Hi,
I'm a Canadian citizen, and have been working in the US for a few years on a green card. I'm thinking about moving back in the medium term - probably after hitting the eight year mark on my green card - so I've started looking into the US exit tax. There are a few details that weren't completely clear to me when it comes to being a covered expatriate:
1) For the five year average tax liability test: is this only federal taxes, or does it include state and local taxes?
2) For the 2 million net worth test: does this include the fair market value of RSUs that have not vested yet? For context, my employer grants me RSUs every year that gradually vest over the following four years. It's a fairly big portion of my compensation, and I'm worried it would push me over the threshold even though it's not really money that I have on hand yet per se.
Thanks!
US exit tax question about covered expatriate criteria
Moderator: Mark T Serbinski CA CPA
Re: US exit tax question about covered expatriate criteria
>I'm thinking about moving back in the medium term - probably after hitting the eight year mark on my green card -
The exit tax only applies to long term permanent residents. Which means eight tax years out of the last 15. So you might want to cut things a bit short of eight year?
> 1) For the five year average tax liability test: is this only federal taxes, or does it include state and local taxes?
Only federal.
> 2) For the 2 million net worth test: does this include the fair market
> value of RSUs that have not vested yet? For context, my employer grants me
> RSUs every year that gradually vest over the following four years. It's a
> fairly big portion of my compensation, and I'm worried it would push me
> over the threshold even though it's not really money that I have on hand
> yet per se.
AFAIK the FMV of your RSU"s get rolled into your network. Which is of course annoying as they get taxed when you actually get them so you will never actually see that money.
The exit tax only applies to long term permanent residents. Which means eight tax years out of the last 15. So you might want to cut things a bit short of eight year?
> 1) For the five year average tax liability test: is this only federal taxes, or does it include state and local taxes?
Only federal.
> 2) For the 2 million net worth test: does this include the fair market
> value of RSUs that have not vested yet? For context, my employer grants me
> RSUs every year that gradually vest over the following four years. It's a
> fairly big portion of my compensation, and I'm worried it would push me
> over the threshold even though it's not really money that I have on hand
> yet per se.
AFAIK the FMV of your RSU"s get rolled into your network. Which is of course annoying as they get taxed when you actually get them so you will never actually see that money.