Irish Capital Gain

[Hoosier]

Client has daughter who graduated from college and married a guy from Ireland in 2008. She has resided in Ireland since marriage. In 2010 she sold some stocks that she received as a gift several years ago while a US student. She has dual citizenship in Ireland and USA. What are her requirements for preparing a US federal tax return? What issues does the stock sale raise as it relates to her citizenship and residency?

[Burke]

She is required to file a US return and report the stock as well as any other income she may have. I don't know of any "issues" it raises to her citizenry or residency. It should not affect either. If she worked, she might be able to use the Foreign Income Exclusion on that.

[Koss]

US Citizen

US citizens are taxed on their worldwide income. Your client may or may not be taxed on income that she earns in Ireland. But it must be reported, whether it is capital gain, wages, self-employment, or any other type of income.

Dual citizenship, marriage to a UK citizen, and residence in a foreign country do not exempt her from US taxation of her income, and they do not exempt her from any filing requirements.

Some or all of her income may be excluded from tax under the foreign earned income exclusion, the foreign housing exclusion, or a tax treaty between the US and the UK (if applicable). She may be able to avoid double taxation by claiming for the foreign tax credit.

If your client hasn't filed a US tax return for 2008 or 2009, that might "raise some issues."

But if she had no income during those years, or if her income was under the filing threshold for MFS, then it may be non-issue.

BMK

[Koss]

Capital Gain

And I always thought that Irish Capital Gain referred to an increase in weight from drinking too much Guinness...

[BP.]

And I always thought that Irish Capital Gain referred to an increase in weight from drinking too much Guinness...

Yes, but only in Dublin . . . it's Capital Gain!