Comment by saxonww

Comment by saxonww 2 days ago

It's only if you qualify as a 'covered expatriate' though. I'm not a lawyer or an accountant but a plain reading of the standard suggests the vast majority of Americans would not be covered.

https://www.irs.gov/instructions/i8854#en_US_2023_publink100...

I think the key would be how they arrive at the net worth numbers. If it's just a calculation of all your assets as if they were sold at FMV, ~90% of the US is below the net worth threshold.

https://dqydj.com/net-worth-percentiles/

The average tax liability standard looks like it would take 5 years at $600K+ of adjusted gross income, too. Plenty of people would meet this standard. Most people would not.

xpl 2 days ago

So it basically says if you net worth is over $2 mil, you're need to pay exit tax, right?

If a house and 401k also counted towards net worth, it could impact quite a few Americans. Besides, those who expatriate for tax optimization purposes usually have a significant amount of wealth.

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duped 2 days ago

> If a house and 401k also counted towards net worth, it could impact quite a few Americans
I have no sympathy for people who want to dodge taxes being forced to pay a tax on income that the government has deferred taxes on while they were a citizen making taxable income in the US, and presumably if you're abandoning your citizenship you're not keeping your home and would have already paid sales and capital gains taxes on it when you sold it.

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ithkuil 2 days ago

You're a covered expatriate also if:

" You fail to certify on Form 8854 that you have complied with all federal tax obligations for the 5 tax years preceding the date of your expatriation. "

I agree you should pay up your taxes but this will not only recover the due taxes but it will take more.

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