Giving up your U.S. passport will now come at a very high price.  A new law signed by President Bush on June 17, 2008 (H.R. 6081) will subject certain people who decide to expatriate or turn in their green cards to an immediate exit tax.

The new rules apply to certain individuals who expatriate as of June 9, 2008 and

1. Have an average annual net income tax liability for the five preceding years ending before the date of expatriation that exceeds $139,000 (2008 amount, adjusted annually for inflation);

2. Have a net worth of $2 million or more on the date of expatriation; or

3. Fail to certify under penalties of perjury that he or she has complied with all US federal tax obligations for the preceding five years or fails to submit such evidence of compliance as the Secretary may require.

Certain exceptions apply to individuals born with dual citizenship and those who relinquish US citizenship prior to age 18 1/2 (provided certain requirements are met).

The impact is fairly significant for affected expatriates and is far worse than the "old" rules.  Withers Worldwide has put together a pretty comprehensive summary of the "new" rules entitled "Exit Tax for U.S. Expatriates to Become Law", so I won't re-create the wheel here.

Source:  Maxim Global Wealth Advisors, By David Colvin, CPA, CFP - 2008

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