Expatriation

The United States imposes income tax on the worldwide income of its citizens and “green card” holders even if they do not reside in the U.S. The taxation of worldwide income that confronts U.S. citizens may entice some to renounce their citizenship or green card. Internal Revenue Code Section 877 was designed to defend against such a possibility. Section 877 assessing an exit tax on so-called covered expatriates. Under these rules, all property of a covered expatriate shall be treated as sold on the day before the expatriation date for its fair market value. A covered expatriate must file a dual-status Form 1040 with the IRS if he or she was a U.S. citizen or long-term green card holder for only part of the year that includes the day before the expatriation date. A dual-status return requires the filing of a Form 1040NR with a Form 1040 attached as a schedule.

We have assisted many U.S. citizens and green card holders expatriate from the United States. We provide expatriation tax planning advice and prepare the necessary expatriation returns to be filed with the IRS. We have written many blogs educating prospective clients regarding the exit tax and the expatriation process.