Skip to main content
THE CITIZENSHIP DESK

US Exit Tax Simulator

Section 877A imposes a deemed-sale tax on US citizens renouncing citizenship and on long-term green-card holders abandoning resident status — but only on those classified as covered expatriates. This simulator walks through the three statutory tests and produces a rough estimate of the deemed-disposition tax burden. All calculation happens in your browser. No data is sent to any server.

Step 1 — Covered Expatriate Tests

Tax-compliance certification

Can you certify on Form 8854 that all federal tax obligations for the prior 5 years (returns, FBAR, FATCA) are met?

✓ Compliance certification available

Covered expatriate status

Not a Covered Expatriate — Section 877A does not apply

The three covered-expatriate tests

You become a covered expatriate if you meet ANY of the three tests below at the time of renunciation / abandonment:

  1. Net-worth test. Net worth ≥ $2 million (worldwide assets minus worldwide liabilities) on the expatriation date. Not adjusted for inflation — a hard line.
  2. Average-tax test. Average annual federal income tax for the 5 tax years ending before the expatriation year exceeds $206,000 (2024 inflation-adjusted threshold; updated annually).
  3. Compliance test. Failure to certify on Form 8854 that all federal tax obligations for the prior 5 years have been met. Late filings and FBAR/FATCA non-compliance can trigger this even for low-net-worth taxpayers.

If you are a covered expatriate

  • Mark-to-market deemed sale. All worldwide assets are treated as sold for fair market value on the day before expatriation. Net gains above the 2024 inflation-adjusted exclusion ($866,000) are subject to capital-gains tax — typically 20% federal long-term rate plus 3.8% net-investment-income tax for high earners.
  • Deferred compensation. Pensions, IRAs, 401(k)s, and certain non-qualified deferred comp are not marked-to-market but are subject to a 30% withholding tax on each future distribution (with no treaty relief).
  • Section 2801 inheritance/gift tax. US persons receiving inheritances or gifts from a covered expatriate face a 40% tax on the value (final regulations issued January 2024). Major planning consideration for children and beneficiaries who remain US persons.
  • Trusts. Distributions from non-grantor trusts to covered expatriates are treated as taxable. Domestic-trust grantor status pre-expatriation typically ends on expatriation.

Long-term green-card holders

Section 877A applies equally to long-term lawful permanent residents who abandon their LPR status — defined as having held LPR status in 8 of the last 15 tax years. This is a trap for green-card holders who never naturalised: even without ever having held US citizenship, abandoning LPR status after 8+ years can trigger the same exit-tax mechanics as citizenship renunciation. Departing the US on tax-residence grounds (without formal LPR abandonment via Form I-407) is insufficient to avoid the regime.

Disclaimer: This simulator is educational only. Section 877A is one of the most complex provisions of the Internal Revenue Code, with substantial interpretive guidance (Notice 2009-85 and subsequent regulations) that this calculator does not capture. Always consult a qualified US-international-tax attorney or CPA before any expatriation decision. See also exit tax by country · guide: exit tax countries.