Before applying for US Citizenship....think well

Marathadi-Saamiyaar wrote:


... But as more Americans are finding, ditching the U.S. can be an expensive affair. Earlier this year, the government increased the renunciation fee to $2,350, more than four times what it used to cost.  On top of that, some U.S. citizens are slapped with a giant "exit tax" bill -- sometimes millions of dollars -- when they renounce.

Kris wrote:

Marathadi-Saamiyaar wrote:


... But as more Americans are finding, ditching the U.S. can be an expensive affair. Earlier this year, the government increased the renunciation fee to $2,350, more than four times what it used to cost.  On top of that, some U.S. citizens are slapped with a giant "exit tax" bill -- sometimes millions of dollars -- when they renounce.

>>.On a somewhat related note, I need to look into any tax implications of the OCI. I don't want to be surprised by some clause that creates a tax liability in India on income abroad for an OCI holder. The US has the same law with regard to overseas income for its citizens, but I haven't had meaningful income in India, except for capital gains a couple of times. That pain is still fresh in my mind.

Marathadi-Saamiyaar wrote:

Kris wrote:

Marathadi-Saamiyaar wrote:


... But as more Americans are finding, ditching the U.S. can be an expensive affair. Earlier this year, the government increased the renunciation fee to $2,350, more than four times what it used to cost.  On top of that, some U.S. citizens are slapped with a giant "exit tax" bill -- sometimes millions of dollars -- when they renounce.

>>.On a somewhat related note, I need to look into any tax implications of the OCI. I don't want to be surprised by some clause that creates a tax liability in India on income abroad for an OCI holder. The US has the same law with regard to overseas income for its citizens, but I haven't had meaningful income in India, except for capital gains a couple of times. That pain is still fresh in my mind.

OCI for living, visiting, and even working is different from OCI filing Taxes. These Tax departments in any country is a fleeceful Mawari-style department.

I went through the OCI tax implciations for someone else's stupidity and there are deep implications after 3 years, when any investment/rental income you have is treated like that of any INDIAN. The catch is you are REQUIRED to list your worldwide investment, mutual funds, properties, etc... and then provide taxes paid elsewhere and take credit. Much like filing for multiple state taxes in US. I do that for years and I know the real pain in the butt. And, it will only be a LOT worse when you file for taxes in both US and India.

Because, shooting an email to Indian Revenue department wont just do it ...babyy... (You better know Rajan to smooth things out with the Tax Netas and Babus).

nevada wrote:Go back to India and write them a letter stating that you lied somewhere in your citizenship application. They will cancel your citizenship for free

smArtha wrote:IMO this cross-border revenue taxation based on the Entity's state of origin or residence is not right. Taxation has to be for the products, resources and services consumed from a Nation. If the business, sales and expenses of a business unit are in another country then that Nation where the resources are put to work and revenues are generated should get the taxes. Also, what is this stupid complexity of tax credits across borders. Once the source of revenue and resources used for fulfillment are determined they should be attributed to the right State and taxes paid at the prevailing rates and terms of that State. No other State should have any jurisdiction on any portion of it. The only reason US is able to get by with its cross-border laws is because most other countries are not enacting or enforcing reciprocal ones. If top 20-25 countries across EU, BRICS, APAC also make similar laws and start enforcement then the multi-national entities (individuals or businesses) will take this to International Courts for a more justified attribution.

Marathadi-Saamiyaar wrote:

nevada wrote:Go back to India and write them a letter stating that you lied somewhere in your citizenship application. They will cancel your citizenship for free

So ??? then they will put a hold on all your assets, investments - including retirement.  The way they "interpret" your renunciation is like you made all this income in one year - including withdrawing all your retirement funds and slap a Non-resident tax rates on this combined income assets. So expect to pay 33 to 40% of all your "accumulated worth.

There HAS to be a way out of this....being an Indian, I got to be smarter than an American. Will find some strategy and pass it to onto my "client"

Kris wrote:

smArtha wrote:IMO this cross-border revenue taxation based on the Entity's state of origin or residence is not right. Taxation has to be for the products, resources and services consumed from a Nation. If the business, sales and expenses of a business unit are in another country then that Nation where the resources are put to work and revenues are generated should get the taxes. Also, what is this stupid complexity of tax credits across borders. Once the source of revenue and resources used for fulfillment are determined they should be attributed to the right State and taxes paid at the prevailing rates and terms of that State. No other State should have any jurisdiction on any portion of it. The only reason US is able to get by with its cross-border laws is because most other countries are not enacting or enforcing reciprocal ones. If top 20-25 countries across EU, BRICS, APAC also make similar laws and start enforcement then the multi-national entities (individuals or businesses) will take this to International Courts for a more justified attribution.

>>>Agree. The convolution in the process itself makes your head reel. A few years ago, I had to amend my US return because I had capital gains in India, a good portion of which was sheltered in a rural electrification bond under the Indian rules. The US does not recognize that as a  shelter as it is not a like-property. I had to pay taxes on that amount in the US, which was a decent chunk. I asked my accountant here about how this makes sense: i.e. I invested my after-tax dollars in a foreign country and realize a gain on that and pay the applicable taxes in that country, which the US has a treaty with and yet, I have to pay taxes here as well. She actually got a little testy with me. Fast forward a couple of years, I sold a property in India and with the lesson learned decided to re-invest in a like asset.The US as a much shorter leash to reinvest. So, I had to rush with that in mind. The other confusion is you are taxed as though the income was in the same country, but the re-investment has to be in the same country. I have become a fatalist when ti comes to this and accept it now.

Marathadi-Saamiyaar wrote:

My dear Rich Iyer man - Check with your accountant.  When I read the income and investment taxes for OCIs from Indian sources, I was flabbergasted.  I dont recall the details, but after 3 years, the OCI filers fall under a different category -and after ten continuous years you need to transfer your investment to India or some such shyt.

Also, if people think they will settle in India after giving up their US citizenship on retirement, they are in for a DEEP shock. If you are just a GC holder and think you will continue forever with a GC but live in India with your "retirement funds" the Indian govt will come after you in addition to the US. Any which way you see, you are all screwed.

One way - you can gift upto $5 mil each to each kid assuming they are citizens, become a pauper, THEN relinquish US citizenship. But why O why ?

Another possibility is consider buying property in your childrens names. If you have in your name, then try to gift it to them.

I tell ya... this entire powerful, fake industry is a very interesting one.  

If you are a middle class guy, you are screwed even if you decide to go on a one-way mission to Mars.

Kris wrote:

smArtha wrote:IMO this cross-border revenue taxation based on the Entity's state of origin or residence is not right. Taxation has to be for the products, resources and services consumed from a Nation. If the business, sales and expenses of a business unit are in another country then that Nation where the resources are put to work and revenues are generated should get the taxes. Also, what is this stupid complexity of tax credits across borders. Once the source of revenue and resources used for fulfillment are determined they should be attributed to the right State and taxes paid at the prevailing rates and terms of that State. No other State should have any jurisdiction on any portion of it. The only reason US is able to get by with its cross-border laws is because most other countries are not enacting or enforcing reciprocal ones. If top 20-25 countries across EU, BRICS, APAC also make similar laws and start enforcement then the multi-national entities (individuals or businesses) will take this to International Courts for a more justified attribution.

>>>Agree. The convolution in the process itself makes your head reel. A few years ago, I had to amend my US return because I had capital gains in India, a good portion of which was sheltered in a rural electrification bond under the Indian rules. The US does not recognize that as a  shelter as it is not a like-property. I had to pay taxes on that amount in the US, which was a decent chunk. I asked my accountant here about how this makes sense: i.e. I invested my after-tax dollars in a foreign country and realize a gain on that and pay the applicable taxes in that country, which the US has a treaty with and yet, I have to pay taxes here as well. She actually got a little testy with me. Fast forward a couple of years, I sold a property in India and with the lesson learned decided to re-invest in a like asset.The US as a much shorter leash to reinvest. So, I had to rush with that in mind. The other confusion is you are taxed as though the income was in the same country, but the re-investment has to be in the same country. I have become a fatalist when ti comes to this and accept it now.