The Joint Committee on Taxation’s Technical Explanation of the exit tax is here as a PDF. Actually, the part you’re interested in starts on Page 36, so skip the rest of it.
I’ll give you a plain text excerpt shortly, plus the text of new Section 877A (the part of the Internal Revenue Code that imposes the exit tax when you give up your U.S. passport or green card). And I’ll do a boil-down Babelfish translation of tax jargon to English. But for now, read this turgid prose straight from Congressional staffers and Treasury Department ghostwriters.
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Phil, we found out about this a week after it was signed, by pure chance. It set off a firestorm of life re-planning in our household. We are baffled by this:
If you’re a married couple - one relinquishing green card, the other retaining US citizenship forever - will they divide assets etc between you BEFORE they run the calculations on you? Does filing jointly for years, or living in community property state like Calif, affect this? (and how the heck do they calculate net worth?)
It seems scary that there is little or no public awareness of this. It will be a big deal for folks here in Silicon Valley - many, many fairly ordinary households and plans will be affected by it. Only rich folks with expensive corporately-funded services will be warned and counseled far enough in advance. When we mention it to friends, their response is - huh? (dumb comment, I guess. Same answer as when you mention those treasury forms)
Good blog, just discovered you…
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