If you are planning to permanently leave the US, you may be considering renouncing US citizenship or ending long term green card status. Doing so can trigger the US exit tax under IRC §877A. Without proper planning, the exit tax can create large and unexpected liabilities.
What Is Exit Tax Planning?
Exit tax planning reviews your assets, income, residency history, and filing compliance to determine how the exit tax rules would apply and to design strategies before you expatriate (including Form 8854 requirements).
WHAT YOU NEED TO KNOW ABOUT EXIT TAX PLANNING
WHY IS EXIT TAX PLANNING IMPORTANT?
Without planning, you may face immediate tax on:
- Unrealised capital gains under mark to market rules (subject to an inflation adjusted exclusion)
- Retirement accounts and specified tax deferred accounts
- Deferred compensation and certain trust interests
The consequences can be significant and often irreversible.
WHO NEEDS EXIT TAX PLANNING?
Anyone who may be a covered expatriate, including:
- US citizens planning to renounce citizenship
- Long term green card holders (generally held a green card in at least 8 of the last 15 tax years)
You are typically a covered expatriate if you meet the net worth test (≥ $2 million), the average annual net income tax liability test (inflation adjusted each year), or fail to certify five years of compliance on Form 8854.
WHEN IS EXIT TAX PLANNING NEEDED?
Exit tax planning is important if you are:
- Relocating permanently outside the US
- Intending to relinquish US citizenship or end long term residency
- Restructuring your global estate or business before expatriation
CONSIDERING LEAVING THE USA?
Speak with our team early to plan and reduce the impact of the exit tax.
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ADDITIONAL SERVICES WE CAN HELP YOU WITH
International Tax Consulting
As US tax specialists with a global perspective, we will help you navigate the local and international tax complexities.
Streamlined Filing Compliance Procedures
Our experienced CPAs will take care of your streamlined filing compliance procedures to get you up to date with your taxes.
Tax Return Preparation
We provide assistance for all your individual tax return needs. This includes preparing and lodging your Individual State and Federal tax returns and any required forms.
Foreign Asset Reporting (FBAR)
We will assist you to stay compliant with FBAR rules and deadlines including fixing missed filings to avoid costly penalties.
Amended Tax Returns
We help amend IRS filings, correct errors, and claim missed deductions to ensure accuracy and avoid penalties.
Pre-Immigration Tax Planning
If you are planning to move to the US, our team can help you stay compliant and optimize your tax outcomes before you arrive.
PLANNING TO LEAVE THE US OR RENOUNCE US CITIZENSHIP?
Exit tax can create big liabilities. Our experts help you plan, reduce risk, and protect your wealth.
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