The U.S. exit tax is the last thing you’ll pay if you give up citizenship.
The U.S. exit tax is a tax on capital gains for American citizens who renounce their citizenship. It was implemented in 2008, as a response to the growing number of Americans renouncing their citizenship.
The exit tax is a tax on the unrealized capital gains of U.S. citizens who renounce their citizenship or give up their green card.
WHO IS SUBJECT TO THE AMERICAN EXIT TAX?
If you’re a US citizen or resident, and you meet the following criteria, you may be subject to one of the most notorious taxes in the world: the American exit tax. The tax applies to US persons who have a net worth of $2 million or more, or who have an annual income of $148,000 or more. It is levied on the capital gains that a person has accrued since they last paid tax in the US.
The tax is controversial, with some arguing that it is unfair to tax people who are leaving the country and that it will only serve to further discourage citizens from staying in the US. Others argue that the tax is necessary in order to prevent wealthy citizens from avoiding tax by renouncing their citizenship—as if they could possibly live without US passports!
The US exit tax is a complicated, controversial tax, and its impact is yet to be fully seen. However, there is no question that it is designed to discourage wealthy citizens from leaving the country—and it could well accomplish that goal.
HOW IS THE EXIT TAX CALCULATED?
The American exit tax is a special tax rate applied to your unrealized capital gains. It’s currently 23.8%.
WHEN IS THE TAX DUE?
The exit tax is due when you renounce or give up your green card or Citizenship.
ARE THERE ANY EXCEPTIONS?
Yes, these are. If you were born with two nationalities, you may not have to pay an exit tax. Please note: if you would like to obtain more information about your situation, or if you have any questions regarding this matter, please contact us at your earliest convenience.
NEED MORE INFORMATION ABOUT THE US EXIT TAX?
Expat Tax Relief offers complete tax preparation services for U.S. citizens living outside of the U.S. We specialize in preparing US Individual Tax Returns and supporting documentation, including FBAR and FATCA required for foreign bank account reporting. We support self-employed expats with filing their quarterly estimated taxes, attaching Schedule C to the 1040 tax form, and filing quarterly with the IRS. Our specialty is Foreign Earned Income Exclusion tax returns and extension applications (IRS Form 2555).