Tax Analysts provides news, analysis, and commentary on tax-related topics, including the exit tax, also referred to as the expatriation tax or emigration tax, imposed on persons who cease to be tax residents of the United States or who give up their green cards that have been held for eight of the last 15 years. The tax must be paid by individuals who have a net worth greater than $2 million, have average annual net income tax for the five previous years of $155,000 or more (adjusted for inflation), or fail to certify that they met all U.S. tax obligations for the five years before expatriation.
Section 877A revised the exit tax consequences imposed under section 877. A covered expatriate must mark property to market and treat it as being sold for fair market value on the day before the expatriation date. Any gain arising from the deemed sale is taken into account for the tax year of the deemed sale, less an exclusion amount that is indexed for inflation. Section 2801 covers gifts and bequests by covered expatriates to U.S. persons and imposes a tax equal to the product of the highest marginal tax rate under section 2001(c) and the value of the gift or bequest, as long as the value exceeds the statutory exclusion amount under section 2503(b).
Individuals who pay the exit tax must file expatriation tax Form 8854, “Expatriation Information Statement.” Exceptions from the exit tax apply to dual nationals from birth, who have not lived in the United States for more than 10 years of the last 15, and persons younger than 18-and-a-half who have not lived in the United States for more than 10 years.
Tax Analysts consistently and promptly publishes all relevant developments regarding exit tax, including information on expatriation tax form.