“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.”
What is your tax liability IF you are a “U.S. person” for tax purposes”;and
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”.