Tag Archives: Expatriation S. 877A

Thinking about getting a #Greencard? The first question is: Do you want @PermResidentUSA status?

A move to another country is a very significant life decision. A “Green Card” is actually a “permanent resident” immigrant visa. A U.S. “permanent resident” visa comes with significant opportunities and significant responsibilities.
Permanent resident visa for immigration purposes: The visa is valid for immigration purposes only as long as the person retains the subjective intent to live permanently in the United States.
Permanent resident visa for tax purposes: Under United States law, one’s status for immigration purposes is different from one’s status for tax purposes. Generally the rules for “tax residence” are found in Internal Revenue Code Sec. 7701(b).
What follows is my answer on Quora that considers the “benefits and burdens” of the Green Card. I suggest that you read all answers to this question.
Read John Richardson's answer to What are the benefits of getting a "green card"? How has your life changed after being a green card holder? on Quora
But, wait! There’s more. If you have the Green Card for 8 years or more, you can’t leave the United States without being subject to the S. 877A Exit Taxes.
Read John Richardson's answer to Must one pay U.S. exit tax on foreign assets? on Quora

Green Card Holders and #Americansabroad: "Residence", "Long Term Residence" and the S. 877A "Exit Tax"

Tax jurisdiction and residential ties
The two types of residential ties considered for all aliens
When considering the meaning of “residence” for tax purposes, attempting to ascribe a place of “residence “to an individual, and imposing taxation on individuals, the Internal Revenue Code considers:
A. The extent of “residential ties” to the United States; and
B. The extent of “residential ties” to another country.
We see both aspects of residence considered as a way to defeat the “substantial presence” test in Internal Revenue Code S. 7701(b). If the country of residence is uncertain, or if a person is considered to be a “tax resident” of the United States and another country, the Internal Revenue Code considers ties to both the United States and the other country in question.
For “resident aliens” (Green Card Holders):
– both past and present residential ties to the United States and to other nations are considered in at least three ways under the Internal Revenue Code itself; and
– residential ties to both the United States and the other country of residence are considered in determining residence under Article IV of the Canada U.S. (and other) tax treaties**.
Green Card Holders and tax residence
A previous post discussed the fact that:

  1. Internal Revenue Code S. 7701(a)(30) defines “U.S. Persons” as including “citizens” and “residents”
  2. The combined effect of Internal Revenue Code S. 7701(b)(1) and S. 7701(b)(6) define Green Card Holders in a way that ensures that they meet the statutory test of “residence”. (Of course Green Card Holders  may be able to defeat the status of “resident” by making use of the Treaty Election in Article IV of the Tax Treaty)
  3. The statutory defenses to “residence” found in S. 7701(b) of the Internal Revenue Code, available to “aliens” who are NOT Green Card Holders, take into account and are a function of the extent of residential ties to other jurisdictions

Residence matters and residence matters hugely. Hence, the definition of “resident” matters and matters hugely.
Congress has directed its attention to the question of the kind of physical connection to the United States, that justifies deeming one to be a “resident” for tax purposes. Interestingly, the definition of “citizenship” has NOT received the same attention. Nor is “U.S. citizen” defined in the Internal Revenue Code.
The purpose of this post is to consider how actual U.S. residence affects the taxation of Green Card Holders.
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