Hi everybody, my name is David. Today, we are going to discuss the process of renouncing US citizenship for covered expats. If any of the following apply to you, then you would be considered a covered expat: if your average annual tax liability for the five years before the date of expatriation is above $155,000 for 2013, $151,000 for 2012, $147,000 for 2011, and $145,000 for 2010 or 2009. Additionally, if your net worth is over $2 million on your date of expatriation, or if you have not complied with US federal tax obligations for the five years preceding the date of expatriation. So, what does it mean to be a covered expat? If you fall into this category, the IRS assumes that on the day before you renounce your citizenship, you sell all of your assets at their fair market value. You will then be taxed on the proceeds from those sales. However, the IRS does allow for a reasonably high exclusion amount. You can exclude up to $668,000 of those proceeds from US taxation. If the amount gained on those assets exceeds $668,000, you will face a 39.6% tax rate on the remaining amount. There are a couple of important points to note. Firstly, you have the option to defer the payment of mark-to-market tax on property, but separate rules apply in that case. Secondly, you can also defer the payment of specific deferred tax assets, such as IRAs and retirement plans. This covers the basics of the process for covered expats renouncing their citizenship. If you have any further questions, please feel free to let us know. We are here to answer all your inquiries. Thank you.
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Video instructions and help with filling out and completing Can Form 8854 Credits
