Renouncing US Citizenship: Costs, Exit Tax, & "Covered Expatriate" Status Explained | Latife Hayson

Описание: Considering severing your ties with US citizenship? It's a significant decision with considerable financial implications beyond just giving up your passport. In this crucial discussion from "The Interchange Podcast with Latife Hayson," Seth Hertz of Expat US Tax breaks down the complex costs and tax considerations involved in renouncing US citizenship. Seth first outlines the initial government fee for relinquishing your passport, which, as of 2025, stands at US$2,350.

The conversation then shifts to the critical concept of being a "covered expatriate," which determines if you'll face a substantial "exit tax." Seth meticulously explains the three tests the IRS applies: (1) your net worth (currently $2 million or more), (2) your average annual net income tax liability for the five years prior to renunciation (exceeding a certain threshold, which is indexed for inflation), and (3) a compliance certification (failure to certify five years of US tax compliance automatically makes you "covered"). If you are deemed a "covered expatriate," we talk about how you could be subject to an exit tax, calculated as if you sold all your worldwide assets the day before renunciation, with unrealized gains potentially being taxed. He emphasizes that navigating these rules is complex and requires careful planning to avoid potentially massive tax liabilities.

For more on the complexities of renouncing your citizenship and all the complexities of being a US Citizen living abroad, watch our full interview with Seth in this link:

   • US Expat Tax Explained: Navigating Citizen...  

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