Accidental Americans, Expatriation & Renunciation
Accidental Americans & Expatriation: When a person is unaware they were considered a U.S. Citizen and has now discovered their U.S. Person status, they are referred to as an Accidental American. There are many downsides with being an Accidental American, with the most prevalent being the sudden realization that the IRS will tax you on your worldwide income, and be required to disclose your offshore assets, investments and accounts.
Since presumably, an Accidental American has been out of U.S. tax compliance for many years, there is the important issue of getting back into compliance to avoid offshore fines and penalties – especially since foreign accounts compliance by the U.S. government is on the rise.
Steps Accidental Americans Should Take
While the knee-jerk reaction for many Accidental Americans is to simply relinquish their status, that is usually not the best option.That is primarily because a person may be subject to an exit tax if they are deemed a covered expatriate.
And, once a person “Expatriates,” they cannot undo the action.
A Few Expatriation Tips
Here a few tips for Accidental Americans who want to Expatriate:
5-Years Tax Compliance
Even if the person can certify they are below the covered expatriate net-worth and/or net-income tax liability, if they cannot certify 5-years tax compliance, they will also be deemed a covered expatriate.
Evaluate Worldwide Assets
Before expatriating, the person should evaluate what their asset value is. If they are going to be a covered expatriate due to net worth, there may be planning strategies to reduce it, “aka Exit Tax Planning.”
Foreign Pension & U.S. Tax
When a person has a foreign pension, it is generally deemed as ineligible deferred compensation and may result in immediate tax liability for the expatriate. They will want to assess if transfer rules are possible under the source country pension taxation rules.
Gift Tax Rules
Whether or not the spouse (if applicable) is a U.S. citizen or not will impact the gift-transfer rules. There are generally no look-back provisions, but there are proposed regulations limiting the tax-free gift transfers of expatriates.
Interested in Expatriation from the U.S.?
Our firm specializes exclusively in international tax.
We are the “go-to” firm for other Attorneys, CPAs, Enrolled Agents, Accountants, and Financial Professionals across the globe. Our attorneys have worked with thousands of clients on offshore disclosure matters, including FATCA & FBAR.
Each case is led by a Board-Certified Tax Law Specialist with 20-years experience, and the entire matter (tax and legal) is handled by our team, in-house.
*Please beware of copycat tax and law firms misleading the public about their credentials and experience.
Less than 1% of Tax Attorneys Nationwide Are Certified Specialists
Our lead attorney is one of less than 350 Attorneys (out of more than 200,000 practicing California Attorneys) to earn the Certified Tax Law Specialist credential. The credential is awarded to less than 1% of Attorneys.
Recent Case Highlights
- We represented a client in an 8-figure disclosure that spanned 7 countries.
- We represented a high-net-worth client to facilitate a complex expatriation with offshore disclosure.
- We represented an overseas family with bringing multiple businesses & personal investments into U.S. tax and offshore compliance.
- We took over a case from a small firm that unsuccessfully submitted multiple clients to IRS Offshore Disclosure.
- We successfully completed several recent disclosures for clients with assets ranging from $50,000 – $7,000,000+.
How to Hire Experienced Offshore Counsel?
Generally, experienced attorneys in this field will have the following credentials/experience:
- 20-years experience as a practicing attorney
- Extensive litigation, high-stakes audit and trial experience
- Board Certified Tax Law Specialist credential
- Master’s of Tax Law (LL.M.)
- Dually Licensed as an EA (Enrolled Agent) or CPA
Interested in Learning More about our Firm?
No matter where in the world you reside, our international tax team can get you IRS offshore compliant.
We specialize in FBAR and FATCA. Contact our firm today for assistance with getting compliant.