How can you minimize your expatriation tax liability?
Expatriation or the Exit tax is a sum of money that individuals have to pay when they plan to exit the country. They become expatriates in the process and have to pay taxes on their net worth. This is a very important process that must be looked prior to the move. Many people wish to move to a new country due to personal reasons, politics, employment or tax reasons. For example, a person might find their tax obligation better suited to a certain country. There can be several reasons for considering an expatriation process for any individual.
However, one should ensure that the benefits outweigh the costs in this process. People who have a high net worth would have to pay a hefty amount to the government. Also, citizens and long-term residents are subject to this tax. If you are planning this move, keep reading. You need to plan your expatriation tax obligations by hiring cross-border legal experts. They would suggest the correct measures to help save money and reduce the tax obligation. However, you can take some steps individually too. It would allow you to take the process into your own hands and have a comfortable and affordable move to your new home.
Consider transferring the assets.
You can transfer your capital assets to your spouse easily. The tax law applies to your individual net worth. If it is above the $2 million thresholds, you would be subject to the taxes. However, if you transfer the assets such as your property and home to your spouse, it wouldn’t be under your name legally. You can consider this step if you have a trustworthy partner and want to minimize your tax obligations. Ensure that you follow the process lawfully and comply with all the rules.
Minimize the capital gains
You cannot just sell property and assets and think you have escaped the tax. It would apply to the gains you get from the sale and increase your obligations. Also, it may make this entire practice of selling not beneficial. The smart choice may be to hold on to your liquid assets. This would be the cash you have with yourself. An easy transfer to your spouse can handle, other things such as land and real estate. Ensure that you do not increase your capital gains which would lead to more taxes for your expatriation.
Include your kids
If you have kids who won’t be moving with you, you can avail of benefits on the tax obligation. Expats who have dependent children who are US citizens can add up their living and care expenses from your tax. It would help reduce the cost by a lot and also help save up the money for your kids. However, you need to bring this up with the authority to claim the benefits.
Hire a legal team
A straightforward way to reduce your worries and expense is to hire an expert legal team. They would assess the situation, your assets, and possible solutions. It would be the best choice as they have years of experience and can help you minimize the tax payable. However, you should hire a team that has expertise in expatriation tax planning. It would allow for quick and efficient solutions for your tax obligations and a smooth move to your new home.
Also, you can use their advice to manage your assets and tax obligations in the new country. They will also help you fill out all the procedures legally and ensure that you don’t miss out on any rules.
These were the tips that would help you reduce your expatriation tax liability. Ensure that you follow all the rules and go through the requirements. Skipping any of them may lead to trouble for you in the future.