Nov, 10 2025
Exit Tax Calculator
Enter Your Assets
Net Worth Analysis
US citizens with net worth over $2 million are considered "covered expatriates" and may owe exit tax.
Tax Estimate
Every year, a small but growing number of US citizens walk into a US consulate abroad and give up their American passport. Not because they hate the country. Not because they want to escape responsibility. But because they can’t afford to keep paying taxes on their Bitcoin.
The US is the only country in the world that taxes its citizens based on citizenship, not where they live. That means if you’re a US citizen, even if you’ve lived in Singapore for 20 years, the IRS still wants a cut of every Bitcoin trade, every staking reward, every NFT sale. For most people, that’s manageable. For someone with $5 million in crypto? It’s a nightmare.
Renouncing US citizenship isn’t a quick tax dodge. It’s a life-altering decision with a $2,350 fee, a potential $1 million+ exit tax, and zero chance of going back. But for some, it’s the only way to stop the IRS from taking half their gains.
Who Actually Pays the Exit Tax?
The IRS doesn’t let you just walk away. If you’re a "covered expatriate," you owe an exit tax before you can renounce. You’re considered covered if you meet any one of three rules:
- Your net worth is over $2 million on the day you renounce
- Your average annual US income tax over the last five years was over $206,000 (adjusted for inflation in 2025)
- You didn’t file all your tax returns for the past five years
Most people who renounce for crypto reasons hit the $2 million net worth mark. But here’s the catch: the exit tax isn’t a flat fee. It’s calculated as if you sold every asset you own the day before you give up your citizenship. That includes Bitcoin, Ethereum, real estate, stocks, even your car.
Let’s say you own 100 BTC bought for $5,000 each in 2017. Today, it’s worth $7 million. The IRS treats that $6.95 million gain as taxable income. At the top capital gains rate of 23.8%, that’s over $1.6 million in exit tax - just for Bitcoin.
How People Avoid the Exit Tax (Legally)
It’s not impossible to get around the exit tax. But it takes planning - years of it.
The smartest move? Gift assets before you renounce. You can transfer Bitcoin, property, or cash to family members, trusts, or charities in the year before you give up citizenship. That lowers your net worth below the $2 million threshold. But here’s the trick: you can’t just give it away and keep using it. The IRS looks at control. If you’re still calling the shots, they’ll count it anyway.
One real strategy: transfer Bitcoin to a trust controlled by your adult child. You no longer own it. You don’t get to spend it. But you can still advise them - and they can help you out if you need cash. It’s legal. It’s ethical. And it’s how many multi-million dollar crypto holders reduce their exit tax from millions to zero.
Another tactic? Wait for your income to drop. If you had $1 million in crypto gains five years ago but haven’t traded since, your average tax liability might now be under $206,000. Renounce then. No exit tax. No problem.
Where Do They Go?
Renouncing doesn’t make you stateless. Almost everyone gets a second passport first. The top destinations? Countries that don’t tax crypto at all.
- Portugal: No capital gains tax on crypto. No wealth tax. No inheritance tax. Just a 20% income tax if you’re employed locally - but most crypto investors aren’t.
- Switzerland: Crypto is treated as private wealth. No tax on holding. No tax on personal trades. Zurich is full of crypto expats.
- Georgia: Zero tax on crypto for non-residents. And you can get residency in 30 days.
- Malta: The "Blockchain Island." Offers citizenship by investment for €700,000+ in real estate and donations. You get an EU passport, then renounce your US one.
- Singapore: No capital gains tax. Strong banking. Low corruption. But residency is hard to get.
Most people choose Portugal or Georgia because they’re affordable and easy to move to. Switzerland is for the ultra-rich. Malta is for those who want EU access.
The Process: What Actually Happens
You can’t renounce online. You can’t do it by mail. You must show up in person at a US embassy or consulate - and you’ll wait months for an appointment. Some people travel to Canada, Mexico, or the Philippines just to get a slot.
Here’s what you need:
- Proof of second citizenship
- Five years of filed US tax returns (including FBARs and Form 8938 for foreign assets)
- Form 8854 - the "Initial and Annual Expatriation Statement" - completed and notarized
- $2,350 fee (paid in cash or credit card at the consulate)
- A 30-minute interview where they ask why you’re renouncing
They don’t judge you. But they will ask. And if you say "I want to avoid crypto taxes," they’ll nod and hand you the paperwork. It’s not illegal. It’s just… rare.
After you sign, you’re no longer a US citizen. You get a Certificate of Loss of Nationality. That’s it. No ceremony. No fanfare. Just a stamp on a piece of paper.
What Happens After You Renounce?
Here’s the myth: "Now I’m free from the IRS forever." Not quite.
You still owe any exit tax you didn’t pay. If you didn’t file Form 8854? The IRS still considers you a US taxpayer - and can hit you with penalties later.
You also still pay US taxes on US-sourced income:
- Rental income from a house in Florida
- Dividends from Apple stock
- Wages from a US-based job
But here’s the win: no more reporting foreign bank accounts. No more FBARs. No more FATCA forms. No more $10,000 penalties for forgetting to file. No more IRS audits on your crypto wallet. You’re free from the nightmare of worldwide reporting.
And you can still visit the US - but you need a visa. B-2 tourist visa? Easy. Work visa? Hard. Green card? Almost impossible. You’re a foreigner now. No special treatment.
Why Most People Don’t Do It
Renouncing sounds great until you think about what you’re giving up.
You lose:
- The right to live and work in the US without a visa
- Access to US embassies abroad in emergencies
- The ability to vote or run for office
- Passport protection - if you’re arrested overseas, the US won’t help you
- Eligibility for Social Security or Medicare (unless you’ve paid in for 10+ years)
And worst of all? You can’t get it back. Not ever. Not if you change your mind. Not if you get sick. Not if your kids want to go to Harvard. Once you renounce, the door slams shut.
Most people with $2 million in crypto? They keep their citizenship. They pay the tax. They file the forms. They live in Bali or Lisbon. They’re happy. The tax is just a cost of doing business - like rent or insurance.
Renouncing is only worth it if:
- You have over $5 million in crypto or assets
- You plan to live abroad permanently
- You’ve already secured second citizenship
- You’ve planned your asset transfers for at least a year
- You’re okay with never setting foot in the US again as a citizen
The Bigger Picture
The fact that people are renouncing over crypto taxes tells us something: the US tax system is out of sync with the digital age.
Other countries tax based on where you live. The US taxes based on where you were born. That’s fine if you’re a teacher in Ohio. It’s brutal if you’re a crypto trader in Thailand.
There’s talk in Washington about switching to residency-based taxation. But nothing’s moving. Not in 2025. Not yet.
For now, renouncing remains a tool for a tiny group: the ultra-wealthy, the globally mobile, the risk-tolerant. It’s not for everyone. But for those who do it right? It’s the only way to truly own their crypto - without the IRS breathing down their neck.
And that’s worth more than a passport.
Is it legal to renounce US citizenship to avoid crypto taxes?
Yes, it’s completely legal. The US government allows citizens to renounce citizenship. The IRS doesn’t prohibit renouncing for tax reasons. But you must follow all rules - file your taxes, pay any exit tax, and submit Form 8854. If you skip steps, you could face penalties or remain classified as a US taxpayer.
How much does it cost to renounce US citizenship?
The administrative fee is $2,350, paid to the US State Department. But the real cost is the exit tax - which can be $1 million or more if you have $2 million+ in assets. Legal and tax advisor fees can add another $10,000-$50,000. You also need to pay for second citizenship, which can cost $100,000-$700,000 depending on the country.
Can I keep my US bank account after renouncing?
Technically yes, but it’s hard. Many banks refuse to serve non-resident aliens due to compliance risks. You may be forced to close your account or move your money to a foreign bank. Some fintech platforms like Revolut or Wise allow non-US residents to hold USD accounts, but they’re not traditional US banks.
Do I still owe taxes on crypto I sold after renouncing?
No - if you sold crypto after renouncing and you’re no longer a US taxpayer, the IRS has no claim. But if you sold crypto while still a US citizen, even if you received the money after renouncing, you owe tax on that gain. Timing matters: the tax event happens when you sell, not when you get paid.
Can I get my US citizenship back after renouncing?
No. Once you renounce, it’s final. There is no appeal, no reversal, no exception. You can apply for a visa to live in the US like any other foreigner, but you cannot regain citizenship unless you go through the full naturalization process - which requires living in the US as a permanent resident for five years and proving you’re eligible. Most people who renounce for tax reasons never want to live in the US again.