Warning to Green Card Holders/Permanent Residents - top US tax questions answered

Warning to Green Card Holders/Permanent Residents - top US tax questions answered

Once you possess a Green Card, you are now taxed on your worldwide income just like any US citizen would be. Additionally, other reporting requirements may exist. For instance if you have overseas bank accounts in excess of $10,000 you likely have an FBAR or what is also know as a FinCEN Form 114 requirement or you could face up to a 50% penalty on account value. Additionally, there exists a litany of foreign reporting forms, like Form 8938, Form 5471 for example that Green Card holders have an obligation to file at a rate much higher than the public at large. Failure to file the forms starts a $10,000 per year and can get as high as $50,000 per year. Again, these are risks that can all be managed. They just take some thought and effort. https://ift.tt/2OQ5tro What is the income tax rate for US Green Card holders? The income tax scheme for US Green Card holders is the same as it is for an American citizens. Taxation is exactly the same. There are no increased or decreased tax rates for Green Card holders. But as we show, their issues tend to be more complicated and the income tax tends to be more onerous because of the types of overseas and foreign investments Green Card holders often possess. What are the tax filing requirements for US Green Card holders? US Green Card holders have the same filing requirements as US citizens. Green Card holders overseas, like US citizens abroad, have an extended time to file taxes, usually June 15th which can be extended to October 15th, and then there is a permissive extension until December 15th. What is a US Green Card holder responsible for when filing? For all tax filings, taxpayers are ultimately responsible for everything they sign even if they can’t understand what they are signing. Additionally, even if they could fully understand English, that is slight guarantee that they know what they are signing as the IRS tax code is so expansive it is unknowable any one person. Are there any tax benefits to being a US Green Card holder? Only if you think that being taxed as a US citizen is a benefit. Can you deduct the cost of your obtaining your Green Card on your tax return? Some may advise against deducting the legal fees relating to the acquisition of your Green Card, but it is not an entirely unreasonable position. What are the tax consequences of allowing a US Green Card to expire? The Green Card is evidence of your Permanent Residence status, but it is not the thing that actually grants Permanent Residence status.  Just because your Green Card expired does not mean you are a no longer subject to US taxation. Yes, this is true even if you are overseas and not eligible for re-entry. It is possible for the IRS to tax you even though the federal government won’t let you back into the United States Your obligation to file and pay U.S. taxes as a long term green card holder persists until there is a judicial or administrative order, or alternatively, until you file Form I-407. A lapsed green card on its own does not terminate your IRS tax obligations. What are the tax consequences when surrendering a US Green Card? Have you had a Green Card for 8 or fewer years of the last 15? If so, then great. You can surrender a Green Card without triggering any exit or departure tax. If however you have been in the US for more than 8 of the last 15 years, and your assets exceed $2 million you may want to engage with our firm to legally lower this exit tax. What is the departure, expatriation, or exit tax for US Green Card holders? For those who have been in the US long enough and have the assets to trigger an exit tax, IRS Form 8854 is used. If I leave the United States without surrendering my Green Card, and without paying or filing the exit tax return, what can the IRS really do to me? Enforcing the US tax code against people who are not in the US and do not have property in the US or any reason to return to the US is incredibly difficult, but not impossible. Some countries have joint agreements to cooperate with the IRS. Many people have gone this route, and truth be told, have gotten away with it. The problem is if another opportunity arises that makes US presence necessary. For instance, many ex-Green Card Holders will return to the US on a investor visa if their children go to school in the US or start a family within a US.  Leaving a loose end like an improper exit tax, or none at all, could very much complicate or completely frustrate a return to the United States. If I try to enter the US with a green card or a passport from another country, will I have a problem if I am in tax non-compliance? You very well could have a problem. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://ift.tt/1RfwK1f https://youtu.be/gNOb3_wYNW0 IRS Medic

PFICs and IRS Form 8621 Assessments: Tech Talk

PFICs and IRS Form 8621 Assessments: Tech Talk

Congratulations to tax attorneys Robert S. Schwartz & Elizabeth C. Petite on a great win! The Tax Court's recent decision in Roberto Toso and Marcela Salman v. Commissioner US Tax Court, Dkt. 8324-15 151 TC ___ No. 4, September 4, 2018 sheds some light on two aspects of reporting foreign income from Passive Foreign Investment Companies to the IRS. The first item is that the IRS got hoisted by its own process. PFIC income does not necessarily change AGI, but rather Form 8621 calculates income and then imposes the highest marginal rate to create a tax due, then this tax due goes on a tax return AFTER adjusted gross income is calculated, along with interest.. Meaning, not all unreported PFIC income is subject to the substantial understatement rule that can open a tax return for an additional 3 years of audit. Also, the Tax Court ruled, in a believed-case of first impression, that the HIRE Act only applies to foreign informational returns that were open when the HIRE Act was signed into law. Meaning, if a foreign information return assessment statute ASED) was closed in 2010, the HIRE Act does not open it. However, post-2010, any unfiled foreign informational return (Form 8938, Form 5471, Form 5472, Form 8865, Form 8858, Form 926, Form 3520, Form 3520-A) can keep an assessment open indefinitely. Yet, a proper disclosure can close those open years, even if there was unreported income. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/0qawBZUpn5Q IRS Medic

Tax traps of holding and attempting to renounce a US Green Card

Tax traps of holding and attempting to renounce a US Green Card

Joining us today is a special guest, Gary Clueit. Mr. Clueit is a US Green Card holder who has been in the US for 34 years. He employs hundreds of people, but the US tax code is forcing him into a precarious situation. Helping to clear the confusion is John Richardson of Citizenship Solutions, Keith Redmond, global advocate for the American Overseas, with host, tax attorney Anthony Parent of Parent & Parent LLP The four discuss the problems unique to sophisticated Green Card holders like Mr Clueitt, who have investments and business around the world. The problem for Green Card holders is that once they have held a Green Card for 8 of the past 15 years, they are subject to an exit tax. Doubling insulting is that their US assets, after renouncing, after paying taxes on them, is subject to the estate/inheritance tax of US property owned by a foreign person. Which is what someone like Mr. Clueit becomes once he surrenders his Green Card. There are some possible solutions, but would they work for Mr. Clueit? And as Mr. Clueit recognizes he is fortunate enough to have the resources to tackle his IRS issue. The fact is that many don't have or can't see the wisdom in paying six figures or more for a compliance and planning package. The fact is that the US tax code, and additions like the Foreign Account Tax Compliance act has not just made Americans toxic, but too, America toxic. Mr. Clueit speaks of market changes in the tech sector have made it so that America is not a must-go-to destination for those advancing their careers, but the additional problem of a terrible taxing regime is absolutely harming America's competitiveness. Unfortunately, it does not look like Tax Reform 2.0, if passed, will offer much relief to Green Card holders like Gary, but rather, must look to innovative lawyers and tax professionals to make the best of a bad situation. Again, Mr. Clueit can afford this cost, but many others can not. Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://youtu.be/uLY36oDGjqo IRS Medic

Is the tax premise to Happy Gilmore plausible?

Is the tax premise to Happy Gilmore plausible?

Happy Gilmore is a delightful coming-of-age story of a young aspiring hockey player, who possesses a great slap shot, but not much else, aside from his uncontrollable rage, as he struggles with a forced career change due to his grandmother’s impending seizure of her home and belongings due to $270,000 in unpaid taxes to IRS. As a tax attorney, the question I’m always asked is “is the tax premise to Happy Gilmore at all plausible?” I am happy to report that the answer is yes. My joy comes from the fact that most Hollywood writers get tax issues all wrong. In this video, I will explain why this premise works, get into some technical nitpicking, but also, show how it is possible for grandma to keep her house and get the IRS to leave her alone through a little known strategy. Happy Gilmore was released in 1996. And the way the IRS worked back then was much MORE aggressive. So aggressive that a couple years later The Reform and Restructuring Act of 1998 was passed to reign in the IRS’s abusive collections practices. How bad did the IRS get? IRS revenue officers would seize someone’s home not for $270,000 but sometimes when the taxpayers owed less than $5000! So here’s some things we know or will assume Grandma owes $270,000 She owns her house outright. The home is worth $450,000 Grandma only gets social security and not much else. Grandma is 80 years old. So with these facts, could you make the IRS go away? Yes. The key is the old part. Grandma is old.  Remember that? That means whatever she has is all she will have. She’s not getting a lucrative job tomorrow.  While a $450,000 house is nice, it represents the entirety of grandma’s wealth. So one solution would be a hardship status with the IRS. Submit financials proving a limited ability to pay. The IRS will simply not do anything, aside from intercept refunds, if any. Now what will happen is the IRS will file a lien on the property. Meaning that once grandma dies, the lien attaches and the IRS will come in between Happy and his grandma’s estate. Happy is only entitled to proceeds after the IRS is satisfied in full. Which is why I don’t like this solution as much. I want an Offer in Compromise. And this is this the entire key to the case: how to legally eliminate grandma’s equity in her house -- as the IRS will want to start offer in compromise negotiations as-is with 80% of Fair market value of her house. Other things we must avoid is a fraudulent conveyance or something that would deemed dissipated asset, which would happen if she signed the house over to Happy without a resolution in place. There are two ways to do get rid of her equity in her house that I can think of.  One is through a reverse mortgage, the other is to sell the house for fair market value, take back a life estate along with an annuity. With either the reverse mortgage or annuity, Grandma would have more income each month (remember she got into tax trouble because she ran out of money.) But these additional proceeds aren’t enough to make her rich, or increase her tax burden in any substantial way. Her increased income would still likely be below the threshold in which the IRS finds any collection potential, thus the IRS would be very interested in accepting less than the full amount owed with a carefully constructed offer in compromise. Now some of you might wonder, how did Grandma get her house back after Happy's chief rival, Shooter McGavin bought the house at the auction? The answer is that in most circumstances there exists a right to redemption, where the foreclosed party just needs to match the highest price to keep the house. I would imagine that Grandma would have 30 days after the auction in which to redeem. The writers got this part right too. So before you abandon your fledgling minor league hockey career to help your grandmother out of a financial tight spot by utilizing your bizarrely awesome golf ball driving skills to become a golf champion, get an opinion from a tax attorney to see if such a bold move is necessary. While drama makes for compelling entertainment, don’t you think that drama in the real world is just a bunch of work that someone else should really be doing? Parent & Parent LLP 144 South Main Street Wallingford, CT 06492 (203) 269-6699 info@irsmedic.com https://ift.tt/1RfwK1f https://youtu.be/oQtF0W4NCUY IRS Medic