You can use the IRS Streamlined Filing Compliance Procedures to catch up without penalties, provided you certify your failure to file was non-willful. This is common for Americans who moved to Asia years ago and did not realize they still had US filing obligations.

To expatriate, you must:

1. Formally renounce US citizenship at a US embassy or consulate, or relinquish a long-term green card by filing Form I-407.
   
   
2. File a final US tax return with Form 8854 to certify you have met all tax obligations for the past five years.
   
   
3. Pay the exit tax if you are a “covered expatriate” with net worth over US$2 million, high average US income tax liability, or failure to certify that you were tax compliant for the past five years.

Covered expatriates are also subject to the reverse gift tax rule, which can impose US gift or estate tax on certain transfers to US persons made after expatriation. We strongly recommend consulting a qualified US tax attorney before renouncing, as the process can carry significant and lasting tax consequences.

For more details, check out our interactive guide here.

An accidental American is someone who is a US citizen by birth but has little or no connection to the US. This can happen if you were born in the US while your parents were temporarily there, or if you were born abroad to a US citizen parent who met the physical presence requirement for transmitting citizenship. For children born on or after November 14, 1986, that requirement is generally 5 years of physical presence in the US before the child’s birth, with at least 2 of those years occurring after the parent turned 14. Even without a US passport or ties to the US, accidental Americans are still subject to US tax and reporting obligations unless they formally renounce citizenship.

If you are a non-US person with beneficiaries who are US persons or may become US persons in the future, holding assets in a foreign grantor trust can be a powerful planning tool. While you are alive and treated as the grantor, the trust’s income is generally not taxable to the US beneficiaries, and US reporting requirements for them are minimal. This allows you to transfer wealth into the trust without triggering US federal estate or gift tax on non-US-situated assets.

A foreign grantor trust can also help manage US estate tax exposure by keeping non-US-situated assets outside the US estate tax net, even after they pass to US beneficiaries.

Form 706-NA is the US estate tax return for non-US citizens domiciled outside of the US (a “NCND”). It is required when a NCND dies owning US-situated assets with a total value above US$60,000. Filing Form 706-NA allows the IRS to assess the estate tax owed. The IRS will not issue the transfer certificate until the full estate tax is paid. This certificate is required by banks, brokers, and other institutions before they will release US-situated assets such as cash accounts, securities, or real estate to the heirs or the estate’s executor.

Because the tax must be paid before the assets are released, estates that do not have sufficient liquid funds outside the US can face severe liquidity problems. This can result in being unable to access the very assets needed to pay the tax.

Planning tip: To avoid this issue, consider keeping enough liquidity outside the US or using ownership structures such as certain foreign entities or life insurance that can provide funds for the estate tax without relying on the frozen US assets.

Potentially, yes. Individuals who are neither US citizens nor US domiciliaries are subject to US estate tax only on their US-situated assets, including US real estate and shares of a US corporation (for example, META or NVDA). The exemption for non-US persons is very low, currently around USD $60,000. The value of US-situated assets above that threshold is taxed at graduated rates up to 40 percent.

Importantly, the US estate tax is applied to the gross value of the assets, not just the gain. For example, if a non-US person owns US real estate worth US$1 million at death, the tax is calculated on the full US$1 million value, regardless of what they originally paid for it. US estate tax is generally calculated based on the fair market value of the assets at the date of death (or 6 months after), and the tax must usually be paid before the estate can transfer the property to the heirs. This makes advance US estate tax planning critical.

If you are a non-US person (defined in another FAQ), you generally do not owe US federal capital gains tax on the sale of shares of a US corporation, provided the gain is not effectively connected with a US trade or business. However, there is also a special US capital gains tax that may apply if you stayed in the US for over 183 days but remained a non-US person because your days were exempted from the substantial presence test. The main exception is if the shares are in a US real property holding corporation under FIRPTA, in which case the gain may be taxable and subject to withholding. While capital gains may escape US tax, US estate tax can still apply if you own shares of a US corporation at death, as they are considered US-situated assets.