Giving up US citizenship or handing back a long-held green card sounds like a clean break — but the US tax system has other ideas. Since the HEART Act of 2008, expatriating Americans and long-term green card holders can be hit with a mark-to-market exit tax that treats nearly everything they own as if it had been sold the day before departure.
In part 3 of Navigating the Expatriate Tax Maze, Dave Zydek and Peter Trieu of BDO unpack:
Who counts as a "covered expatriate" — and the three tests that pull you into the regime (tax liability, net worth, and certification)
Who qualifies as a long-term green card holder (the 7-year rule)
What the mark-to-market exit tax actually looks like in practice
The 30% tax on future distributions from non-grantor trusts to former covered expatriates
The 40% inheritance-style tax on US persons receiving gifts or bequests from covered expatriates
Planning moves to avoid covered expatriate status — including primary residence sales, lifetime gifting, and spousal transfers
Essential listening for anyone considering expatriation or advising clients who are.
Brought to you by CAW Network USA in partnership with BDO.
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