J.K. Lasser's Your Income Tax 2013: For Preparing Your 2012 Tax Return

1.20 Expatriation Tax

U.S. citizens who have renounced their citizenship and long-term U.S. residents who end their residency are considered expatriates subject to special tax rules. You are considered a long-term resident for purposes of these rules if you give up lawful permanent residency (“green card”) after holding it for at least eight of the prior 15 years. Form 8854 must be filed if the expatriation date was on or after June 4, 2004. Individuals who expatriated after June 3, 2004 and before June 17, 2008 are subject to different tax consequences than individuals who expatriate after June 16, 2008.

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Law Alert

Proposed Increase in Penalties if Citizenship Renounced for Tax Reasons

Bills have been proposed in Congress to impose a 30% capital gains tax on future investment gains of individuals who renounce their U.S. citizenship to avoid taxes. The proposals would also bar such individuals from re-entering the United States if the required taxes have not been paid. The e-Supplement will have an update, if any, on the proposals.

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Expatriation after June 16, 2008.

If you expatriated after June 16, 2008, you are subject to a “mark-to-market” tax if any of the following is true: (1) your average annual net income tax liability for the five years ending before the date of expatriation exceeds an annual ceiling, which is $151,000 for expatriations ...