We're The Brits In America

45. Leaving the USA: Relinquishing Green Card / Renouncing US Citizenship - Beware The Exit Tax | Ask an Expert with Virginia La Torre Jeker, J.D.

Richard Taylor - Plan First Wealth

Many green card holders mistakenly believe they are no longer liable for US taxes after expiration. Properly relinquishing a green card requires completing Form I-407. If this is news to you (or you’ve never heard of this form) then you better listen to this week’s Ask An Expert. 

Richard Taylor is joined once again by Virginia La Torre Jeker, a member of the NYS Bar since 1984 and preeminent US tax professional. Together they talk about what green card holders and US citizens need to know before giving up their status. They break down the risks of becoming a “covered expatriate,” how the exit tax works, and why signing the wrong form at the border can have big consequences. 

Plus, Virginia shares tips on how to plan ahead to avoid major tax issues. One of those is the exit tax: covered expatriates are treated as if they sold all their assets the day they expatriate - even if they haven’t. In the case of IRAs and similar retirement accounts, the IRS treats the entire balance as a taxable distribution, potentially triggering a tax bill without the expat actually accessing any of the funds. 

If you’ve got a million dollars in an IRA, the IRS is going to treat it like you've just received a million dollars of IRA income - taxable at the highest rate, up to 37%. That hurts. 

 

Find out how to avoid this, right here.

We're the Brits in America is affiliated with Plan First Wealth LLC, an SEC registered investment advisor. The views and opinions expressed in this program are those of the speakers and do not necessarily reflect the views or positions of Plan First Wealth.

Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. Investments involve risk and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Plan First Wealth does not provide any tax and/or legal advice and strongly recommends that listeners seek their own advice in these areas.