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First a questions
Sorry, "question" .... Is this youi primary residence?
yes it is
THe if you file jointly, 500,000 of the gain will be excludble
ON the 1st first question....
the $250,000 also applies to my non resident alien husband who is not currently living in the states?
he currently resides in another country
How do you file your taxes?
i have no income in the states, so thus, i do not need to file
OK, let me look somethng up quickly
ok thank you.
First see this: from IRS ... more to come
Married to U.S. citizen or resident alien. Nonresident alien individuals married to U.S. citizens or resident aliens may choose to be treated as resident aliens for certain income tax purposes.
even though he does not actually live here?
That is the next question I need to see what the (for certain purposes ) is ... but yes, this waives the need to pass either the greed card test or the substantial presence test
will i be receiving a copy of this chat in an email or something?
I'm sorry the exclusion does not apply to those subject to the Expatriation tax rules.... first see this:
If you sold your main home, you may be able to exclude up to $250,000 of the gain on the sale of your home. If you are married and file a joint return....This exclusion does not apply to nonresident aliens who are subject to the expatriation tax rules
The see this:
The expatriation tax provisions apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their residency. The rules that apply are based on the dates of expatriation, which are described in the following sections.
Expatriation Before June 4, 2004.
Expatriation After June 3, 2004, and Before June 17, 2008.
Expatriation After June 16, 2008.
Would he come under this definition?
yes he would
he had a green card at one point
and he then gave it up
So sorry, at least having all the facts here, may allow you to see around some corners
back to your questions
so to continue with the 1st question
does the fact that he is a joint tenant as a non resident alien
subject the sale of the home to higher tax rates?
looking at something .... he will probably need to file a 1040 NR, but be subject to same level of taxation ... let me see
OK, from here: http://www.irs.gov/Individuals/International-Taxpayers/Nonresident-Spouse-Treated-as-a-Resident
If, at the end of your tax year, you are married and one spouse is a U.S. citizen or a resident alien and the other spouse is a nonresident alien, you can choose to treat the nonresident spouse as a U.S. resident. This includes situations in which one spouse is a nonresident alien at the beginning of the tax year, but a resident alien at the end of the year, and the other spouse is a nonresident alien at the end of the year.
If you are married and both you and your spouse are required to file, you must each file a separate return, unless one of the spouses is a U.S. citizen or a resident alien, in which case the departing alien could file a joint return with his or her spouse
but he still wouldn't qualify for the $250,000 exclusion
That's right, he would not, because of the Expatriation tax rules
so to make things easier, we're thinking about gifting the property to me, so i own it as the sole owner
You will however, be able t file jointly and take the itemized deductions or standard deduction for married filing jointly
2 dependency exemptions, etc
this way if i pass away
i can use my lifetime exclusion
and pass it to my kids
are there any issues with a non-resident alien spouse gifting property to a citizen spouse?
Yes, and lifetime exclusion is 5,250,000 now and will increase annually sincc the last tax act
if we do that, would he need to file a gift tax return?
that's really a good one.... typically there is an unlimited deduction for spouses
Where doe he have citizenship/residency?
typically, the RECEIVER of a gift is never obliged ....but let me check something
i thought there was a requirement if the gift was over $100,000
but i'm confused because i thought there was unlimited gifting between spouses too
you are thinking of the information reporting form, which is used to track for money laundering, etc.... but that is not a tax form www.irs.gov/pub/irs-pdf/i3520.pdf
Logically, there would be no gift tax paid by you and that would certainly be trus for 2 us citizen spouse citizens
And it would be true if your spouse were in a country with an estate tax treaty
Germany, Austria, France, and the United Kingdom, all of which have modern, domicile based estate tax treaties with the U.S.
just ne second
is there a way to save this chat and send it to me?
Yes... you can copy and past into a document .... bookmark in your brower, or file-print from you browser ... you can also return to this url
For purposes of the U.S. estate and gift taxes, an alien is considered a U.S. resident if he or she is domiciled in the U.S. at the time of his or her death or at the time of a gift. If an alien enters the U.S. for even a brief period of time, with no definite present intention of later leaving the U.S., he or she is deemed to be domiciled in the U.S. and, therefore, is considered a U.S. resident for estate and gift tax purposes.1 Thus, an alien may be considered a nonresident for estate tax purposes and a U.S. resident for income tax purposes, or vice versa, since the estate tax residency test is the more subjective domicile test just described, while the income tax residency test is met if the alien satisfies an objective day count test known as the “substantial presence test” or holds a green card (i.e., is a lawfully admitted permanent resident of the U.S.)
1 Treas. Reg. §§ 20.0-1(b) and 25.2501-1(b).
Note that the more subjective test is DIFFERENT that the rules based income tax test
Diferent "than," (from)
i understand this
however, i'm not sure how it applies to my situation
so as long as my husband is only coming here to visit, there will be no gift or estate tax issues?
NO, there could be... depending on the nature of the gift
Generally, nonresident aliens are subject to Federal estate tax only on “U.S.-situs” property, with no credit for foreign death taxes paid.1 (The foreign country may allow a credit against its death taxes for Federal estate tax paid2). Nonresident aliens are also subject to Federal gift tax on lifetime gifts of U.S. situs property, but not on gifts of U.S. situs intangible property.3
1 Sections 2101, 2103, and 2106 of the Internal Revenue Code of 1986, as amended (the “Code”).
2 See German Inheritance Tax Law § 26 ErbStG; French Tax Code Article 784 A CGI; United Kingdom Inheritance Tax Act 1984 §§ 158 (treaty relief) and 159 (unilateral relief) (if unilateral relief is more favorable than treaty relief, the taxpayer chooses the former). To this author’s knowledge, the Austrian inheritance tax law does not provide for an automatic tax credit with respect to inheritance tax paid in another country, unless a treaty provides otherwise. It is this author’s understanding that in the absence of a tax treaty, under article 48 Bundesabgabenordnung (BAO) it is possible to apply for tax relief in Austria. The application must be filed with the Austrian ministry of finance, which may grant tax relief, either by a tax credit with respect to the foreign tax or by deducting the foreign tax from the taxable amount. The decision also depends on the way in which such a case would be treated in the other country.
3 Code §§ 2501(a)(1) and (2) and 2511(a).
What is situs property?
single residence home
it's not rented out
U.S. situs property includes the following: (i) Real property located in the U.S.;1 (ii) tangible personal property located in the U.S.2 (including cash,3 U.S. Treasury Bills,4 cars, furniture, jewelry, artwork, etc.); (iii) shares of stock issued by a U.S. corporation;5
The exemption equivalent will apply AND there is now what is called portability ... so between the two of you it now sits at 10,500
i dont understand
can you explain this in my specific situation?
OK you mentioned retaining your estate tax exemption for the children
since 2011 (as long as an election is made on the first spouse to doe's estate tax form) whatever estate tax exemption is not used is portable... transfers to the other spouse . so at the second spouse to die (it that were to be this year... again it is now indexed to go up every year) the total estate tax exemption equivalent is %10,500,000
sorry get it tight in a minute $10,500,000
oh i see what you mean
ok this sounds good
so, to recap, you CAN file jointly in the year you sell, same tax brackets and rates apply
his 1/2 of the exemption 250000 will be disallowed
And you MAY want to consider doing annual lifetime gifts your self NOW 14,000 per person per year without having to file a gift tx form IF you think that you'll be abpve that $10,500,000 number (which again is slated to go up as well, however)
ONe more thing... So sorry, just seeing now that there may be exceptions for those covered under the expatriate rules as well
thank you for your detailed research
My apololgies ... not that good planning may not alleviate some of this, but see this: http://www.irs.gov/Individuals/International-Taxpayers/Some-Nonresidents-with-U.S.-Assets-Must-File-Estate-Tax-Returns
Again, wanted to give you fact (not necessarily all good news)
The links I'm providing here will stay active so if you bookmark, or come back here http://www.justanswer.com/tax/7vu4o-hi-husband-moved-u-s-bought-house.html you can go to the sites/pages I've linked for future reference
then he wouldn't need to file an estate tax return
if he transfers the property under my name
and thus, he would own nothing in the U.S.
am i correct?
Yes, that's where we've ended up because (did you see this?)
In addition, covered expatriates under IRC 877A are not considered U.S. expatriates for purposes of Form 706NA, United States Estate (and Generation-Skipping) Tax Return, Estate of a nonresident not a citizen of the United States (PDF).
and the 706NA, just like the 706 form has the unified credit
sory for the vascillation
but were are really back where we were when I re-capped
please recap again
THe esate and gift tax is a unified system
no exclusion of gain on sale of the residence (that's an INCOME TAX issue) because of the expatriate tax rules
Now, let me check that the credit is te same on the 706NA as the 706 (same for non-residents as Citizens)
FO non-use citizens Only a unified credit of $13,000 equivalent to a taxable estate of $60,000 is allowed. Although not confirmed by the IRS, the unused exemption or unused unified credits attributable to the first spouse to die (as outlined earlier) may be available to the surviving spouse.
The US subjects US citizen and US resident decedents (“US Decedents”) to estate taxon their worldwide assets. 3 In 2013, US Decedents are entitled to an estate taxexemption of $5,250,000 (as indexed for inflation) to reduce their taxable estates onwhich tax is imposed at graduated rates with a top tax rate of 40%. 4 However, the USonly exposes non-US resident and non-US citizen decedents (“Non-US Decedents”) toestate tax on their US situs property to the extent the combined value exceeds theapplicable $60,000 exemption equivalent (equal to a $13,000 unified credit), which isnot annually adjusted for inflation. 5 The estate tax exemption available to a Non-USdecedent may be increased through application of an estate tax treaty in force. Thatsaid, the total value of a decedent’s assets exceeding such applicable exemptionamount is subject to the same graduated rates as US Decedents.
SO, on the income tax front news is not terrible, you can file jointly in the year you sell, and can exclude 250 of the 500
But on the estate front, the form that you husband would have to file, if the US situs assets were still owned by him ... severely limits the exemption
NOw, here's what I'm seeing about GIFTS TO non-resident spouses:
Federal Gift Tax Rules for Noncitizen Spouses – No Marital Deduction In contrast to the unlimited gift tax marital deduction available to couples in which both spouses are U.S. citizens, there is no marital deduction for gifts to noncitizen spouses. Instead, Congress addressed the potential for imposition of significant gift tax on transfers to noncitizen spouses by increasing the gift tax annual exclusion amount for gifts to noncitizen spouses to $100,000, indexed for inflation pursuant to 26 U.S.C. Section 2503(b)(2). In 2012, the “super” annual exclusion amount is $139,000. Only a present interest gift, or the portion of a gift consisting of a present interest, qualifies for the exclusion
Generally, the marital deduction permits the deferral of estate tax at the firstspouse’s death, postponing it until the death of the surviving spouse. The rulesgoverning the application and method of qualifying for the marital deduction depend onthe citizenship of the surviving spouse, not the decedent.
so if he gifts me the house
there will be gift tax?
but in my case
the non citizen spouse is gifting it to me (a citizen spouse)
so would the marital deduction still apply in this case?
or GIFTS yes, now we're back to the expatriate tax rules
Which of the three time frames apply for you husband?
different sets of rules apply
i would have to look at the records
but i would imagine the second
maybe the 1st
it's the first
after june 16, 2008
OK before we delve into the rules for, note how the expstriate is defined:
The expatriation tax provisions under Internal Revenue Code (IRC) sections 877 and 877A apply to US citizens who have renounced their citizenship and long-term residents (as defined in IRC 877(e)) who have ended their US resident status for federal tax purposes.
this is the case
ok, next then
If you expatriated after June 16, 2008, the new IRC 877A expatriation rules apply to you if any of the following statements apply.
If any of these rules apply, you are a “covered expatriate.”
Still falling under the rules? (No personally identifying information please)
are you doing more research?
What I keep beng distracted by is the issue of the expatriate tax itself ... I can't get top the gifting issue, becauae of the huge amont od data out there on the issue of having to pay the exit tac itselfI keep running
DO you know if he has filed the 8864?
ON the gift itself, Should an expatriate make gifts or bequests back to U.S. beneficiaries, the IRS will assess the full gift and estate tax at the highest marginal rate and will not allow for any exemption other than the annual $13,000 gift tax exclusion (unless there is a separate treaty-based limitation that applies).
i'm pretty sure he didnt
so it is not advisable to gift his share of the house to me
is that correct?
because i may be hit with a gift tax issue since he is a non resident alien