Who is subject to expatriation tax?

O

octopus

Registered Users (C)
For people who want to relinquish their permanent residency or citizenship, I've read some information about expatriation taxes. But I've found many unclear and sometimes contradicting information.

Can anybody shed some light on it?

Your average annual net income tax for the last 5 tax years ending before the date of your action to relinquish your citizenship or terminate your residency was more than $145,000.
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1) The $145,000 is your annual salary or the amount that you pay to the IRS?

2) Does anybody understand the other conditions?
3) When abandoning GC, all you need to do is to file I-407 and fill out Form 8854 ?
 
They mean $145K in taxes. Which would mean income of somewhere above $400K.

2) Does anybody understand the other conditions?
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If your income or net worth is so high that you might be hit with this tax, you can afford to consult a tax attorney or accountant to help you understand the conditions and how you can minimize the impact.
 
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Thank you very much guys!

Is it also true, that everyone who ceases to be an USC or an LPR is liable for U.S. taxes 10 years after s/he expatriates?
 
Not everyone. Only the 1% or 2% with income or net worth high enough to be above the threshold. And former LPRs who don't meet the "long term resident" criteria (held GC for at least 8 of the last 15 tax years) are exempt.
 
Jackolantern: thank you for clarification. In other words, even "long term resident" whose income is below the threshold is exempt.

My uncle has had green card for over 12 years, which qualifies him as "long term resident". Now, he is living abroad, so he contemplates filing I407. I guess he needs to show tax compliance on a form 8854, right? For a one year, when he sold his house, his income could have been over 145k, this is why I was asking. So no expatriate tax should apply to him then.

Second question:

Is there anything else to file except for I407 and form 8854?
 
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