Are you planning on leaving the US?
A taxpayer's last day of presence in the United States on which they were considered to be a lawful permanent resident of the United States is the residency ending date under the immigration laws of the United States.
However, green-card holders who reside outside the United States are still considered to be resident aliens of the United States for tax purposes, unless such persons: (1) voluntarily turn in their green cards to USCIS and renounce their US immigrant status; (2) have their immigrant status administratively revoked by USCIS; or (3) have their immigrant status judicially revoked by a United States federal court.
CAUTION! A Lawful Permanent Resident (green card holder) for at least 8 of the last 15 years who ceases to be a US lawful permanent resident may be subject to special reporting requirements and tax provisions as an expatriate. See Expatriation Tax section that follows.
Residency Ending Date Under the Substantial Presence Test
In general, if a taxpayer meets the Substantial Presence Test, their residency ending date is their last day of presence in the United States followed by a period during which:
- They were not present in the United States;
- They had a closer connection to a foreign country than to the United States; and
- They were not a resident of the United States during the calendar year following that of their last day of presence in the United States.
Under the general rule, the residency ending date is December 31 of the calendar year in which they left the United States. However, an exception is allowed for a residency ending date earlier than December 31 in the alien's last calendar year in the United States. Under this exception, the alien's residency ending date shall be the last day during the calendar year that the individual is physically present in the United States if, for the remainder of the calendar year:
- The individual's tax home is in a foreign country; and
- They maintain a closer connection to that foreign country than to the United States.
An "exempt individual" is not considered to be "present in the United States" during the exempt period for purposes of determining the residency ending date under the Substantial Presence Test. This rule may result in situations in which
Expatriation Tax (8854)
The expatriation tax provisions under Internal Revenue Code sections 877 and 877 A apply to US citizens who have renounced their citizenship and long-term residents who have ended their US resident status for federal tax purposes. Different rules apply according to the date upon which the taxpayer expatriated.
This is an exceedingly complex area with very specific rules as to what needs to be disclosed, how it should be reported, and when it must be filed. The instructions for filing Form 8854 are some ten pages long and include new additional required disclosures for those expatriating on or after January 151, 2015. The form itself (2014 version) is a deceptively short six pages, but the information required is extensive and very probative.
At HerrickGlobal, we can give you peace of mind that comes with knowing you will not face the unknown alone. Our highly trained advisors can handle all of your tax filing needs quickly and efficiently. Schedule an appointment today - we look forward to meeting you!