US Expatriation Tax

Expatriation comes with a heavy tax price tag. In this episode, we unravel the U.S. international tax rules surrounding expatriation under IRC §§877 and 877A. We break down who qualifies as a “covered expatriate” and what that means in practice—whether through the net worth, tax liability, or compliance tests.

Listeners will learn how the mark-to-market exit tax applies to worldwide assets, with special attention to tax-deferred accounts like IRAs and HSAs, as well as deferred compensation arrangements. We’ll also cover how the U.S. estate tax rules hinge on the concept of “situs” (asset location) and what that means for non-resident aliens holding U.S. assets.

Along the way, we provide historical context on expatriation legislation, compliance obligations tied to Form 8854 and Form W-8CE, and the broader implications for those considering giving up U.S. citizenship or long-term green cards.