U.S. Exit Planning
& Expatriation
The United States taxes its citizens on worldwide income regardless of where they live. For some families, the arithmetic eventually demands a structural answer. We model covered expatriate status, exit tax exposure, and the sequencing that determines whether expatriation is a liberation or a penalty.
The Problem
The United States is one of only two countries that taxes its citizens on worldwide income regardless of where they live. For most Americans, this is an inconvenience. For mobile Americans with significant international income, foreign business interests, or multi-jurisdictional family structures, it is a structural constraint that shapes every other planning decision.
Renouncing U.S. citizenship or abandoning long-term permanent residency is among the most consequential and irreversible decisions in sovereign planning. It is not the beginning of a plan. It is the end of one — the final step in a sequence of decisions that must be made in the correct order, with the correct timing, and with full understanding of the consequences.
Covered Expatriate Analysis
The threshold question is whether the individual will be classified as a "covered expatriate" under IRC 877A. Three independent tests determine covered status: net income tax liability (indexed annually), net worth ($2M threshold), and five-year tax compliance certification. Meeting any single test triggers covered status and the mark-to-market exit tax. We model all three and evaluate mitigation strategies where available.
The Exit Tax
IRC 877A treats covered expatriates as having sold all worldwide assets at fair market value on the day before expatriation. The unrealized gain above an exclusion amount (indexed annually) is taxed as if realized. For clients with significant unrealized appreciation — in real estate, business interests, or investment portfolios — the exit tax can be substantial. We model the exposure and evaluate timing and structuring options that affect the calculation.
Strategic Sequencing
Exit planning must be sequenced with every other sovereign planning decision: nationality acquisition (you must have a second citizenship before renouncing), tax residency establishment (where you land matters as much as where you leave), asset restructuring, and trust planning. The order matters as much as the substance. Decisions made in the wrong sequence are frequently irreversible.
- U.S. citizens with significant international income or business interests
- Long-term permanent residents evaluating status abandonment
- Clients requiring exit tax modelling and mitigation analysis
- Those needing pre-expatriation asset and trust restructuring
- Families with multi-generational U.S. exit planning considerations
Begin with a conversation.
Initial briefings are structured conversations about objectives, current exposure, and jurisdictional fit. No pathway is pre-selected.
Request a Private Briefing