FATCA tax rules could affect green card expats in the US

FATCA tax rules could affect green card expats in the US
Published:  7 Dec at 9 AM
Expats living and working in the US may face having to surrender their green cards if they want to avoid having to pay tax under new rules being introduced under the Foreign Accounts Tax Compliance Act. The controversial system requires taxpayers in the US to reveal every detail about overseas earnings and investments to the Internal Revenue Service.

Expats who hold green cards are subject to the FATCA tax rules which include having to declare investments, savings and bank accounts held in the country they moved from. Those who do decide to give up their green cards are likely to be charged an exit tax by the IRS as they are giving up US tax residency.

The amount of tax they will have to pay will depend on their net worth. Time limits are attached to green cards and the level of tax a person moving to the US is required to pay could change if the green card is issued in a new tax year.

However separate legislation could help expats who moved to the US after 17 June 2008. The rules state that any foreign property is deemed to have been disposed prior to leaving. Reporting by the FATC is due to begin in 2014.

Before then most countries are expected to try and negotiate treaties on behalf of residents leaving to settle in the US.