Expatriation Tax

AAA

DEFINITION of 'Expatriation Tax '

An expatriation tax is a tax on someone who renounces their citizenship. In the United States, the expatriation tax provisions under Section 877 and Section 877A of the Internal Revenue Code (IRC) apply to U.S. citizens who have renounced their citizenship, and long-term residents who have ended their U.S. resident status for federal tax purposes. Different rules apply, according to the date upon which one expatriated.

INVESTOPEDIA EXPLAINS 'Expatriation Tax '

Because many people who expatriated did so to avoid tax laws regarding their assets, the IRS has imposed more severe tax implications for expatriates. The IRS assumes reasons for expatriation is tax avoidance if the person who does it has an annual income over a specified benchmark figure. The ex pat tax does not apply to individuals who can prove in a ruling with the Secretary of Treasury that their reason for expatriation was not to evade taxes, such as a person with dual citizenship choosing the other country for permanent citizenship.

RELATED TERMS
  1. Internal Revenue Code - IRC

    The comprehensive set of tax laws created by the Internat Revenue ...
  2. Dual-Status Taxpayer

    A taxpayer that has met the criteria to be both a resident and ...
  3. Income Tax

    A tax that governments impose on financial income generated by ...
  4. Federal Income Tax

    A tax levied by the United States Internal Revenue Service (IRS) ...
  5. Tax Return

    1. The tax form or forms used to file income taxes with the Internal ...
  6. Tax Evasion

    An illegal practice where a person, organization or corporation ...
RELATED FAQS
  1. No results found.
Related Articles
  1. Taxes

    Surviving The IRS Audit

    Keeping thorough records and knowing the penalties make this experience easier than you'd expect.
  2. Taxes

    Safe Tax Planning For High-Net-Worth Filers

    Planning is essential for the affluent seeking tax breaks. Get to know the legal strategies for saving more.
  3. Taxes

    The History Of Taxes In The U.S.

    The number of taxes that we now consider a given did not always exist. Find out how they arose.
  4. Economics

    Are Greece’s Worries Almost Over?

    Last week ended with the news that Greece and the European Union (EU) finance ministers struck a deal to temporarily extend the Greek bailout program.
  5. Economics

    Why Is Ukraine At War? A Russian Rivalry With West

    Huge power games which are being played behind the Ukrainian conflict are rooted in a previous revolution, a past Cold War, and an old Russia-West rivalry.
  6. Economics

    Does A Junk Rating Reflect Russia's Fundamentals?

    Moody’s, like other credit rating agencies, has downgraded Russia’s sovereign debt rating to non-investment grade, but does this reflect Russia's economy?
  7. Taxes

    Getting U.S. Tax Deductions On Foreign Real Estate

    If your home or second home is not in the United States, you can still get U.S. tax deductions. How many and what kind depends on whether you also rent it.
  8. Economics

    This Is A Small Country With Huge Potential to Grow

    Trinidad and Tobago's increased revenue and economic success have been primarily generated by its energy sector, but it still might be best to diversify.
  9. Economics

    Popular Places Where U.S. Citizens Need A Visa

    A U.S. passport will get you into many countries, but not everywhere. Here's how to visit five of the most popular destinations that require visas.
  10. Retirement

    Tapping Retirement Funds Early – Without A Penalty

    The IRS offers several ways to skirt the 10% penalty on early retirement distributions.

You May Also Like

Hot Definitions
  1. Sunk Cost

    A cost that has already been incurred and thus cannot be recovered. A sunk cost differs from other, future costs that a business ...
  2. Technical Skills

    1. The knowledge and abilities needed to accomplish mathematical, engineering, scientific or computer-related duties, as ...
  3. Prepaid Expense

    A type of asset that arises on a balance sheet as a result of business making payments for goods and services to be received ...
  4. Gordon Growth Model

    A model for determining the intrinsic value of a stock, based on a future series of dividends that grow at a constant rate. ...
  5. Cost Accounting

    A type of accounting process that aims to capture a company's costs of production by assessing the input costs of each step ...
  6. Law Of Supply

    A microeconomic law stating that, all other factors being equal, as the price of a good or service increases, the quantity ...
Trading Center