US Passport Holders-Beware
There was an interesting article in one of the Swiss local newspapers, Le Matin, on 11 December discussing a case of a Swiss citizen who faces a US tax bill of USD 145’000 for taxes (USD 105’000) and penalties/interest (USD 40’000) as a result of filing late his US tax declarations. The individual was born on US soil and spent only one month there before moving to Switzerland permanently. As a result of being born in the US he was granted a US passport, something that many individuals would pay considerable money for, but in his case ended up being a poisoned chalice. The individual did not realise that even as a non US resident without even a US social security number he was obliged to complete a US tax return when his worldwide earnings exceeded USD 86,600 per annum (current US exemption limit) and pay any extra taxes due to the US if applicable. This only came to light once he began the process of renouncing his US passport. This rule also applies to any US Green card holders who are not living in the US! So next time you see there is a public draw to win a Green card, think twice before you enter as it can bring potential unforeseen obligations!
Article taken from Capital Consulting's newsletter, Taxing Issues