Tax consequences of becoming a US citizen.

[Tim May]

On Tuesday, July 9, 2002, at 01:19  PM, Gabriel Rocha wrote:

> 		On Tue, Jul 09, at 11:52AM, An Metet wrote:
> | What are the tax implications of a US resident green card holder, 
> with substantial assets both in his original nation and in the US, of 
> becoming a US citizen?
>
> Well, think positive because you're already screwed. If you have a
> greencard, you're tax implications are the same (or have been for me
> thus far) as a US citizen. if you have a green card, you can either give
> it up (for the loss of legal tax juridsdiction of the IRS over you)

Why do you think a person without a green card is exempt from IRS 
jurisdiction?

Unless one's stay is a short one (see below), income or other money 
earned while in the U.S. (and maybe earned outside the U.S. if the IRS 
can make a nexus case) is taxable. Illegal aliens are supposed to file 
tax returns...and they certainly don't have green cards!

Here's what Uncle Sam says:

"You will be considered a U.S. resident for tax purposes if you meet the 
substantial presence test for the calendar year. To meet this test, you 
must be physically present in the United States on at least:

1.	31 days during the current year, and
2.	183 days during the 3-year period that includes the current year 
and the 2 years immediately before that, counting:
*	All the days you were present in the current year, and
*	1/3 of the days you were present in the first year before the 
current year, and
*	1/6 of the days you were present in the second year before the 
current year.

--end IRS quote--

There are some exemptions, for student visa persons and athletes 
competing in games, but basically the idea is that you owe tax on money 
earned in the U.S., regardless of citizenship, green card, or other 
status.

> or
> get a US citizenship since you're already in their jurisdiction anyway.
>

I think this is terrible advice. Becoming a U.S. citizen exposes a 
person to not only the _current year_ tax scheme but also the "for ten 
years after you leave the U.S." tax scheme. (Yes, any U.S. citizen who 
moves anywhere in the world must, technically, file U.S. tax returns for 
10 years after leaving. And pay various kinds of taxes, though the 
amount may be different from what he would have paid had he remained in 
the U.S.)

Also, a person having extensive offshore (outside the U.S.) assets may 
well find his assets are now taxable in the U.S. And for those with 
capital assets not taxed in their home countries (e.g., Germany, Japan), 
this may be quite a shock.

A U.S. passport buys almost no protection. The U.S. will not defend its 
citizens, only its imperialist interests.



--Tim May
"That government is best which governs not at all." --Henry David Thoreau