nun

How is you wife "entitled" to US citizenship? If it's by parentage or birth she already is a US citizen and should be filing US taxes each year.

If you wait until you become a US resident until you sell your rented UK property you will have to pay US CGT.......also the UK CGT rules for non-residents are changing so you'd need to be aware of that.

rangdaa

She is the daughter of an American and she held a US passport until she was 22 at which point she was obliged to relinquish it or to live in the USA for the following 5 years (the rules of 40 years ago were quite different to what they are now). She has been advised that she can apply for a US passport based on the strength of being the daughter of a US citizen.

Thank you for your help re CGT and the rental property - much appreciated.

nun

That's interesting. I assume your wife was a dual US/UK citizen. I never knew of the requirement to live in the US for a certain time apart from that required of a US citizen parent to pass on citizenship to their child. I'd be interested to see how the US treats your wife's application now if she's on file as having previously renounced.

rangdaa

Thanks Nun. Your previous comments have made me revisit the US London Embassy website and there have been some subtle changes since I last looked - "first" has now been added to "passport" which does not apply in my wife's case. Further research is required methinks...

JAJ

There were retention requirements in the past. These were repealed in 1978 but could still affect those born before October 10, 1952.
http://www.uscis.gov/policymanual/PD...lityChart1.pdf

The change in the law in 1978 was not retroactive, but as far as I am aware, those who lost U.S. citizenship may apply for it to be restored by taking an oath of allegiance. The restoration of U.S. citizenship is not retroactive. For example: http://www.state.gov/documents/organization/153156.pdf

With U.S. citizenship come the tax filing obligations, etc. and if she isn't a U.S. citizen (but may become one) it may be a good idea to do some tax planning before becoming a U.S. citizen again. For example, realizing certain capital gains and/or divesting of certain investments. Depends on the complexity of financial affairs. Obviously, make sure that U.S. citizenship (including its obligations) is wanted before taking the oath to resume it. And if moving to the U.S. at an advanced age, consider healthcare costs and Medicare eligibility.

nun

So would someone with a single USC parent, born outside the US before Dec 24th 1952 and applying for US citizenship today still have to meet the US residency requirements?

This is probably the most important consideration. For anyone close to Medicare age I'd put healthcare planning before tax planning.

rangdaa

JAJ,

Thank you for the links you have provided. I have read both and it does seem that if my wife were to take the oath she might be given US citizenship.

JAJ and NUN - you are both correct about healthcare being very important - it is something we have looked into and it does seem that my wife will be entitled to join medicare - she still has her SSN!

As for tax planning, finding someone in the UK with intimate knowledge of the US system is not easy...

Thanks to both of you for your help.

nun

If your wife hasn't at least 10 years of SS wages she'll probably have to pay for Part A Medicare as well as Part B and the supplementary stuff. That might cost around $700 a month. I think you have to be a US citizen or resident for at least 5 years in the US to qualify for Medicare so you'll need to find health insurance to bridge the gap, luckily you now have access to "Obamacare" and should be able to buy insurance. The cost and range of plans available will depend on the state you live in.

rangdaa

Thanks NUN - off to look at the US Medicare site right now and thanks for the tip about "Obamacare" - I would not have thought of that...

JAJ

As I understand it, a person born before the 1952 cut-off, who can demonstrate they became a U.S. citizen under the law at the time, and then subsequently lost U.S. citizenship, can recover U.S. citizenship by taking an oath of allegiance.

No further residence requirement is required.

Documenting the actual acquisition of U.S. citizenship at birth shouldn't usually be a problem, since there would normally be a Consular Report of Birth Abroad on file.

The cut-off is actually a date in October 1952 (October 10, from memory) because the law revoking U.S. citizenship for non-compliance with the residence requirement took effect in October 1978. Those born in the Oct-Dec 1952 window were subject to a retention requirement, but it was repealed before it could take effect on their 26th birthday.


Perhaps consider Pete Newton (search forum for contact details).

The most important tax planning point to consider is capital gains. Look at all unrealized capital gains, work out what the U.S. charge to capital gains would be if disposal took place after becoming a U.S. citizen, and then consider whether or not to sell before becoming a U.S. citizen. This might cause a capital gains charge in the U.K. but may be worth it regardless.

The other one to look at is any investments that don't fit well into the U.S. tax system - particularly endowments or non-U.S. mutual funds. It would usually be better to divest of these before becoming a U.S. citizen.

There may be other tax issues to watch out for - reporting on non-U.S. bank accounts, any small non-U.S. company she owns part of, and so on.

rangdaa

Thanks JAJ. If we sell all our stocks before moving to the USA, we will in fact make a capital LOSS. Care to guess on whether we will be able to carry forward this loss to offset against future US capital gains?

I shall search for Pete's details...

nun

Owning foreign individual stocks have no negative tax consequences for a US resident or citizen, however, you should check if your UK broker imposes any trading restrictions on people who live outside the UK.

The investments that are definitely had to hold for US tax purposes are UK based pooled investment funds held outside of a pension fund recognized by the US/UK tax treaty and endowment policies.

rangdaa

Thanks NUN.

Barclays Stockbrokers has advised that if I become US tax resident, I will have to close my account.

I have contacted Hargreaves Lansdown who advised that I will be able to continue using my account as normal with the exception that I will not be able to add additional funds.

Wonder what my banks will say...

Cook_County

NS&I closed most of their investments to al US citizens and residents in May 2014.

JAJ

Not if the loss is realized before becoming U.S. tax resident. If realized after becoming U.S. tax resident - maybe. Seek professional advice. But also be aware that as far as the U.S. is concerned, you have to take the original cost and multiply into U.S. dollars, and compare that to the sale price converted into U.S. dollars. The change in exchange rate between these two dates can increase a capital gain - or reduce it. So are you sure you have a loss as far as the U.S. is concerned? Including any reinvested dividends?

As you note, you may find that your brokerage accounts are subject to forced closure if you become a U.S. resident, unless you keep a U.K. mailing address (in which case, they don't know). Once you are U.S. tax resident you have to report worldwide income and capital gains to the IRS but you don't necessarily have to share the fact (of your U.S. residence) with your broker. If you have stock in certificate form, then it will be quite difficult for you to sell this if you are not a U.K. resident.

Of course. That's what they said.

However, that doesn't mean they successfully purged their customer base of any U.S. connection. In particular, if the person concerned, if already an NS&I account holder, suddenly becomes a U.S. citizen then it's highly unlikely that NS&I would somehow know about that fact, even less likely they'd take any action ...

If they move to the U.S. and advise a U.S. mailing address to NS&I then the accounts might be forcibly closed ... then again they may not. But if there is an intention to keep NS&I accounts upon moving to the U.S. then perhaps it would be better to keep a U.K. mailing address, even if it's simply a mail forwarding service.