US Citizenship and Taxes

[Gemma12nel 1]

I was reading the thread about Citizenship V Permanent resident and saw the tax issue, here is what I have which was from the Union jack news about it:

Greencard holders who are married to US citizens, should be aware for tax liabilities not often discussed with respect to their "status" in the US. What I am specifically talking about are the estate taxes that a greencard holder will have to pay if the US citizen dies. Shockingly a greencard holder can be taxed up to 55 percent on the estate left by their deceased spouse!

Unfortunately a greencard holder who survives her US citizen spouse is not afforded the marital deduction which US citizens can use to avoid estate tax upon the death of their spouse when their estate is valued at less than $1m. This tax year (2005) the marital deduction will be allowed for estates valued at under $1.5m in 2006-2008 the deduction will be allowed for estates valued at under $2m in 2009. It will be $3.5m in 2010 there will be no maximum amount. That is in 2010 US citizens can leave $100m or more and no tax will be levied upon their us citizen spouse. In 2011 the deduction will be allowed only for estates valued at less than $1m. These benefits are not avaliable to surviving green card holders.

Nevertheless thre are a couple of things you can do now to avaoid this unfair situation later. The first thing you can do is become a us citizen. Us citizens can leave their estate to their us citizen spouse and the spouse(because she is a us citizen. will not face the prospect of having to pay estate taxes so long as the estate is valued under the designated amount for the year. Further it does no matter if the deceased spouse is a us citizen only the citizenship of the surviving spouse is pertinent for marital deduction and estate tax purposes.

Another option(if you do not want to be a us citizen) is to creat a qualified domestic order trust, which allows the surviving spouse to delay her tax liability payments until her death.

For fellow brits out there you will not lose your british citizenship when you become a us citizen. The above information is general in nature and should not be taken as legal advice Please consult a attorney with specific questions.

As I said before this was in last years union jack, and is not my advice just a article I read. Things could have changed, but its worth reading and asking your own questions.

In my case I consulted a lawyer!

Edited February 10, 2006 by Gemma12nel

[zyggy 9]

I was reading the thread about Citzenship V Permanent resident and saw the tax issue, here is what I have which was from the Union jack news about it:

Greencard holders who are married to US citizens, should be aware for tax liabilities not often discussed with respect to their "status" in the US. What I am specifically talking about are the estate taxes that a greencard holder will have to pay if the US citizen dies. Shockingly a greencard holder can be taxed up to 55 percent on the estate left by their deceased spouse!

Unfortunately a greencard holder who survives her US citizen spouse is not afforded the marital deduction which US citizens can use to avoid estate tax upon the death of their spouse when their estate is valued at less than $1m. This tax year (2005) the marital deduction will be allowed for estates valued at under $1.5m in 2006-2008 the deduction will be allowed for estates valued at under $2m in 2009. It will be $3.5m in 2010 there will be no maximum amount. That is in 2010 US citizens can leave $100m or more and no tax will be levied upon their us citizen spouse. In 2011 the deduction will be allowed only for estates valued at less than $1m. These benefits are not avaliable to surviving green card holders.

Nevertheless thre are a couple of things you can do now to avaoid this unfair situation later. The first thing you can do is become a us citizen. Us citizens can leave their estate to their us citizen spouse and the spouse(because she is a us citizen. will not face the prospect of having to pay estate taxes so long as the estate is valued under the designated amount for the year. Further it does no matter if the deceased spouse is a us citizen only the citizenship of the surviving spouse is pertinent for marital deduction and estate tax purposes.

Another option(if you do not want to be a us citizen) is to creat a qualified domestic order trust, which allows the surviving spouse to delay her tax liability payments until her death.

For fellow brits out there you will not lose your british citizenship when you become a us citizen. The above information is general in nature and should not be taken as legal advice Please consult a attorney with specific questions.

As I said before this was in last years union jack, and is not my advice just a article I read. Things could have changed, but its worth reading and asking your own questions.

In my case I consulted a lawyer!

Still the same... and it was the main reason why a friend of mine naturalized after being a PR for 25 years. She was a Canadian and also did not lose her citizenship by naturalizing

Edited February 10, 2006 by zyggy

[Boiler 43,667]

Not wishing to be mean, but all of this has been mentioned many times before. Perhaps we need a sticky.

[Gemma12nel 1]

who how what why??? how do we make it a sticky?

[cmartyn 0]

Only admins can make stickys..

To avoid this ####### in its entirety. Own everything jointly. That way, when hubby kicks over, you allready own everything and there is no tax on what you allready own.

Of course, The evil 401K plans and other various ways for the govt to scam estate taxes from the middle class do go into probate and have estate tax implications. No getting around that AFAIK.

[Boiler 43,667]

Life Insurance is a solution.