Ephraim Moss

According to a report published by the United Nations, Department of Economic and Social Affairs, the number of Americans living in the United Kingdom was estimated at 212,150 in 2015. This represents a sizable group of Americans living in just one foreign country.

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As a U.S. expat, you may have heard about the latest and greatest IRS amnesty program available for delinquent U.S. taxpayers known as the “streamlined procedures.”  What you may not know is that if you continue to spend a significant time in the U.S. each year, your eligibility for the procedures and your ability to obtain penalty-free relief may be in jeopardy.

The key issue here is “residency,” which separates the friendlier “foreign offshore” procedures (available for taxpayers residing outside the U.S.) from the harsher “domestic offshore” procedures (available for taxpayers residing in the U.S.)

For instance, a domestic resident taxpayer that has failed to file a U.S. income tax return in any of the three most recent tax years cannot participate in the domestic offshore Read More

Call me naive but the immigration “problem” in the USA is rooted in the fact that the country offers the absolute best Social Security and Medicare systems on the planet. Surely detractors painfully draw out and depending on perspective fabricate flaws. It is remarkable that millions of people, mostly good people in all other regards are so willing to commit the crime of residing in the USA without proper documentation in pursuit of a ‘better life’ for themselves and their progeny.

On the one hand thinking about and planning for multiple generations at a time is what seems to lead to measurable advancements in humanity. But on the other hand one must ask whether being in the USA without proper documentation is worth it at any cost. Evidently the answer is a resounding and problematic yes. That is why expatriating from Read More

This letter was posted by Robert Wood on Forbes’ website. Robert is a US tax lawyer based in San Francisco, California. He received this letter in the course of his practice. I thought it was well worth passing on and have reproduced it in full:

“Dear Mr. President,

I am writing with a heavy heart as I, my husband, and our daughter are all seriously contemplating giving up our U.S. citizenship. We are doing this not to avoid paying U.S. taxes but because we strongly object to a system that is blatantly discriminatory and unfair to law-abiding Americans living outside the country. In addition, it has become too expensive, too difficult, and frankly, too frightening, to try to comply with all of the tax filing Read More

Often, U.S. citizens who move to Canada are shareholders of U.S. S Corporations. This can potentially create double tax problems.

Under Canadian tax law, the S Corporation is just like any other foreign corporation. Dividends received are generally fully taxable. In addition, if the S Corporation is a “controlled foreign affiliate”, the shareholder can be taxable on his or her share of underlying investment income and capital gains under Canada’s “foreign accrual property income” (“FAPI”) rules.

Double taxation can arise because of the fact that Canada will generally only grant limited foreign tax credit relief for the U.S. taxes paid by the shareholder on the S Corporation Read More

Certain individuals who give up their US citizenship or their green cards are subject to the so-called ”Exit Tax” imposed under Section 877A of the Internal Revenue Code.

Under the so-called “expatriation” tax rules, harsh tax consequences will result if the individual giving up his US citizenship or “long-term” permanent residency (generally, this is an individual who has held a green card for 8 out of the past 15 years) is a so-called “covered expatriate”. Only “covered expatriates” will suffer the onerous tax consequences.

One is a “covered expatriate” if the individual has either a net worth of US$2 million at the time of expatriation; or, if he has a certain average income tax liability over the past 5 years prior to expatriation. One is also automatically treated as a “covered expatriate” if the Read More

When it comes to considering gross income for tax purposes, Section 121 of the US Internal Revenue Code allows for the exclusion of up to $250,000 in gains arising from the sale of a “principal residence.” The exclusion should apply whether the property is in the US or a foreign country. In the case of married couples filing a joint return, up to $500,000 may be excluded. The tax law is very specific in how it defines a “principal residence”, and in the “ownership” and “use” requirements that form part of the definition for utilizing this exclusion.

Principal Residence under Section 121

In order for a property to qualify as a principal residence, the residence must have been owned and occupied by the taxpayer for a minimum of 2 years (specifically, 730 days) Read More

If you have fallen behind on your US expat taxes, you are not alone! There are approximately six million Americans living abroad and only about half actually filed their US taxes, which is a US tax law requirement. So if the IRS has contacted you about delinquent tax returns, what should you do? First off, don’t panic! Here are a few tips on what to do next.

Tip #1 – Respond!

The worst thing you can do is ignore the notice. If you don’t think that you will be able to gather the proper documentation and file the return(s) by the deadline they provide, call them right away. Explain that you are aware of the delinquency and you are doing your best to resolve it. Often they will give you a few extra weeks if you are honestly trying to resolve the situation. If you do nothing at all, the IRS can file a return on your behalf and assess a Read More

This is a two-part blog post with Part I available HERE.

Renouncing US Citizenship if the Individual is a Minor

“Jus soli” (the law of the soil) is a rule of common law followed by the United States, under which the place of a person’s birth determines his citizenship. In addition to common law, this principle is embodied in the 14th Amendment to the US Constitution which states, in part, that: “All persons born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” Citizenship is also determined under various US citizenship and nationality statutes, such as the Immigration and Nationality Act (INA). Read More

Year-end tax planning could be especially productive this year because timely action could nail down a host of tax breaks that won’t be around next year unless Congress acts to extend them, which, at the present time, looks doubtful. These include, for individuals: the option to deduct state and local sales and use taxes instead of state and local income taxes; the above-the-line deduction for qualified higher education expenses; and tax-free distributions by those age 70-1/2 or older from IRAs for charitable purposes.

Some areas to draw your attention are listed below:


High-income-earners have other factors to keep in mind when mapping out year-end plans. Read More

Many Americans living and working overseas are involved in charitable causes. The question often arises whether US expats living abroad can obtain the tax benefit for a charitable contribution deduction? The answer depends on various factors, including those discussed below.

Where is the Charity Organized or Created?

The mere fact that a United States taxpayer is living abroad will not prevent the taking of a charitable deduction on the tax return. The more critical consideration involves where the charity is created to which he is making the contribution. Under the US tax laws governing charitable deductions, the organization must be “created or organized in the United States or Read More

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Expatriation And Exit Tax

Many individuals who previously took on United States citizenship as a second nationality or obtained a green card are now regretting this decision.  Some individuals often incorrectly assume they can give up the US citizenship or the green card without adverse US tax consequences.

Under the so-called “expatriation” tax rules, harsh tax consequences will result if the individual giving up his US citizenship or “long-term” green card (generally, held for 8 out of the past 15 years) is a so-called “covered expatriate”.  Only “covered expatriates” will suffer the onerous tax consequences.  One is a “covered expatriate” if the individual has either a net worth of US$2 million at the time of expatriation; or, if he has a certain average income tax liability over the past 5 years prior to expatriation. One is also automatically treated as a “covered expatriate” if the person fails to notify the IRS that he has expatriated and satisfied all of his tax liabilities for the past five years even if he did not meet the aforementioned dollar thresholds.

In these cases, imposition of an “Exit Tax” (among other harsh tax results) will occur when one gives up his US citizenship or “long term” green card. Under the Exit Tax provisions, the individual is subject to tax on the net unrealized gain on all of his world wide assets as if such property were sold for its fair market value on the day before the expatriation date.  Thus, the individual must pay US income tax on gain that he is “deemed” to have earned by operation of the Exit Tax rules, when in fact, the individual has not sold anything and is without any cash in hand with regard to the deemed sale. Naturally, this raises the issue of how the individual will fund payment of the Exit Tax. Read More