ExPatriot?

[Possi]

I'm still trying to figure out my Aussie who has been a resident alien for 11 years... leaving the US at the end of this month, no longer earning US $$.

I understand that he has to file a 1040NR because he is not a resident at the end of the year.

What I don't understand is the expatriated taxpayer.

Under "who must file," I have never filed a form 8854 for this client "preceding the date of expatriation."

"3. You fail to certify on Form 8854
that you have complied with all federal
tax obligations for the 5 tax years
preceding the date of your expatriation."

So, that would be the only bullet that would subject client to file the 8854.

Then, I go to the actual form, and it doesn't state that residents who expatriate after 2013 are subject to filing this form.

help?

[Roland Slugg]

I have no experience with expatriates or that alternate tax that can apply to them, but I read a little about it and can offer the following:

Based on my limited reading on the subject it appears that ....

(1) If your client's average income for the past five years was below the threshhold ... $157k for persons becoming expats in 2014; and (2) his net worth is less than $2,000,000; then (3) all he needs to do is certify on F-8854 that he has met the requirements of the Internal Revenue Code for the five preceding tax years. (See correction below.)

If you haven't already seen it, here is a link to an IRS discussion of the subject, which appears to be complete and accurate ... but not necessarily easy to understand.

http://www.irs.gov/Individuals/Inter...patriation-Tax

(As other have correctily pointed out, requirement (1) above should have said, "... average income tax liability for the past five years ...")

By the way, your client will soon become an expatriate, not an ExPatriot. An ex Patriot is a former football player who once played for the NFL team in the Boston area.

[Possi]

Income or tax?

I have no experience with expatriates or that alternate tax that can apply to them, but I read a little about it and can offer the following:

Based on my limited reading on the subject it appears that ....

"(1) If your client's average income for the past five years was below the threshhold ... $157k for persons becoming expats in

By the way, your client will soon become an expatriate, not an ExPatriot. An ex Patriot is a former football player who once played for the NFL team in the Boston area.

Isn't that "income TAX liability," and not income? (The limit)

Yeah, I thought expatriot was wrong!! LOL

Posting from my phone, way past my bedtime. I'm sure there are errors, but here goes.

[AZUKHiker]

2014 Form 8854 Needed

You need to wait for the 2014 form 8854 to be issued. You will be filing it with the 2014 tax returns so there is no rush to fill the form in as you won't be filing them until next spring.

Yes you are right that the first test is average tax liability not income. In essence tests 1 and 2 cover fairly wealthy individuals (although don't forget to include all their foreign assets and pensions in the net worth calculation). For most people the third test is the important one.

One final point, if he is not a green card holder then he isn't subject to the expatriation tax charge or reporting requirements.

An excellent web site for information on this is www.hodgen.com

[Possi]

Green card vs. visa

If he has a visa and not a green card, do I still file the 8854? I believe I do, as I read it.

The 2014 tax return will be a 1040NR, and attach the 8854, correct?

Thanks for this help. I truly appreciate it!

[AZUKHiker]

The 2014 return will be two returns as he will be a dual status alien. Resident alien for the period to the date he leaves and then a 1040NR for the period after he leaves and ceases to be US resident. Chapter 6 of Pub 519 has all the details on how to file for a dual status alien and the restrictions that apply for the final year (e.g. no standard deduction). Chapter 1 also sets out the requirements and dates on which you are considered to leave the US for tax purposes. Yes, the 8854 if needed would be attached to the filed returns.

As far as the expatriation tax is concerned it applies to US citizens and long term residents. Long term residents is defined in Section 877(e)(2). As you will see from the definition it only refers to lawful permanent residents (i.e. green card holders). So somebody on a non-immigrant visa such as H1B would not be subject to the expatriation tax and would not need to file form 8854. However, they would still be a dual status alien for income tax filing purposes in the year they depart the US.

[Possi]

No way!

There is no way I would have understood that on my own.

Thanks for all your help.