Covered Expat question for US Expatriation Tax

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future_canuck
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Joined: Wed Dec 02, 2020 2:08 am

Covered Expat question for US Expatriation Tax

Post by future_canuck »

from this site: https://thunfinancial.com/home/american ... -you-leap/

“Covered Expat”: The Tests and the Exception

In addition to the immigration and tax filing processes mentioned above, a one-time exit tax will be assessed for certain persons who expatriate that become designated “covered expatriates.” A covered expat includes any expatriating citizen or long-term resident that meets any one of the following three criteria:

-High Net Worth: the applicant has a net worth of at least $2 million on the date of expatriation;
-High Taxable Income: the applicant had an average annual net income tax liability above $168,000 (2019) (adjusts with inflation) over the prior 5 tax years; OR
-Non-Compliant on Tax Returns: The applicant fails to certify, under penalty of perjury, that the taxpayer has fully and compliantly reported income taxes for the preceding five tax years; or the applicant fails to provide evidence of such compliance (i.e., file a complete and accurate Form 8854).

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so, my two questions:
1. does net worth include primary residence? alternatively, if you set up an LLC and hold funds in the LLC, would these count against net worth?
2. what is "average annual net income"? is this MAGI, AGI, or some other definition to determine "net"?

thanks!
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