Expatriation Tax 2025: What U.S. Citizens Need to Know Before Leaving

When you give up your U.S. citizenship or long-term residency, the expatriation tax, a one-time tax imposed by the IRS on certain high-net-worth individuals who renounce their U.S. status. Also known as the exit tax, it doesn’t apply to everyone—but if you’re sitting on crypto, real estate, or stocks worth over $2 million, you’re in the crosshairs. This isn’t a tax on leaving—it’s a tax on unrealized gains, treated as if you sold everything the day before you renounced.

The IRS uses three tests to decide if you’re a covered expatriate, a person subject to the expatriation tax based on net worth, tax compliance, or average income. If your net worth is over $2 million, your average annual net income tax over the last five years was over $185,000 (2025 adjusted), or you failed to file IRS Form 8854 for the past five years, you’re flagged. Crypto holdings count—every Bitcoin, Ethereum, or meme coin you own is part of your asset total. If you held $2.1 million in crypto and never reported it, the IRS can still come after you, even if you moved to Portugal or Dubai.

Many people think moving abroad means leaving taxes behind. But the U.S. taxes based on citizenship, not residence. If you’re a dual citizen and you’ve been filing taxes properly, you might avoid the tax—but only if you meet all the exceptions. The foreign asset reporting, the requirement to disclose overseas financial accounts and assets to the IRS. includes crypto wallets held abroad. If you didn’t file FBAR or Form 8938, you’re already in trouble before you even think about renouncing.

There’s no gray area here. The IRS doesn’t care if you moved because of high taxes, political reasons, or just wanted to live on a beach. If you’re a covered expatriate, you pay. And if you try to hide crypto in offshore exchanges or use privacy coins to avoid detection, you’re playing with fire. Recent audits show the IRS is now using blockchain analytics to track asset transfers before renunciation.

What you’ll find below are real cases, clear breakdowns, and warnings from people who thought they could escape the tax—only to get hit with a $300,000 bill. Some posts explain how to legally reduce exposure. Others show how scams prey on people trying to navigate this mess. No fluff. No theory. Just what happens when the IRS catches up with you—and how to avoid becoming a statistic.