Covered expatriate income tax

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Fug1
Posts: 24
Joined: Sun Mar 09, 2014 12:00 pm

Covered expatriate income tax

Post by Fug1 » Wed Jun 12, 2019 9:01 pm

I'm a Canadian citizen who has been living in the USA for a few years on a green card. I'm planning to move back to Canada and would be giving up my green card. I'm considered a long term resident in the USA (I've had my green card for more than 8 years).

Per the instructions for Form 8854 (https://www.irs.gov/pub/irs-pdf/i8854.pdf) there are 3 test to determine if you're a "covered expatriate" and therefore subject to USA exit tax.

The first test is related to income tax. "Your average annual net income tax liability for the 5 tax years ending before the date of expatriation is more than the amount listed next." Are these amounts related to income or income tax? My average income is higher than this amount for the last 5 years, but the average annual income tax I owed to the IRS for the last 5 years is lower.

Thank you!

exPenn
Posts: 99
Joined: Tue Aug 20, 2013 3:06 pm
Location: GTA

Re: Covered expatriate income tax

Post by exPenn » Thu Jun 13, 2019 12:19 pm

As stated in the instructions, it is income TAX, not income.

Fug1
Posts: 24
Joined: Sun Mar 09, 2014 12:00 pm

Re: Covered expatriate income tax

Post by Fug1 » Thu Jun 13, 2019 9:12 pm

Thank you. I thought that was the case...the idea of being a covered expatriate is so frightening that I'm second guessing myself.

expat61
Posts: 13
Joined: Tue May 08, 2018 7:00 pm

Re: Covered expatriate income tax

Post by expat61 » Sun Jun 16, 2019 8:49 pm

Hint : use line 56 from your previous five year form 1040's

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