topic Re: Interrupted Period of Residence Special Tax Rule in Get your taxes done using TurboTax

Interrupted Period of Residence Special Tax Rule

taoj — Tue, 24 Feb 2026 07:50:53 GMT

In Pub 519 https://www.irs.gov/pub/irs-pdf/p519.pdf under section Interrupted Period of Residence, there is a special rule to "tax on your U.S. source gross income and gains on a net basis at the graduated rates applicable to individuals". When I try to see what this means and how to calculate this, it says "For information on how to figure the special tax, see Expatriation Tax, later." which is not helpful because Expatriation Tax does not seem relate to this at all.

I am guessing it's about some US income such as capital gain that will be taxed as ordinary income under nonresident alien tax bracket (as single filer or married filing separately since non resident is not allowed for joint filing), but I am not sure. I know this may be a very specific situation, but has someone come across this before?

Re: Interrupted Period of Residence Special Tax Rule

Anonymous_ — Tue, 10 Oct 2023 15:42:25 GMT

See if @pk has any input.

The expatriation tax is a MTM (mark-to-market) type tax where U.S. citizens who renounce their citizenship and long-term residents who end their residency are treated as if their assets were sold and then are taxed on unrealized gains.

Re: Interrupted Period of Residence Special Tax Rule

pk — Tue, 10 Oct 2023 21:18:54 GMT

@taoj , my understanding of this s" special rule " and for re-patriation of citizens and Green Card holders is that instead of treating these persons as pure Non-Resident Aliens under section 871, there si the possibility of treating them under section 877 A unless 871 yields more taxes due. and considering tac treaty benefits . I am not very clear as to benefit of this special rule. However, I suggest the taxpayer ( whom had given up US citizenship or GreenCard and within a three year period renounced the earlier decision or entered the country again as a GreenCard holder ) to read through both section 871 and 877A in conjunction with the applicable tax treaty. I say this every thing depends on the exact facts and circumstances of the particular tax payer.

Re: Interrupted Period of Residence Special Tax Rule

taoj — Wed, 11 Oct 2023 14:13:15 GMT

I see. So this special tax rule is applicable to only those who were US resident for tax purpose as permanent residence/citizen and is nonresident due to losing that status. It is not about those who were in US as nonimmigrant (e.g. work visa or stay for over 183 days), move out, and for some reason come back again (either back as nonimmigrant or with permanent residency). Do I understand correctly?

Re: Interrupted Period of Residence Special Tax Rule

pk — Wed, 11 Oct 2023 17:06:10 GMT

@taoj , your understanding is correct.

This code section 877-A and the special rule also does not include even those persons whom have passed Substantial Presence Test and are taxed as Resident for Tax purposes ,

This section hints at and is probably applicable also to Long-Term Residents whom have been subject to Mark-to-Market rules when leaving the country and then come back -- I need to study the rule a little bit more extensively for that portion of the rules

Is there more I can do for you ?

Re: Interrupted Period of Residence Special Tax Rule

taoj — Mon, 16 Oct 2023 03:20:11 GMT

This clears things up a lot - those are all the questions I have. Thank you @pk !