Tag Archive for S. 877A

Canada Pension Plan (And Other “Foreign Social Security”), The “Net Worth” Test, Form 8854 And Form 8938

John Richardson

Q. How does the inability of the state of Rhode Island to pay its employee pensions help us understand the “net worth” of a U.S. citizen wanting to renounce U.S. citizenship?

A. The answer (like most wisdom in the modern world) is explained in the following tweet.

Read More

Written by | Posted in Canada • Citizenship • Exit Tax • International

The “Exit Tax”: Dual US/Canada Citizen From Birth, No Canada Citizenship Today = No Exemption To US “Exit Tax”

John Richardson

Relinquishing US citizenship: South African Apartheid, the Accidental Taxpayer and the exit tax

The above references a “guest post” written by Dominic Ferszt of Cape Town South Africa. The post demonstrates how the “dual citizen from birth” exemption to the S. 877A “Exit Tax” relies on the citizenship laws of other nations. In some cases those laws of other nations are arbitrary and unjust. If these laws were U.S. laws, they might violate the equal protection and/or due process guarantees found in the United States constitution. For example, Mr. Ferszt describes how the “dual citizenship exemption” to the “Ext Tax” is dependent on South African “Apartheid Laws”. He describes a situation where a “black” U.S. citizen from birth is denied the benefits of the dual citizen exemption to the Exit Tax, which are available to a “white” dual citizen from birth. (During the “Apartheid Era” Blacks were not entitled to South African citizenship.)

Read More

Written by | Posted in Canada • Citizenship • Exit Tax

Part 15 – Understanding “Exit Taxes”

Interview with GordonTLong.com – Citizenship based taxation, PFIC, the S. 877A Exit Tax and #Americansabroad

On May 22, 2015 I was interviewed by Gordon T. Long. There is NO way to discuss U.S. “citizenship taxation” (which is primarily “place of birth taxation”) without discussing the S. 877A Exit Tax rules. During the month of April 2015, I wrote a 14 part series on “How the S.877A rules affect Americans abroad“. The interview with Mr. Long serves as a good reminder (or if you don’t want to read the posts) on:

– what it means to be a “covered expatriate”

– how the U.S. S. 877A “Exit Tax” rules operate to impose punitive “taxation” on non U.S. pensions (See the actual Read More

Written by | Posted in Expatriate • FATCA

Part 14 – Understanding “Exit Taxes”

“Leaving the U.S. tax system – renounce or relinquish U.S. citizenship, What’s the difference?”

Renunciation is one form of relinquishment – It’s not the form of relinquishment, but the time of relinquishment

Tina Turner: What’s FBAR Got To Do With It?

“Washington Post, Tina Turner Formally ‘Relinquishes’ U.S. Citizenship:

This item just in via an “activity” report from the U.S. Embassy in Bern, Switzerland, headlined “Soul Legend Relinquishes U.S. Citizenship.” Read More

Written by | Posted in Canada • Exit Tax • Expatriate

Part 11 – Understanding “Exit Taxes”

S. 2801 of the Internal Revenue Code is NOT a S. 877A “Exit Tax”, but a punishment for the “sins of the father”

Updated September 12, 2015 – the IRS has issued “proposed rules”  governing the issue of “The sins of the father”.

The following was a comment on Part 9 of this “Exit Tax” series.

“I know many tax compliant, patriotic Americans who have renounced. Many have done so seeing the $2m threshold approaching, to protect their families and get on with their lives. All with heavy hearts.

You did not mention the additional burden on those who renounce who have US citizen relatives–the tax their Read More

Written by | Posted in Exit Tax • FATCA • FBAR

Part 9 – Understanding “Exit Taxes”

For #Americansabroad: US “citizenship taxation” is “death by a thousand cuts”, but the S. 877A Exit Tax is “death by the guillotine”.

1995 – The origins of the S. 877A Exit Tax –
Video of House Oversight Committee (see video below).

This testimony in this video covers a number of perspectives. It includes a consideration of whether the S. 877A rules are a “human rights violation”. This video should be watched in its entirety. It illustrates the viciousness of the Exit Tax and the attitude of the Clinton administration. There is a suggestion that the purpose of the S. 877A rules was to “keep people from leaving”. If you find any testimony or questions that address the problems of “Americans Abroad”, please leave a comment describing the speaker, time Read More

Written by | Posted in Exit Tax • FATCA

Part 7 – Understanding “Exit Taxes”

Why 2015 is a good year for many #Americansabroad to relinquish US citizenship – It’s the “Exchange Rate”

The purpose of my series of posts on the S. 877A “Exit Tax” has been to explain how the tax actually works. I have provided actual examples. The results have been enlightening and have demonstrated how arbitrary the results have been. In “Part 5” of this series you will find the actual examples and draft tax returns. I provided examples of how much the S. 877A “Exit Tax” could be. The examples were based on one consistent set of financial circumstances and demonstrated how that one set of financial circumstances would apply to five different people. We learned that there were wide variations in the amount of the “Exit Tax” payable. A person who was a “dual citizen” from birth may have paid on “Exit Tax” of $0.00. A person who was born Read More

Written by | Posted in Exit Tax

Part 6 – Understanding “Exit Taxes”

Part 6 – “Surely, expatriation is NOT worse than death! The two million asset test should be raised to the Estate Tax limitation – approximately five million dollars – It’s Time”

Introduction

Many Americans abroad have had their lives turned upside down by the combination of FATCA and the enforcement of U.S. “place of birth” taxation. Those who are “long term” residents abroad find themselves caught between a “rock and a hard place”.

On the one hand they can’t afford the costs and complexity of filing U.S. tax returns.

On the other hand, many “middle class” Americans abroad cannot relinquish their U.S. citizenship (freeing themselves from the complexity of U.S. tax laws and the IRS) without Read More

Written by | Posted in Canada • FATCA

Part 5 – Understanding “Exit Taxes”

“The “Exit Tax” in action – Five actual scenarios with 5 actual completed U.S. tax returns.”

In order to see the graphic and brutal confiscatory effects of the U.S. Exit Tax in action I asked a licensed U.S. CPA who specializes in International Tax to consider the following scenario:

Relinquishment date: A person who renounced U.S. citizenship on November 1, 2014.

Profile: He was a “middle class” person who was completely tax compliant in his country of residence. He was a saver and investor. He had worked hard for this money. Read More

Written by | Posted in Exit Tax

Renouncing US Citizenship? How The S. 877A “Exit Tax” May Apply To Your Canadian Assets – Introduction

There is much discussion of the U.S. rules which operate to impose taxation on the residents of other countries and income earned in those other countries. You will hear references to “citizenship taxation”, “FATCA Canada“, PFIC, etc. It is becoming more common for people to wish to relinquish their U.S. citizenship. The most common form of “relinquishment is renunciation”. The U.S. tax rules, found in the Internal Revenue Code, impose taxes on everything. There is even a tax on “renouncing U.S. citizenship”. I don’t mean the $2350 USD administrative fee which everybody has to pay. (Isn’t that really a tax?). I mean a tax on your assets. To be clear:

• You must pay a price to NOT be a U.S. citizen. Read More

Written by | Posted in Expatriate • FATCA • Internet Tax Summit - 2015