Tag Archives: Green Card abandonment

The teaching of Topsnik 2 – 2016: #Greencard expatriation and the S. 877A “Exit Tax”

What! You want to abandon your Green Card and leave the USA!

Introduction – Introducing Gerd Topsnik – The World According to Facebook

“This case will be seen as the first of an (eventual) series of cases that determine how the definition of “long term resident” applies to Green Card holders. The case makes clear that if one does NOT meet the treaty definition of “resident” in the second country, that one
cannot use that treaty to defeat the “long term resident” test. A subsequent case is sure to expand on this issue. Otherwise, the case confirms that the S. 877A Exit Tax rules are “alive and well” and that the “5 year certification” test must be met to avoid “non-covered status”

Topsnik may or may not be a “bad guy”. But even “bad guys” are entitled to have the law properly applied to their facts. It would be very interesting to know how the court would have responded if Topsnik had been paying tax (a nice taxpayer) in Germany as a German resident.”

A nice summary of Topnik 1 and Topsnik 2

This is part of a series of posts on: (1) “tax residency“, (2) the use of “treaty tiebreakers” when an individual is a “tax resident” of more than one jurisdiction and (3) how to use “treaty tiebreakers” to end “tax residency” in an undesirable tax jurisdiction.

This is the second of the two Topsnik posts.

Topsnik 1 focused on the “tax residence” of Green Card Holders. The decision in Topsnik 1 is here:

topsnikdiv.halpern.TC.WPD
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The US “expatriation tax” and the the incentive to apply for a Green Card and/or remain in the USA

America doesn’t really need skilled immigrants, or does it?

The above tweet references a post that references a comment by Victoria Ferauge:
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Are Green Card holders resident outside the USA “US persons” under the #FATCA IGA?

Introduction …

The above tweet references a comment that was left on Olivier Wagner’s Tax Samurai blog. Olivier is discussing an earlier post of mine called “When It Comes To FATCA, There Are Four Kinds Of Americans Abroad“.

I highly recommend his “post about my post”.

The comments discuss the question of:

Is a Green Card Holder resident in Canada a “U.S. Person” for the purposes of FATCA?

The last comment notes that the Canada Revenue Agency is advising U.S. Green Card Holders who are resident in Canada that they should NOT identify as “U.S. Persons” under the FATCA IGA.

The exact text of the comment reads:

Green Card holders in Canada are interpreting the following statement from the Government of Canada to mean that FATCA does NOT apply to them:

http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html

“I hold a U.S. green card. How does this affect my tax residency?

If you are a green card holder (that is, a lawful permanent resident of the U.S.), the U.S. considers you to be a U.S. resident.

However, if you are a resident of Canada for tax purposes and do not hold U.S. citizenship, you should not identify yourself as a U.S. person to your Canadian financial institution.”

The actual IGA is here.

http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf

The definition section includes “U.S. residents” which presumably means tax residents (which in the case of Green Card Holders may be affected by a Treaty election).

The plain reading of the statement on the CRA site will mean that Green Card holders resident in Canada will NOT identify as being U.S. tax subjects.

Note: I tried to leave a similar comment a moment ago, but it didn’t seem to show up. This is a duplicate. Feel free to pick one comment or the other.

– See more at: http://www.taxsamurai.com/index.php/2014/09/06/four-kinds-americans-abroad-response/#comment-7

The purpose of this post is to expand this discussion …
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Taxability Freedom Day: On what day does a “U.S. person” cease to be a “U.S. taxpayer”?

Update: October 9, 2015

This post focuses largely on the role of form 8854 in relinquishing U.S. citizenship for tax purposes. See also my more recent post which discusses the role of the Certificate of Loss of Nationality in relinquishing U.S. citizenship.

 

Introduction …

There is a difference between:

  1. What is your tax liability IF you are a “U.S. person” for tax purposes”;and
  2. Whether you are a U.S. person for tax purposes at all.

I find that many of the blog posts and articles confuse these two issues.

Remember that “U.S. person” for tax purposes INCLUDES (but is not limited to) U.S. citizens and Green Card Holders.

What this post is NOT …

This post is NOT to discuss your specific U.S. tax liability – the AMOUNT of U.S. taxes owing in general. It is NOT to discuss how U.S. taxes are calculated in general. It is NOT to discuss the “taxes that may be triggered” by expatriation. Only those who are “U.S. persons” are subject to U.S. taxation. Therefore, in order to end the “jurisdiction of the United States to impose taxes on you (your “taxability”):

You must terminate your status as a “U.S. person” for tax purposes. This means that you must either “relinquish your U.S. citizenship” under ALL applicable legislation or terminate your Green Card.

What this post IS …

This post is to explain the date that you cease to be a “U.S. person” for tax purposes. At what point, can you say with confidence:

“I’m free. The U.S. no longer has the right to treat me as a “U.S. person” for tax purposes. Nothing that I do from this point on will generate “U.S. tax liability”.

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