Is there a way for US citizen to renounce and become a green card holder so the exit tax isn’t applied, as then they would still remain a tax resident of US??
Exit tax can also apply to permanent residents.
Yes, i read that (on giving up that status) it seems to me though that if a US citizen wished to renounce, yet avoid exit tax a way to go about that might be to secure pr (green card) on renouncement thus the exit tax wouldn’t kick in… if that is possible in the US.
More recently, high-profile cases of wealthy individuals renouncing their U. S. citizenship, seemingly to avoid U.S. taxation, sparked a debate surrounding the concept of an exit tax. In response, Congress enacted the first iteration of the current U.S. exit tax with the passage of the Heroes Earnings Assistance and Relief Tax (HEART) Act, P.L. 110-245, in 2008. The act codified amendments to Sec. 877 and new Sec. 877A, seeking to capture unrealized gains on assets and ensure that individuals settle their tax obligations before they exit the U.S. tax system.
I get that, but if you remain a us tax resident by securing a greencard then you aren’t avoiding us tax.
Also exit tax it only applies if:
- Net worth test: The individual’s worldwide net worth is $2 million or more on the date of expatriation (i. E., the date the individual relinquishes U. S. citizenship or terminates long-term residency). This threshold is not adjusted for inflation.
Should quote the whole thing mate:
Under Sec. 877A(g)(1), for an expatriate to be a covered expatriate, the individual must satisfy one of three tests under Sec. 877(a)(2):
Net worth test: The individual’s worldwide net worth is $2 million or more on the date of expatriation (i. E., the date the individual relinquishes U. S. citizenship or terminates long-term residency). This threshold is not adjusted for inflation.
Tax liability test: The individual’s average annual net income tax obligation for the five years ending prior to the individual’s date of expatriation exceeds the statutory threshold, which is indexed for inflation each year. For 2024, the threshold is $201,000.
Tax-compliance test: The individual fails to certify, under penalties of perjury, on Form 8854, Initial and Annual Expatriation Statement, that they have complied with all U.S. federal tax obligations for the five years prior to their expatriation.
So to summarise.
- Have more than 2 mil in assets. (Easy to reach if you have a house and have been saving in a foreign pension account.
- Earn more than $201,000 usd. (I know a few in Taiwan earning above that.)
- Simply miss a tax return (Easy to do if lazy or forgetful or rebellious. But also easy to avoid… just wait out the 5 years and file returns)
Mate, the 2 million is net worth so less mortgages etc
200k usd can be managed by taking a break from earning income. And most business owners already minimise their income/taxes.
Non compliance with tax… well that’s their fault.
True. But still many fall in those three categories. With some strategic structuring, of course many could avoid it.
No objection to U.S. changing their law; be nice (but unlikely under Trump) if they did it according to their own Constitution.
I think many americans will make any excuse not to renounce… even the 2m can be managed in advance through trusts and gifts etc
Even those who can resume often make every excuse under the sun. There was another guy (who could easily resume) claiming he needed to travel for work and could never meet the residency requirements (despite meeting them successfully for an APRC…) Then a year later talks elsewhere about not flying/travelling for well over a year lol.
The other excuse I see are those who claim “the principle of it” or “the fairness.” There was also some prominent blogger bragging about how he could get the renunciation exemption but claims he couldn’t help but feel sorry for all us “common folk” so won’t apply lol. (I say BS)
It’s not as easy as getting a driver’s license, else more people would do it.
I’ll be honest. Even if I were to consider, I would want a clear pathway/plan to get it back.
In Australia it is probably easier than getting drivers licence (resumption of citizenship) there’s
no wriltten and practical test. But why would you want to resume US citizenship with all that tax on worldwide income?
Not “probably.” It absolutely is! Both the renunciation and resumption (for Australians) are far easier than getting a driver’s license.
One thing that is a concern with australia… if only one parent is aussie then when they renounce the minister can revoke the child’s citizenship.
If you are the responsible parent of a child when your Australian citizenship ceases, consideration may be given to revoking the citizenship of any children under the age of 18 years, unless:• the other responsible parent is still an Australian citizen, or• doing so would render them stateless
It isn’t automatic but still a concern.
Cannot revoke the Aussie kids citizenship if they are not also obtaining the other citizenship.
When I renounced I did not include my son for ROC citizenship. All I had to prove was that he was not already an ROC citizen by being born in Taiwan. As the law says, cannot be stateless.
This is not the same as this:
My daughter has 3 citizenships
I would have to wait until my wife is australian to be safe. Alternatively I would have to renounce my other one… which I may or may not be able to get back.
With Ireland you can’t resume citizenship if you got it by descent and not automatically. But I saw somewhere on the irish government website a mention that you could reapply from scratch presumably register foreign birth again… but not sure of the veracity of that.