The United States is not alone in having an exit tax, but it is unique in tying its exit tax to a change in visa or citizenship status. The process of renouncing your U.S. citizenship can be overwhelming. The consequences of not doing it right could be very costly as an exit tax may be imposed if you:
- Have a Net Worth above (USD) $2 million.
- Failed to comply with U.S. taxes for the last 5 tax years.
- Have an average annual tax liability over 5 years exceeding (USD) $155k
In 2014, Boris Johnson (former UK Foreign Secretary) publicly said that the US was trying to hit him for tax on the sale of his home in Islington, North London; something he said he regarded as “absolutely outrageous”, although he later reportedly paid the demand. Then he quietly expatriated. Be smarter than Mr Johnson was and properly plan your exit.
The IRS loves to take on targets.
If expatriation is on your mind, Expatriation planning is a must.
“If you fail to plan, you are planning to fail!” Benjamin Franklin