1840] How Current is This? Section, act Aug. 16, 1954, ch. 736, 68A Stat. 361, related to recovery of excessive profits on government contracts.But then 10 year rule is here, and it does not say repealed.
(1) In general Every nonresident alien individual to whom this section applies and who, within the 10-year period immediately preceding the close of the taxable year, lost United States citizenship shall be taxable for such taxable year in the manner provided in subsection (b) if the tax imposed pursuant to such subsection (after any reduction in such tax under the last sentence of such subsection) exceeds the tax which, without regard to this section, is imposed pursuant to section 871.
And later on in the same page that have the expatriation tax
(2) Gain recognition on certain exchanges (A) In general In the case of any exchange of property to which this paragraph applies, notwithstanding any other provision of this title, such property shall be treated as sold for its fair market value on the date of such exchange, and any gain shall be recognized for the taxable year which includes such date.
I then looked up the law itself, which is the Heroes Earnings Assistance and Relief Tax Act of 2008, and it uses the word "inserted" instead of "replaced":
(a) In General- Subpart A of part II of subchapter N of chapter 1 is amended by inserting after section 877 the following new section:
So it looks like you get the best of both worlds!
In the above link they also say:
(b) Election To Defer Tax-
(1) IN GENERAL- If the taxpayer elects the application of this subsection with respect to any property treated as sold by reason of subsection (a), the time for payment of the additional tax attributable to such property shall be extended until the due date of the return for the taxable year in which such property is disposed of (or, in the case of property disposed of in a transaction in which gain is not recognized in whole or in part, until such other date as the Secretary may prescribe).
(2) DETERMINATION OF TAX WITH RESPECT TO PROPERTY- For purposes of paragraph (1), the additional tax attributable to any property is an amount which bears the same ratio to the additional tax imposed by this chapter for the taxable year solely by reason of subsection (a) as the gain taken into account under subsection (a) with respect to such property bears to the total gain taken into account under subsection (a) with respect to all property to which subsection (a) applies.
So it looks like you can defer paying tax until you actually sell the stock say 10 years later. (2) seems to say that the tax is computed in a funny way, but I'm not sure what it means.
However, section 877 does at the law.cornell.edu website does not contain the word "defer".
Good point, but irrelevant I think because both provisions apply.
Only one or the other applies, depending on departure date. From the text of HR 6081:
(d) Termination of Section 877- Section 877 is amended by adding at the end the following new subsection:
`(h) Termination- This section shall not apply to any individual whose expatriation date (as defined in section 877A(g)(3)) is on or after the date of the enactment of this subsection.'.
See also IRS instructions for form 8854, and IRS Notice 2009-85. There's ongoing harassment if you defer expatriation tax payment, but in the case of retirement plans that's not an option; you have to include them in the departure year's return as deemed distribution.
In article , simon snipped-for-privacy@mailinator.com (Simon Baldwin) writes: | On 19 Jan, 18:26, " snipped-for-privacy@yahoo.com" wrote: | > ... | > > Any preference here would have to be based on individual | > > circumstances, and therefore subjective. | >
| > > Given the choice between a future decade of bureaucratic harassment | > > but no tax cost, or being stripped of one third of retirement savings | > > built up over the preceding decade but without the future harassment, | > > would you choose the latter? If so, why? | >
| > Good point, but irrelevant I think because both provisions apply. | | Only one or the other applies, depending on departure date. From the | text of HR 6081: | | (d) Termination of Section 877- Section 877 is amended by adding | at the end the following new subsection: | | `(h) Termination- This section shall not apply to any individual | whose expatriation date (as defined in section 877A(g)(3)) is on or | after the date of the enactment of this subsection.'. | | See also IRS instructions for form 8854, and IRS Notice 2009-85. | There's ongoing harassment if you defer expatriation tax payment, but | in the case of retirement plans that's not an option; you have to | include them in the departure year's return as deemed distribution.
Cool. To answer your question (and remember I did say ``personally'') most of my money is in bonds with very little (probably no net) unrealized gain and I would likely liquidate anyway if I ever left. The relatively small amount I have in a deferred retirement account doesn't bother me. What happens with a Roth? (Though again, the relatively small amount means that the answer wouldn't change my mind. And in any case could I pull what could be pulled tax-free in anticipation of leaving?)
Dan Lanciani ddl@danlan.*com
The above sentence is in the section "Chapter 15. Gifts and Bequests
Where in
Note that the 250k/500k exclusi (37) (2) SPECIFIED TAX DEFERRED ACCOUNT- For purposes of paragraph (1), the term `specified tax deferred account' means an individual retirement plan (as defined in section 7701(a)(37)) other than any arrangement described in subsection (k) or (p) of section 408, a qualified tuition program (as defined in section 529), a Coverdell education savings account (as defined in section 530), a health savings account (as defined in section 223), and an Archer MSA (as defined in section
220).Which parts of section 408 describe a Roth IRA?
| Note that the 250k/500k exclusion on the sale of your primary house | does not apply under the expatriation tax. So if you have 1M gain on | your primary home, that will be counted for the expatriation tax | (although they have a 600k or so exemption).
I don't; however...
| So better to sell your | home, move into an apartment, take the exclusion, and then expatriate.
This comment and the possible things one might do with a Roth suggest to me that as the new rules are tested we will see the addition of some sort of lookback period for ``actions taken in anticipation of expatriation.''
Dan Lanciani ddl@danlan.*com
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