What would leaving the US tax system cost you?
Renouncing citizenship or surrendering a long-held Green Card triggers three tests. Fail any one and the IRS taxes you as if you sold everything the day before you left.
Three tests, one bad label
You are a covered expatriate if your net worth exceeds $2,000,000, your average US tax over five years exceeds the inflation-adjusted threshold, or you cannot certify five years of full compliance. Covered status triggers a deemed sale of worldwide assets — gains above the exclusion taxed immediately, pensions and deferred accounts under their own harsher rules.
The estimate that matters is the planning delta: gifts before the $2m test, a compliance clean-up before certification, and timing the I-407 or renunciation date can move the answer from six figures to zero.
- $2,000,000 net worth, tax-liability, and certification tests
- Deemed-sale gain above the exclusion taxed at exit
- Green Cards: 8 of the last 15 years brings the same tests
The three tests that decide covered status
A quick orientation, not advice — real positions have edges this cannot see.
Answer all three tests to see your status.
Questions we get about this
Pensions and deferred compensation follow separate rules rather than the deemed-sale calculation, and this estimate does not model them fully.
For anyone with a substantial pension, that difference can dominate the result.
Treat it as a starting point. If it says an obligation applies, the next question is what the filing actually involves and whether earlier years are affected.
If it says nothing applies, it is worth re-running whenever your circumstances change - a move, a property, a new account.
Covered expatriates: those who exceed the net worth or average tax liability thresholds, or who cannot certify five years of tax compliance.
Long-term Green Card holders are caught as well as citizens who renounce.
Broadly as if your worldwide assets were sold the day before expatriation, with an exclusion amount applied to the resulting gain.
Pensions and deferred compensation follow separate rules rather than the deemed sale, which this estimate does not model in full.
It covers the common cases and will tell you reliably whether the basics apply to you. It is a guide, not a filing position.
Edge cases - trusts, business ownership, unusual residence patterns - can change the answer, which is why the result flags when a position is worth checking properly.
Last reviewed . Thresholds and rates change annually — check figures against the current tax year before relying on them.
Got your answer and it looks complicated?
These tools are deliberately simple, and real positions rarely are. Send us what you found and we will confirm it properly.