Expatriation Tax

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.



comments powered by Disqus
Hot Definitions
  1. Benchmark Bond

    A bond that provides a standard against which the performance of other bonds can be measured. Government bonds are almost always used as benchmark bonds. Also referred to as "benchmark issue" or "bellwether issue".
  2. Market Capitalization

    The total dollar market value of all of a company's outstanding shares. Market capitalization is calculated by multiplying a company's shares outstanding by the current market price of one share. The investment community uses this figure to determine a company's size, as opposed to sales or total asset figures.
  3. Oil Reserves

    An estimate of the amount of crude oil located in a particular economic region. Oil reserves must have the potential of being extracted under current technological constraints. For example, if oil pools are located at unattainable depths, they would not be considered part of the nation's reserves.
  4. Joint Venture - JV

    A business arrangement in which two or more parties agree to pool their resources for the purpose of accomplishing a specific task. This task can be a new project or any other business activity. In a joint venture (JV), each of the participants is responsible for profits, losses and costs associated with it.
  5. Aggregate Risk

    The exposure of a bank, financial institution, or any type of major investor to foreign exchange contracts - both spot and forward - from a single counterparty or client. Aggregate risk in forex may also be defined as the total exposure of an entity to changes or fluctuations in currency rates.
  6. Organic Growth

    The growth rate that a company can achieve by increasing output and enhancing sales. This excludes any profits or growth acquired from takeovers, acquisitions or mergers. Takeovers, acquisitions and mergers do not bring about profits generated within the company, and are therefore not considered organic.
Trading Center