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Subject Author Date
401K Distributions Overseas Billy 03-12-2008
Posted by Billy on March 12, 2008, 9:59 pm
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 If a US Citizen emigrates to another country and then redeems his 401K's,
does the person have a US Tax liability then?

tks all

bw

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Posted by Rich Carreiro on March 12, 2008, 10:30 pm
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> If a US Citizen emigrates to another country and then redeems his 401K's,
> does the person have a US Tax liability then?

Yes, since an emigre who retains his US citizenship is taxed
just like a US citizen back at home -- all US citizens are taxed
on worldwide income regardless of where they reside (though emigres
do have the foreign earned income exclusion).

--
Rich Carreiro rlc-news@rlcarr.com

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
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Posted by L K Williams on March 13, 2008, 8:30 am
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wrote:

>
>> If a US Citizen emigrates to another country and then redeems his 401K's,
>> does the person have a US Tax liability then?
>
>Yes, since an emigre who retains his US citizenship is taxed
>just like a US citizen back at home -- all US citizens are taxed
>on worldwide income regardless of where they reside (though emigres
>do have the foreign earned income exclusion).
>
>--
>Rich Carreiro rlc-news@rlcarr.com
I'm not sure if you meant it this way but you imply that the 401(K)
would come under the exclusion. As it is not "earned" income,
however, it is not subject to the exclusion. Earned income means
income paid within a year of the year in which it is earned.
Retirement plan distributions, including 401(K), apply to all years
worked and don't meet this requirement.

Lanny K. Williams, CPA
Nawarat, Williams & Co., Ltd.
Income Tax Services for Expatriate Americans

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Billy on March 13, 2008, 10:30 am
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>
>> If a US Citizen emigrates to another country and then redeems his 401K's,
>> does the person have a US Tax liability then?
>
> Yes, since an emigre who retains his US citizenship is taxed
> just like a US citizen back at home -- all US citizens are taxed
> on worldwide income regardless of where they reside (though emigres
> do have the foreign earned income exclusion).
>
> --
> Rich Carreiro rlc-news@rlcarr.com
>
> --Sorry wasn't clear enough, if the previous US citizen is now a citizen
> of another country, what is tax status on 401K distributions?

tks all

bw

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

Posted by Ira Smilovitz on March 13, 2008, 12:42 pm
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>
>>
>>> If a US Citizen emigrates to another country and then redeems his
>>> 401K's,
>>> does the person have a US Tax liability then?
>>
>> Yes, since an emigre who retains his US citizenship is taxed
>> just like a US citizen back at home -- all US citizens are taxed
>> on worldwide income regardless of where they reside (though emigres
>> do have the foreign earned income exclusion).
>>
>> --
>> Rich Carreiro rlc-news@rlcarr.com
>>
>> --Sorry wasn't clear enough, if the previous US citizen is now a citizen
>> of another country, what is tax status on 401K distributions?
>
> tks all
>
> bw

Becoming a citizen of another country does not terminate your US
citizenship. You need to take affirmative actions to relinquish your US
citizenship. Until you do so (and perhaps for several years afterwards) you
are still subject to all US income tax laws.

Ira Smilovitz

--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2007) - All rights reserved. >>
<< ------------------------------------------------------- >>

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