Expat Forum For People Moving Overseas And Living Abroad banner

1 - 4 of 4 Posts

·
Registered
Joined
·
19 Posts
Discussion Starter · #1 ·
Hi,

Finally, I am at the last stage of the Green Card abandonment process, filing Form 8854 for the next year.

I have a question in regards to Life Insurance where to write down its FMV in Part V Balance Sheet.

I am one of beneficiaries on my mother's life insurance in case of her death next 15 years. But my mother has never filed any documentation about my residency in USA.

My status:
I 407 filed i Feb 2017.
The total of my assests are under 600K. I read somewhere that it is better to be less than 500K if possible. (I don't know the reason).
LTR (long term residence) Green Card
Non covered Expat

I will probably have more questions....

Thanks!!!
 

·
Registered
Joined
·
340 Posts
I have a question in regards to Life Insurance where to write down its FMV in Part V Balance Sheet.
Life Insurance doesn't really fit in unambiguously anywhere, does it? In notice 2009-85 the IRS referenced a bunch of excruciating detail on how to calculate the value of a life insurance policy, but nothing there or ever since about how to report it.

If you feel that you must report it -- and see below for perhaps why not -- maybe use line 19 (Other Assets) and add a one-line 'statement' describing this as a Life Insurance policy, with no further detail.

I am one of beneficiaries on my mother's life insurance in case of her death next 15 years. But my mother has never filed any documentation about my residency in USA.
Given that this is your mother's and not (yet?) yours, I'd say this means you don't have to report that at all on the 8854. A thing is not an asset until you own it. And you may never own this one -- a simple change of beneficiaries, for example. No different to being named in someone's will while that someone is still living.

(Personally I would also consider this to be none of the IRS's business. The major point of manoeuvring oneself free of the jackboot of the IRS is to no longer have to deal with nonsense such as this.)

The total of my assests are under 600K. I read somewhere that it is better to be less than 500K if possible.
There's nothing really magical about either of the figures you give here. When the execrable 'exit tax' was introduced in 2008, covered expats were allowed an allowance of $600k before any exit tax became due. And before 2008 the IRS definition of 'rich' -- that is, liable to expatriation tax rules -- was total assets of $500k. Perhaps this is where you got these figures from.

In any case, since 2008 the trigger point for the 'exit tax' is $2mm total assets owned. You say your assets are well below this, indeed below $600k. In which case provided you have filed all your US taxes for the past five years and that your average US tax liability over that period is less than $161k (you wish!), you are a long way from being a covered expat, and so in that sense it really doesn't matter what you include (or exclude) on the 8854 balance sheet.

TL;DR -- providing you duck well under $2mm in all circumstances, nearly all the detail of what you write on the 8854 balance sheet is completely immaterial.
 

·
Administrator
Joined
·
50,461 Posts
Just a note here - it can depend on whether you're talking about "life insurance" as we know it in the anglophone world, or "assurance vie" which translates as "life insurance" but is actually a form of investment. But, as said, if you are merely the named beneficiary of your mother's life insurance (or assurance vie) it wouldn't be considered part of your assets, and thus would not need to be reported.
Cheers,
Bev
 
1 - 4 of 4 Posts
Top