With this year’s election approaching soon, tensions are rising as both candidates continue to campaign throughout the United States. But what happens if your preferred candidate loses? Would you want to leave the United States?
Many people, including celebrities Samuel L. Jackson and Cher, have claimed that they will move outside the United States if Donald Trump becomes president. Others want out if Hillary Clinton is elected. Either way, leaving the United States will result in a tax bill to Uncle Sam. If you move from the U.S. but maintain your citizenship, the U.S. will continue to tax you. The U.S. taxes its citizens on their worldwide income, no matter where they reside. You also will not be able to escape the rules on reporting foreign bank accounts.
If you choose to give up your U.S. citizenship, you could owe an exit tax if your average annual tax for the five years prior to expatriation exceed $161,000, of if you have at least $2 million of net worth. The government will treat you as selling all your assets for fair market value on the day before the expatriation date and will be taxed on the profit from the deemed sale that exceeds an exemption of $700,000.
Either way, Uncle Sam wins.