The Wild Cost of Renouncing Your U.S. Citizenship | Queer Money Ep. 601

Thinking of say "Bye Gurl" the U.S.?

Madonna’s divorce was expensive—but renouncing your U.S. citizenship could cost you even more 💸. In this episode of Queer Money®, we’re spilling the tea on the exit tax—what it is, who gets smacked, and how to not get wrecked by it.

So before you grab your passport and peace out to Portugal, know what Uncle Sam (aka Daddy Taxman) wants from you first. Because freedom ain’t free, darling—especially when the IRS is involved.

✅ Key Takeaways Checklist:

• 🇺🇸 The Exit Tax Is Real – Officially called the Expatriation Tax, it hits folks who renounce U.S. citizenship and meet specific criteria.

⚠️ You may be a "covered expatriate" if:

1. Your net worth is $2 million+
2. Your average income tax over the last 5 years is $206,000+ (2025 estimate)
3. You haven’t filed or paid taxes for the past 5 years
4. 👉 Green card holders may be subject if they’ve held one for 8 of the last 15 years

🏡 What gets taxed:

• Your home
• Investments
• Retirement accounts (401(k), IRAs)
• Even Taylor Swift merch 👀
• → The IRS pretends you sold it all and taxes your phantom capital gains.
• 💰 2024 exemption: First $821,000 in phantom gains is tax-free—but that’s not much if your home doubled in value since 1995.
• 🧓 Even in retirement (or death):
• Rental income or property sales could still be taxed
• Your heirs could owe gift or estate tax (up to 40%)
• Welcome to the Foreign Investment in Real Property Tax Act—thanks, Reagan!

🧠 Ways to plan ahead:

• Donate appreciated assets (to LGBTQ+ orgs = win-win!)
• Max Roth conversions now
• Relocate abroad early, reduce assets before renouncing
• Review international tax treaties for potential protection
• 🧾 Must file IRS Form 8854 – Whether you qualify for the tax or not, this is your official “I broke up with America” form.
• 💡 Talk to a pro: This is niche tax law. H&R Block ain’t it. Find someone who knows international tax strategy.

Start here:

🎁 Grab your free Happy Gay Retirement Calculator here: https://queermoneypodcast.com/hgrcalc

Mentioned in this episode:

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