There are some ways to avoid paying gift tax: 3 The only question will be exactly how much tax you must pay in real money. citizens (and noncitizens who are domiciled in the United States) are taxed. Let’s see how you make those large gifts tax-free. citizenship and not be a covered expatriate. If you successfully avoid covered expatriate status under the other two tests, 2 you will be able to renounce your U.S. This is less than the $2,000,000 threshold for covered expatriate status. You give $3,500,000 of assets to your spouse, and file a gift tax return reporting the gift. citizen who wishes to renounce but does not want covered expatriate status. You file a gift tax return, but pay no tax. If you have a net worth of more than $2,000,000 but less than $7,500,000, it is possible to give away enough assets - with no gift tax - to avoid covered expatriate status. citizenship (or giving up a long-held green card).

Objective: Avoid Covered Expatriate StatusĪ covered expatriate is someone who has a net worth of $2,000,000 or more when relinquishing U.S. Make your big gifts in year 1, and expatriate in year 2. The unified credit does not apply to you. If you make a large gift before expatriation and in the same year, you will pay a large gift tax. Make Big Gifts in the Year Before ExpatriatingĭecemPhil Hodgen Expatriation Bottom Line Up Front

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