United States Exit Tax and Wealth Recipient Tax Applies to Covered Expatriates

The tax consequences of expatriation for U.S. citizens and long-term green card holders after June 17, 2008 can be enormous. With the exception of deferred compensation items, interests in non-grantor trusts, and specified tax deferred accounts, all other assets of the expatriating taxpayer are deemed sold at fair market value on the day before the expatriation dates. Although, an exemption is granted for the first $711,000 of deemed gain in 2018, this so called 'exit tax' is harsh on long-term green card holders who inadvertently lose their status. A Covered Expatriate needs to pay special attention to the tax consequences and comply with the law.