passport

Could the wealthiest people in the U.S. really giving be giving up their citizenship to save money on taxes? Wealth Bulletin has a report that says that some wealthy Americans who live abroad are so determined to shed the yoke of American taxation that they are willing to surrender their U.S. passports. The U.S. tax laws require those living outside the U.S. to continue to pay taxes on worldwide income no matter where they live.

Those who do choose to leave will be subject to something known as the exit tax. The exit tax affects both US citizens who expatriate and long-term US permanent residents who give up their green cards which they have held for eight of the last 15 years. Those who qualify for the exit tax have a net worth of over $2 million and an average net U.S. income tax liability of greater than $139,000 for the five year period prior to expatriation. Those who want to leave pay a one-time tax on gains over $600,000. Isla Offshore Advisor has more of the salient details including the fact that the tax is due 90 days after giving up your citizenship. Right now, when just about everyone's net worth is lower it is seeming like an opportune time for many to take the leap.

Wealth Bulletin quotes Jay Krause, a partner at private-client specialist law firm Withers who says he's seen a rise in those interested in expatriation lately. This number may increase in the wake of a crackdown on clients of UBS AG. The Wall Street Journal reports that lawyers representing UBS clients think that the bank will reveal names associated with 5,000 to 10,000 accounts.

Wealth Bulletin paints a dramatic picture in which the ultra-wealthy elude possible taxes by staying on their yachts and cruising outside coastal waters. Just how many of these yacht-borne rich renegades are there? It is estimated that there could be a few thousand of them keeping trillions of dollars away from global tax authorities. Those who decide to pay the U.S. exit tax would then become former U.S. citizens and would be able to travel to the U.S. without facing more taxes. Around 90 people gave up their citizenship in the first half of 2009 so lets not call this a mass exodus yet.

[Thanks, Ben!]

Passport rules are changing on June 1 for Western Hemisphere travel. If you plan to travel outside the U.S. this year, get or renew your passport now, and think twice before planning a car trip to Mexico or Canada in June. That's because come next month (unless Congress changes the deadline), Americans will need to show a passport, a passport card, or other special document to return to the United States by land or sea from Mexico and Canada.

What do you need to do? Get reading, and get planning. According to an L.A. Times article pulled from Philly.com:

What you need now. Generally, you need a passport to enter the U.S. by air from any foreign country. If you enter by land or sea from Canada, Mexico, the Caribbean, or Bermuda, you may not need a passport, but you will need at least a birth certificate or other proof of citizenship, plus a government-issued photo ID, such as a driver's license. Children 18 or younger need only a birth certificate for land and sea entry from these areas.

What you'll need starting June 1. The same rules apply for air travel -- passport required. If you're arriving from Canada, Mexico, the Caribbean, or Bermuda by land or sea, you'll generally have several choices: a passport; a passport card; an enhanced driver's license; or a "Trusted Traveler" card such as SENTRI and NEXUS for frequent border-crossers. There will be exceptions for land and sea crossings from these destinations. U.S. and Canadian children younger than 16, for example, will need only proof of citizenship, such as a birth certificate; in organized groups, the cutoff will be age 18.

Passengers on cruise ships that sail round-trip from a U.S. port may need only a birth certificate and a government-issued photo ID (although the cruise line or foreign countries they visit may require a passport).

You'll find a summary of the current and new rules at a Web site maintained by U.S. Customs and Border Protection. The State Department's travel Web site is one-stop shopping for information on passports and passport cards. Click on "Passports for U.S. Citizens," and you can get instructions and forms.

I like the idea that this men's bag, the Haircalf Holdall by Bill Amberg, is designed for travel because it assigns an immediate use for the bag. There is no need to cast about for situations in which such an accessory might be appropriate.

A striking piece of craftsmanship, an adaptation of a 1930s style bag, it is made out of brown and ivory haircalf with a smooth, soft leather trim. It can hold just about everything you might want to access during a flight and will take up minimal room on the plane. The front pocket will fit a ticket or passport perfectly, and it's always helpful to keep track of those two items in particular when traveling. Price: $1,100.