US Citizenship: pros and cons?
#76
Back in US & happy!
Joined: Nov 2011
Posts: 505
Re: US Citizenship: pros and cons?
Yeah, I don't exactly know how he did it, but it sounded like it was a lot of money he was going to give up to US taxes and he was most unhappy about it.
#77
Re: US Citizenship: pros and cons?
It wouldn't surprise me if, after looking at the mechanics and consequences renouncing US citizenship, he may have quietly dropped the plan.
#78
Re: US Citizenship: pros and cons?
A friend of mine, a US citizen, who has lived in UK for 30+ years has recently retired and renounced his US citizenship because of the tax implications. He wanted to sell his house and buy smaller one and use the profits to increase his pension. He was told he would lose a bunch of money from the profit on the house to US taxes. I would have to look seriously at the tax implications of being a US citizen before I took the plunge, and I certainly wouldn't want to give up my British citizenship, but that is a personal thing for me
If you are below these thresholds its an easier decision.
#79
Back in US & happy!
Joined: Nov 2011
Posts: 505
Re: US Citizenship: pros and cons?
Well I know he was holding back on selling his house until he looked into everything. Also, he was looking at another option of transferring the house into his wife's name only before selling it as his wife is British. But I'm not sure what he did in the end, just that he told me about it when I mentioned looking into US citizenship. He seems to have been on a very long holiday since retiring, so haven't been in contact. But I will know more when I go back to UK in sept....
#82
Forum Regular
Joined: Mar 2015
Posts: 101
Re: US Citizenship: pros and cons?
Nobody mentioned the all important 'unlimited marital deduction'. A non-citizen spouse faces estate taxes on what is inherited from a dead partner.
If you ever look at estate planning and have saved a few bob this is going to come up.
If you ever look at estate planning and have saved a few bob this is going to come up.
#83
Re: US Citizenship: pros and cons?
For a nonresident non-citizen ("nonresident alien" or "NRA") the applicable exemption continues to be limited to $60,000. Thus, estate tax is due when a nonresident alien's estate transfers U.S. situs assets above $60,000.
#84
Re: US Citizenship: pros and cons?
#85
Re: US Citizenship: pros and cons?
A friend of mine, a US citizen, who has lived in UK for 30+ years has recently retired and renounced his US citizenship because of the tax implications. He wanted to sell his house and buy smaller one and use the profits to increase his pension. He was told he would lose a bunch of money from the profit on the house to US taxes.
Generally speaking though CGT rates in the US are lower than in the UK and there is a foreign tax credit available, so you would pay no US tax effectively. The case you've described though is a somewhat unusual exception because there is no tax to claim a credit against.
One of those times when it's really important to file the paperwork correctly. More information at: https://www.irs.gov/pub/irs-pdf/i706na.pdf
#86
Re: US Citizenship: pros and cons?
Would US resident alien spouse pay death taxes if the property was joint ownership?
#87
Re: US Citizenship: pros and cons?
The difference if the spouse is an LPR is that they can't claim the joint credit, so the limit would be the single person exemption available to the decedent, so $5.43 million or whatever it is now. So usually still not a problem, although it can be a problem in jurisdictions which copy the federal law but have a much lower estate tax limit, e.g. New Jersey.
Yet another reason to get citizenship ASAP.
Yet another reason to get citizenship ASAP.
#88
Re: US Citizenship: pros and cons?
The difference if the spouse is an LPR is that they can't claim the joint credit, so the limit would be the single person exemption available to the decedent, so $5.43 million or whatever it is now. So usually still not a problem, although it can be a problem in jurisdictions which copy the federal law but have a much lower estate tax limit, e.g. New Jersey.
Yet another reason to get citizenship ASAP.
Yet another reason to get citizenship ASAP.
If your spouse becomes a U.S. citizen by the time your estate’s federal estate tax return is due, he or she will qualify for the unlimited marital deduction. The return is generally due nine months after death, but the IRS may grant a six-month extension. Because it takes a long time to get citizenship—for most people, there is a waiting period before you can apply, and it takes at least several months after you apply—this isn’t an option for most people