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USA Exit Tax

Audio version available here:

Length: approx. 1 min. 30 sec.

Leaving the United States to live in another nation takes a lot of planning and paperwork. This remains true in regard to your US tax obligation. For those who simply wish to move to a different country and maintain US citizenship, your tax circumstances do not really change. The IRS will continue to tax your income regularly, regardless of where it is gained. The way to escape this is by renouncing your US citizenship, though it comes with caveats.

Once you give up your citizen status, you will be classified as either an expatriate or a covered expatriate. As an expatriate, you will not be subjugated to an exit tax, but as a covered expatriate, you could be. The US government’s method of determining if you qualify as a covered expatriate is with these three tests: the income tax test, the net worth test, and the compliance test. There is an exception to being subjected to the exit tax in these circumstances, which involves being a dual-citizen at the time of your birth.

So, what is the exit tax? The exit tax involves paying an income tax on the unrealized gain of all your property just before leaving the country, even if you have not actually sold it. However, there comes some relief in 2023, as you are able to exclude up to $821,000 of the gain.

If you are thinking of moving away from the US and renouncing your US citizenship, we encourage you to speak with a tax professional before you make the decision. If you do not have a CPA to consult with, please contact our experts at XQ CPA. We would love to help you!

Phone: 832-295-3353

Did you know? XQ CPA and OneSelfClub are giving away $10,000 to a select business through our video contest! Find out how to enter at

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