From neomimsy!cs.umd.edu!skates.gsfc.nasa.gov!ukma!eng.ufl.edu!spool.mu.edu!howland.reston.ans.net!europa.eng.gtefsd.com!uunet!decwrl!pa.dec.com!nntpd2.cxo.dec.com!nntpd.lkg.dec.com!cfsctc.enet.dec.com!patil Wed Aug 25 17:12:53 EDT 1993 In article <25g3ma$jpb@news.ysu.edu>, ah301@yfn.ysu.edu (Jerry Sy) writes... >a few other issues I'm not sure myself. >Can a resident collect unemployement benefits, food stamps, medicaid,etc ? Unemployement yes. Don't know about others. >Do residents collect Social Security checks during retirement ? I believe the answer is yes. U.S. citizens can have their SS checks mailed to other countries (if they chose to live there upon retirement) but I think residents will have difficulty doing so. >Do residents pay different taxes for owning property (house, building) ? Attached is an old article about estate tax laws in this regard. >Is there any difference between a Resident and Citizen in setting up and > operating a business ? (such as IRS rules, federal/state/local laws etc) -------------------------------Old article attached--------------------------- From: resmith@psivax.UUCP (Robert E Smith Jr.) Newsgroups: misc.taxes Subject: Resident alien married to US citizen: Estate taxes Message-ID: <2929@psivax.UUCP> Date: 10 Nov 89 23:46:39 GMT Reply-To: resmith@psivax.UUCP (Robert E Smith Jr.) Distribution: misc.taxes Organization: Pacesetter Systems Inc., Sylmar, CA Lines: 73 I read a column in the L.A. Times (11/9/89) which alerted me to a law enacted in Nov 1988 as part of the "Technical and Miscellaneous Revenue Act" (TAMRA) which will have a profound impact on the estate planning of anyone married to a resident alien. Upon the demise of the first spouse, a federal tax return must be filed. If both spouses are U.S. citizens, a $600,000 deduction is allowed to reduce (or, in most cases, wipe out) the taxable amount of the estate left to the surviving spouse. However, this new law does not allow the deduction if the surviving spouse is a resident alien. This would result in a substantial tax liability. The columnist speculated that the justification for the law is to prevent the surviving spouse (a non-citizen) from leaving the country with the money derived from the estate. Apparently, the government collects its due when the second spouse dies. If the second spouse does not die here, the government misses out on collecting the tax. Naturally, there is a loophole. If something called a QDOT (qualified domestic trust) is set up to receive the non-citizen's interest (i.e., the "gift"), the tax can be avoided. The essential requirement is that the proceeds of the estate will be controlled to some extent by a U.S. citizen. Actually, there is one other loophole -- the resident alien can become a citizen. This, for some reason, is not an attractive alternative for some, especially those who are British subjects. Since I have a personal interest in this situation (my wife is a resident alien with British citizenship), several questions and observations come to mind: (1) Can anybody tell me more about these QDOTs? How much would one cost to set up? What sort of restrictions would be placed on the surviving spouse (it seems like a lot of control is given to a trustee, rather than the rightful heir)? Is there any latitude as to who the trustee can be (e.g., a family member who is a U.S. citizen would be a better option than an impersonal bank trustee, IMHO). (2) Is there any chance that this law can be revoked or changed? I know my wife has to get clearance from the IRS whenever she wants to travel abroad. She must show proof that her current witholding is adequate to cover her tax liability for the year. I feel that a reasonable approach would be to assess the tax at the time of departure, rather than causing a headache for the thousands of resident aliens who have no intention of ever moving back to their native land (but then, who ever said the federal government was reasonable?). (3) What happens when a U.S. citizen decides to emigrate, say, after his spouse (also a citizen) dies? How is this situation different from the resident alien leaving? (4) What rules apply to a married couple who are both resident aliens? A case in point is my in-laws, who came to this country for a better opportunity than they could expect in Great Britain, so have no incen- tive to return. (5) Was this law written by lawyers who are just trying to find new ways to get people into their offices? As you can see, I need to resolve this problem before I die (not soon, I hope! :-) If you know anything about this, please let me know. (Since this is apt to apply to a great number of net users, I think posting is appropriate.) Thanks a lot! Bob Smith -- Robert Smith Pacesetter Systems Inc., A Siemens Company {ttidca|hacgate|nrcvax|jplpro|hoptoad|csun|quad1|harvard| uunet|rdlvax|ashtate|siemens|cetacea|otto}!psivax!resmith Internet: resmith@psi.siemens.com ----------------------------edn of old article attached------------------------- ----------------------------------------- Avinash Patil CASE Tools Integration Digital Equipment Corp. Acton, MA UUCP: decwrl!cfsctc.enet!patil INTERNET: patil@cfsctc.enet.dec.com --------------------------------------------