Expatriation Tax<\/strong><\/p>\n\n\n\n Under current U.S. income tax laws, if a U.S. person (citizen or long-term lawful permanent resident) gives up U.S. citizenship and residency status, he or she will be subject to expatriation tax rules if any one of the following three conditions applies:<\/p>\n\n\n\n (1) The average income tax liability for the 5 taxable years immediately before the year in which citizenship or residency status was relinquished exceeded a certain threshold ($165,000 for 2018*).<\/p>\n\n\n\n (2) The individual\u2019s net worth on the date before relinquishing citizenship or residency status is $2 million or more.<\/p>\n\n\n\n (3) The individual had not complied with the U.S. income tax reporting requirements for the 5 taxable years immediately before the year in which citizenship\/residency status was relinquished.<\/p>\n\n\n\n The consequences for meeting any 1 of the 3 conditions are as follows:<\/p>\n\n\n\n (a) Assets will be deemed to have been sold at fair market value on the date before relinquishing citizenship\/residency and the deemed gain (in excess of a certain threshold ($711,000 for 2018) will be included in the calculation of expatriation tax.<\/p>\n\n\n\n (b) Any ineligible deferred compensation item (e.g., deferred compensation plan of a foreign employer) will be deemed to have been realized and becomes taxable in the expatriation tax calculation.<\/p>\n\n\n\n Streamlined Filing Compliance Procedures<\/strong><\/p>\n\n\n\n Streamlined Foreign Offshore Procedures cater to U.S. expat taxpayers who can satisfy all of the following eligibility requirements*:<\/p>\n\n\n\n \u00b7 During at least 1 of the most recent 3 delinquent tax years, the individual was physically present outside the U.S. for at least 330 days and the individual did not have a permanent abode in the U.S.<\/p>\n\n\n\n \u00b7 The individual had income from \u201cforeign financial assets\u201d that had not been reported to tax and may also have non-compliance for report of foreign bank and other financial accounts.<\/p>\n\n\n\n \u00b7 The non-compliance was not due to willful conduct.<\/p>\n\n\n\n If the individual satisfies all 3 conditions, he or she will need to file income tax returns for the most recent 3 tax years and, if required, reports of foreign bank and financial accounts for the most recent 6 reporting years. <\/p>\n\n\n\n Under the Streamlined Filing Compliance Procedures, if there is tax due on any of the income tax returns submitted, the taxpayer is only required to pay late payment interest on the outstanding tax liability. All other non-compliance penalties will be waived. *While this is not intended to be a comprehensive list of criteria and the rules for eligibility are subject to change, these conditions must be met in order to be eligible for the Streamlined Foreign Offshore Procedures.<\/p>\n\n\n\n Relief Procedures for Certain Former Citizens<\/strong><\/strong><\/p>\n\n\n\n Relief Procedures for Certain Former Citizens is designed for those who have already relinquished their U.S. citizenship. Certain conditions must also be met in order to take advantage of the procedure:<\/p>\n\n\n\n (A) The individual\u2019s net worth on the date when he\/she gave up the citizenship and at the time of submission under this procedure was less than $2 million.<\/p>\n\n\n\n (B) The aggregate tax liability for the year of expatriation and the 5 preceding tax years was less than $25,000.<\/p>\n\n\n\n (C) Taxpayer must not have filed a U.S. income tax return as a U.S. citizen.<\/p>\n\n\n\n As with the Streamlined Filing Compliance Procedures, no non-compliance penalties will be imposed on the outstanding tax liability shown on the tax returns submitted.<\/p>\n\n\n\n
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