{"id":15942,"date":"2017-12-13T09:00:48","date_gmt":"2017-12-13T14:00:48","guid":{"rendered":"http:\/\/www.escapeartist.com\/?p=15942"},"modified":"2020-06-02T05:26:29","modified_gmt":"2020-06-02T09:26:29","slug":"escape-exit-tax","status":"publish","type":"post","link":"https:\/\/www.escapeartist.com\/blog\/escape-exit-tax\/","title":{"rendered":"How to Escape the Exit Tax"},"content":{"rendered":"

How to Escape the Exit Tax<\/strong><\/h2>\n

Americans are renouncing their citizenship in record numbers, in 2016 alone 5,411 Americans chose to give up their <\/span>passport<\/span><\/a>. It looks like <\/span>2017 will be about 6,800<\/span><\/a>. Here\u2019s how to escape the exit tax when you give up your US citizenship\u2026 or, at least, minimize it. <\/span><\/p>\n

While it is safe to assume that some left the country for disagreements they had with Trump\u2019s government, they\u2019re not the majority. Americans rarely leave the US for political reasons. They talk a lot, but those who act cite taxes as the the primary reason they gave up their US citizenship. <\/span><\/p>\n

More than 57 percent of Americans say that they pay too much in federal income <\/span>taxes<\/span><\/a>. America leads the world in high corporate tax <\/span>rate<\/span><\/a>, forcing many of its business entrepreneurs to open companies and obtain citizenships in different countries with a more relaxed corporate tax system. And the US imposes some of the highest personal income tax rates in the world. <\/span><\/p>\n

And don\u2019t expect this to change under Trump\u2019s new tax proposal. Yes, corporate rates will go down to 20%. Personal rates will go down a bit, but <\/span>US citizens abroad will still be taxed on their worldwide income<\/span>!<\/span><\/p>\n

If you\u2019re thinking about giving up your citizenship, remember that the IRS won\u2019t let you leave the without paying an Exit Tax. <\/span><\/p>\n

Yes, you read that correctly. Some Americans who decide to renounce their American passport have to pay an Exit Tax. The Exit Tax is measured as if you sold all of your assets the day before you left the United States. Net capital gain is taxed instantly. This can be extremely costly for high-net worth individuals.<\/span><\/p>\n

If you follow this link to Escape Artist bookstore, you will find a really valuable book we have for sale called:\u00a0 How to Renounce Your US Citizenship<\/a>. It’s a fantastic read and has everything you need to know to know about exiting the USA.<\/p>\n

 <\/p>\n

Not Everyone who leaves the United States pays an Exit Tax<\/b><\/h2>\n

The first thing you need to do is see if you qualify. Only United States citizens and long term residents, such as green card holders, pay an Exit Tax. Meaning that, if you are working in the United States with any type of employment visa like an H-1B you don\u2019t need to worry about the Exit Tax. <\/span><\/p>\n

Also, if you hold another citizenship besides the United States <\/span>by birth<\/span><\/i> you don\u2019t have to pay the Exit Tax. Purchasing a second passport doesn\u2019t count!<\/span><\/p>\n

Finally, children who expatriate before age 18 \u00bd are exent to paying the Exit Tax.<\/span><\/p>\n

 <\/p>\n

There needs to be a Reason<\/b><\/h2>\n

You can\u2019t be forced to pay an Exit Tax just because you are a citizen or a long term resident, there needs to be an explanation for the action. You need to personally renounce your citizenship or have your citizenship taken away. Having your citizenship taken from you makes you an expatriate according to the exit tax rules. That is to say, you must actively renounce your US citizenship. You don\u2019t lose it by being abroad or by taking a second passport.<\/span><\/p>\n

 <\/p>\n

Net Worth<\/b><\/h2>\n

If you have a net worth of more than $2,000,000 you qualify for the Exit Tax. <\/span><\/p>\n

f you as your spouse are worth more than $2,000,000, and all assets are in your name, a solution would be to gift some of those assets to your wife or partner. That way you could have $4,000,000 between the two of you and you wouldn’t have to pay the exit tax when you left the country together. <\/span><\/p>\n

This changes when your wife is not a US Citizen. For 2017, there is an annual exclusion of $149,000 for gifts to noncitizen <\/span>spouses<\/span>.<\/span><\/p>\n

 <\/p>\n

Historic Tax Liability<\/b><\/h2>\n

No matter your net worth, you will pay the Exit Tax if you have an average net income tax liability for the five tax years before the year of expatriation $<\/span>162,000,<\/span><\/a> That\u2019s the 2017 number and it increases with inflation each year. <\/span><\/p>\n

If you can prove that your average doesn\u2019t reach 4162,000 then you won\u2019t have to pay the Exit Tax.<\/span><\/p>\n

 <\/p>\n

Tax Noncompliance<\/b><\/h2>\n

If you cannot certify five years of U.S. tax compliance, then you have to pay an Exit Tax. Fortunately, you can amend your prior tax returns (and other forms) and simultaneously also file a Form 8854 to <\/span>expatriate.<\/span><\/a><\/p>\n

That is to say, you can get into compliance and then file to give up your US citizenship.<\/span><\/p>\n

 <\/p>\n

Second Passport and Second Residency Programs<\/b><\/h2>\n

Before you give up your US citizenship, you must have a second passport in hand. You can\u2019t renounce your US citizenship and become stateless.<\/span><\/p>\n

There are two ways to get a second passport. You can buy one or you can earn it by being a resident of certain countries for 5 or 6 years. <\/span><\/p>\n

For example, you can buy a passport from <\/span>St. Lucia<\/span><\/a> for about $125,000. St. Lucia is the best purchase program for 2018. <\/span><\/p>\n

If you don\u2019t have the cash, you can earn your passport over time. The lowest cost residency program for US citizens is <\/span>Panama<\/span><\/a>. Invest $20,000 in their reforestation visa program and get residency. Maintain that residency for 5 years and you can apply for citizenship. <\/span><\/p>\n

If you want an EU passport, consider <\/span>Portugal\u2019s Golden Visa<\/span><\/a> program. Deposit 1 million euros or buy a property for 500,000 euros and you\u2019re in. Maintain that visa for about 6 years and you can apply for citizenship.<\/span><\/p>\n

 <\/p>\n

Conclusion<\/b><\/h2>\n

I hope you\u2019ve found this article on the Exit Tax to be helpful. For more information, or for assistance with renouncing your citizenship and opening an offshore bank account in Panama or any other country, please contact us HERE.<\/a>\u00a0<\/span><\/p>\n

 <\/p>\n","protected":false},"excerpt":{"rendered":"

How to Escape the Exit Tax Americans are renouncing their citizenship in record numbers, in 2016 alone 5,411 Americans chose to give up their passport. It looks like 2017 will be about 6,800. Here\u2019s how to escape the exit tax when you give up your US citizenship\u2026 or, at least, minimize it. While it is […]<\/p>\n","protected":false},"author":686,"featured_media":11900,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"content-type":"","om_disable_all_campaigns":false,"footnotes":"","_jetpack_memberships_contains_paid_content":false},"categories":[2,1401],"tags":[26813],"yst_prominent_words":[2864,2661,4026,26812,26811,21556,18598,3041,13288,2164,2276,4985,18602,18596,23608,23607,2132,2131,15476,1804],"acf":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"https:\/\/www.escapeartist.com\/wp-content\/uploads\/2017\/05\/Tax2.jpg","_links":{"self":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/15942"}],"collection":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/users\/686"}],"replies":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/comments?post=15942"}],"version-history":[{"count":5,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/15942\/revisions"}],"predecessor-version":[{"id":35500,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/posts\/15942\/revisions\/35500"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/media\/11900"}],"wp:attachment":[{"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/media?parent=15942"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/categories?post=15942"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/tags?post=15942"},{"taxonomy":"yst_prominent_words","embeddable":true,"href":"https:\/\/www.escapeartist.com\/wp-json\/wp\/v2\/yst_prominent_words?post=15942"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}