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Old 07.01.2016, 18:05
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Swiss Citizen considering US Citizenship - pro's / con's / experience

Hi There,


I thought I'd see if the collective wisdom of this forum has a few bullet points I might not have thought about.


I am a Swiss citizen and current US resident. As of this months I am eligible for the naturalization process in the US and I am considering this.


Both my children have dual citizenship and my wife is American. My thinking is that it would benefit me more so than not, as we could consider traveling to and from the US and live in Switzerland with out worrying about 'I-130' or giving up the green card.

I am not a top earner, so the dual taxation does not concern me as much, we always file US taxes when in Switzerland so that's a given.


The one thing that does give me pause is what would happen should my parents pass away, I would inherit a house and monetary amounts that are "not" insignificant to me. These items would be in Switzerland however, so I am wondering if there would be any US Tax claim on that.


Thanks for you time,
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Old 07.01.2016, 18:32
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Re: Swiss Citizen considering US Citizenship - pro's / con's / experience

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Hi There,

The one thing that does give me pause is what would happen should my parents pass away, I would inherit a house and monetary amounts that are "not" insignificant to me. These items would be in Switzerland however, so I am wondering if there would be any US Tax claim on that.

Thanks for you time,
The US Federal government has an estate tax due on estates with a value exceeding about $5.5 million in assets. Most US states also have estate taxes, due on the estate value mostly above the same threshold. Some US states, however, have inheritance tax for which the heirs are liable (i.e., not the estate). Assuming your parents' estate is in Switzerland (and, for example, does not have US securities), the US Federal government would not tax the estate. If you live in a state with an inheritance tax (but not an estate tax), you possibly could have an inheritance tax liability.

"Foreign Inheritance The Internal Revenue Service collects estate tax on property or money you might transfer upon your death. However, the IRS does not levy estate tax on inheritance that comes from foreign soil. Before you get excited, though, some states do. If you are the recipient of a foreign inheritance, even though federal taxes arenít applicable in most cases, you are obliged to report it on your federal tax return. To be sure of your state's requirements, check with your accountant."


http://budgeting.thenest.com/can-out...xed-33825.html
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Old 07.01.2016, 18:39
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Re: Swiss Citizen considering US Citizenship - pro's / con's / experience

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Hi There,

I thought I'd see if the collective wisdom of this forum has a few bullet points I might not have thought about.

I am a Swiss citizen and current US resident. As of this months I am eligible for the naturalization process in the US and I am considering this.

Both my children have dual citizenship and my wife is American. My thinking is that it would benefit me more so than not, as we could consider traveling to and from the US and live in Switzerland with out worrying about 'I-130' or giving up the green card.

I am not a top earner, so the dual taxation does not concern me as much, we always file US taxes when in Switzerland so that's a given.

The one thing that does give me pause is what would happen should my parents pass away, I would inherit a house and monetary amounts that are "not" insignificant to me. These items would be in Switzerland however, so I am wondering if there would be any US Tax claim on that.

Thanks for you time,
I am not familiar with the specifics of U.S. estate tax, however, generally speaking, for individual income tax purposes, there is no difference between a permanent resident (green card holder) and a U.S. citizen. So the tax treatment should not influence/has no bearing on your decision, because in the eyes of the IRS you are treated the same whether you are a citizen or a GC holder (barring anything specific/different on estate tax).

I would do it specifically to avoid the hassle of having to reside in the US not to lose your green card. I plan to naturalize as soon as I qualify - I am happy to live in the US but, should I go back to Europe temporarily or permanently in the future, I don't want any issue re. coming back.
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Old 08.01.2016, 20:38
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Re: Swiss Citizen considering US Citizenship - pro's / con's / experience

Thank you guys, really appreciate the input.


I agree with you BokerTov, the hassle and intimidation in secondary inspection is sometimes just a bit too much to bear. Even if you are doing everything right and are fully legal in every which way. It still can happen that you get selected and barraged with questions.
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Old 08.01.2016, 20:51
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Re: Swiss Citizen considering US Citizenship - pro's / con's / experience

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Thank you guys, really appreciate the input.


I agree with you BokerTov, the hassle and intimidation in secondary inspection is sometimes just a bit too much to bear. Even if you are doing everything right and are fully legal in every which way. It still can happen that you get selected and barraged with questions.
The barrage of questions is mainly for those on non-immigrant visas and not for permanent resident card holders.
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Old 09.01.2016, 15:34
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Re: Swiss Citizen considering US Citizenship - pro's / con's / experience

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The US Federal government has an estate tax due on estates with a value exceeding about $5.5 million in assets. ...
The tax rules -- especially estate, gift and inheritance taxes -- with respect to alien spouses are complex and traps for the unwary. See, for example: http://blogs.wsj.com/expat/2014/11/1...alien-spouses/

If the American spouse is wealthy then there are several considerations relating both to estate tax (federal and some states -- and the UK even though they call their's an IHT) and inheritance tax (some US states and most European civil-law countries). Germany and (according to one posting in this thread, I haven't myself looked) one or more US states tax incoming inheritances and gifts. The trap for the unwary there is that if there is conflicting characterisation ("qualification") as, for example where a trust (not, in law, an entity but seen as such in some legal systems), there can be double taxation. Form 3520 is the key one (aside from 706) in the event of a decedent estate where a gift or bequest is received from an alien. The penalties for failure to file are draconian.

Think also of #PFIC (relates to foreign pensions and investments), #FBAR (foreign accounts), #FATCA and the rest of the alphabet soup relating to American expats, foreign-resident green-card holders, and owners and recipients of foreign assets.

But most of that relates to citizens and resident (and former resident) aliens too.

And think of community property and the marital regime applicable to you under Swiss law. You might find this (old) memo formerly handed out by the Swiss Embassy in Washington useful: http://uniset.ca/misc/swissestates.pdf

The advice given must depend on issues and questions that are difficult to address now, but I have to state them:

(1) the stability of your marriage. The boss of one of my daughters, when she worked for an investment bank in Paris, had a green card on the basis of his marriage to an American. After 9 years, with a divorce under way, he cancelled his green card. http://www.immihelp.com/forms/i407-a...ent-status.pdf This meant that he was no longer liable for US taxes ("US Person") and because he'd held the status for less than ten years was not subject to expatriation tax.

(2) prospects for inheritance from abroad. This, unfortunately, has to be dealt with long before the alien obtains US resident status.

(3) wealth and the prospects that, upon emigration, one could be a "covered expatriate". Essentially, more than $2 million in assets.

(4) your expectation for future residence. If you are going to spend the rest of your life in the United States then there is hardly any reason not to naturalise.

(5) if, by chance, although being Swiss you were born in a "denied" or "suspect" country (could happen: children of diplomats, missionaries, business representatives...) such as Syria, Iraq, Afghanistan then naturalisation is doubly advisable. Yes, your Swiss passport won't show that, but other ID will.

Hope that helps.
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Old 09.01.2016, 15:43
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Re: Swiss Citizen considering US Citizenship - pro's / con's / experience

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The one thing that does give me pause is what would happen should my parents pass away, I would inherit a house and monetary amounts that are "not" insignificant to me. These items would be in Switzerland however, so I am wondering if there would be any US Tax claim on that.
I did answer that if only by implication, and another posting mentions Form 3520 as well. See the "Swiss Estates" document I linked to and be aware there are reporting requirements -- with draconian penalties for errors and omissions -- but probably no tax beyond whatever the relevant canton assesses.

Swiss wealth tax and income tax on "imputed rental income" would be charged to you by the Swiss federal, canton and commune authorities. The wealth tax portion is not creditable against US federal or state income tax.

Because I know more about divorce and bankruptcy of clients than I would like to, I should mention that even the expectation of inheritance can be an issue when they happen.
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Old 14.01.2016, 00:12
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Re: Swiss Citizen considering US Citizenship - pro's / con's / experience

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I am not familiar with the specifics of U.S. estate tax, however, generally speaking, for individual income tax purposes, there is no difference between a permanent resident (green card holder) and a U.S. citizen. So the tax treatment should not influence/has no bearing on your decision, because in the eyes of the IRS you are treated the same whether you are a citizen or a GC holder (barring anything specific/different on estate tax).

I would do it specifically to avoid the hassle of having to reside in the US not to lose your green card. I plan to naturalize as soon as I qualify - I am happy to live in the US but, should I go back to Europe temporarily or permanently in the future, I don't want any issue re. coming back.
BokerTov is absolutely right. Anything you are would be taxed as a citizen you would be taxed anyhow as a green card holder. So maybe you do want to lose the green card after all.
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