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Exit Tax

Level 1

My client voluntarily surrendered the US green card in Jan 2021. She has around $5million in bank deposit and another 2 million in bonds, partnership interest. So she will be considered  a covered expat but on what amount and at what rate she will have to pay the exit tax?

Does cash balance in bank attracts any tax?

The FMV of partnership interest may be less than the original investment. 

The bond may have a small premium. 

So what's her liability and what option she has to avoid any taxes.


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3 Comments 3
Level 15

It's calculated as if everything was sold at FMV.

So no gain on cash.

Level 15

Your client is a covered expatriate based on the limited info you provided if she is a long-term resident.

Especially since you don't seem to be familiar with the rules, in the event she is a long-term resident, it would be advisable that you refer your client to a specialist, preferably a tax attorney, because this is a complex and high risk area; the exposure for not doing it right could be substantial.

For how many calendar years (or a part thereof) has she been a green card holder?

Still an AllStar
Level 1

Thanks for the advice. She is a long term around 15 years green card holder and definitely a covered expat. 

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