Hello ALTA members:
I wanted to share with you a case we had a few months ago.
A "prominent" Italian national married for over 5 years to a U.S. citizen received his Permanent Resident Card while in Italy, they both lived in Europe until he retired, for those 5 years they filed "Married Filing Separate" tax returns, because he did not want to include all his financial assets on a Married Filing Jointly U.S. tax return, he included only a few dollars in interest from a bank account he owned here in the U.S.
His CPA filed a Nonresident return because even when he had a "green card" he never set foot in the U.S. after receiving it since he wanted to sell properties in Italy and cash on a few investment accounts to make his "life in the U.S. easier taxwise", "very well planned", however, when they sold their property in the U.S. to downsize, the wife mentioned he had not been in the U.S. since getting his green card and they filed separate returns.
The title person reached out to us to consul the case, we ran his transcripts… well, needless to say, he was subject to FIRPTA and was NOT happy to send almost $150,000 to the IRS AND pay taxes on capital gains on his allocated share of the house, you can't have it both ways, you cannot plan NOT to be treated as a U.S. tax resident and then want the benefits of a U.S. citizen/tax resident.
This is why we think is important to verify the tax residency status when seller's do not present a U.S. passport or birth certificate, sometimes, even with a green card you must make sure the TP is complying with the U.S. tax laws to protect the buyer(s) and agent(s) involved in the transaction.
Any thoughts on this one, again, it may be more a tax matter, but it became a title matter....
If you have any questions, please call us 281 578-1040 send us an email [email protected] we will be glad to assist you and make FIRPTA easy for you!
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Mary Enzi
Tax Solutions – FIRPTA Consulting
Barker TX
+1 (281) 578-1040
[email protected]------------------------------