General Information about "Covered Expatriate" Status
There are three triggers that can cause you to be a covered expatriate. You only need one to be a covered expatriate.A covered expatriate is someone who answers "No" to one or more of these questions, as of the date of formal termination of permanent resident visa or citizen status:
QUESTION 1. Tax Filing Up To Date?
Are you completely up to date with filing all of your U.S. tax returns and paying all of your U.S. taxes for last year and the four years before that? In other words, we are in 2022. Have you filed 2017 through 2021 income tax returns in the USA and paid all of your U.S. taxes for those years?If you answer "no" that means you haven't filed something you should have filed, or you haven't paid a tax liability you should have paid. You fail the "certification test." You are a covered expatriate.
QUESTION 2. Did You Pay Lots of U.S. Income Tax?
Look at the income tax you paid to the U.S. for 2017 through 2021. Compute the average tax liability for those five years by adding the tax paid for all five years, then dividing the sum by five. Is that amount below $178,000?If you answer "no" to this question, you paid (on average) more than $178,000 per year of income tax to the United States in the previous five years. You failed the "net income tax liability test." You are a covered expatriate.
QUESTION 3. What's Your Personal Net Worth?
Look at all of your worldwide assets (including U.S. and foreign assets, pensions, life insurance, and everything else you can think of) and all of your worldwide debts. Is your personal net worth less than $2,000,000?If you answer "no" to this question, your personal net worth is greater than $2,000,000 and you have failed the "net worth test." You are a covered expatriate.If you determine you are a covered expatriate, you may consider reading our
Exit Tax articles for more information.
