Expatriation Planning (Renouncing Citizenship Tax Planning)
Ogle international tax advisors
assist US citizens and long-term US residents who have relinquished their citizenship or terminated their “green card status” or who are considering to do so with tax planning and on going tax compliance needs.
U.S. citizen(s) or U.S. permanent resident(s) living and working abroad are required to file annual U.S. tax returns, reporting both U.S. and foreign sourced income. Those who choose to relinquish citizenship or terminate residence also have U.S. tax obligations pursuant to Internal Revenue Code Section 877. Recently, the American Jobs Creation Act of 2004 amended the provisions of Section 877, establishing objective standards for determining whether expatriating individuals are subject to an “alternative method of taxation.” This alternative method applies to individuals who expatriate after June 3, 2004 and for 10 years following an expatriation.
Under Sec. 877 and the “alternative tax regime”:
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The definition of "U.S. source" income is expanded
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The "expanded" definition may include income, gain, and property covered by rules relating to re-sourcing, tax-free dispositions, controlled foreign corporations ("CFC") and tax treaties
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Travel restrictions can trigger U.S. taxation on all inclusive "worldwide" income as opposed to the more limited "expanded" U.S. source income
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Our professionals help clients determine whether Section 877 is applicable and identify income subject to U.S. taxation under the 10 year “alternative tax regime.” We work closely with each client and their immigration attorney to ensure tax compliance, minimize tax exposure, and bring the most value to their expatriation.
For more information, please call us or download our Expatriation Planning brochure including a summary of the tax rules relating to IRC Sec. 877 and the “alternative tax regime.”