Election angst leads many to consider moving abroad

According to some sources, Google searches for “emigrating to Canada,” “moving abroad” and “leaving the U.S.” (among others) spiked the night of the first election debate between Hillary Clinton and Donald Trump. Say what you will about either candidate, the truth remains that this election cycle has been a tumultuous one that has inspired deep feelings in supporters on both sides. These feelings have even inspired many to consider a radical solution if their candidate doesn’t come out on top: moving out of the country.

It’s one thing to dream of fleeing what you fear will be an unsuccessful government and another entirely to actually make it happen. There are countless considerations to be made before such a big move, many of which could have serious tax implications for you as an American citizen.

These include:

• Employment – Will you be able to stay with your current employer, or will you need to find a new job?
• Housing – Will you purchase a house in your new location, or rent? Are you going to sell your old home in the U.S.?
• Assets – will you keep funds in American banks, or move them to a foreign country as well? If you plan on moving investment accounts like 401Ks and IRAs, have you prepared for the possibility of early withdrawal fees and the tax consequences these could produce?

The importance of declaring all your assets

With the surge in interest in potentially emigrating from the U.S. after the election is done or when the new President is sworn in, government agencies have begun issuing guidance and advice to people who might have been considering not declaring assets upon leaving to avoid tax issues. The main piece of advice regarding this: don’t do it.

The IRS requires citizen and green card-holding expatriates with a net worth of at least $2 million or an annual income of $160,000 or more for the five previous years to file Form 8854 and pay exit taxes on American assets before leaving the country. Failure to do this can have serious civil and criminal repercussions, including jail time, extensive fines (in the millions of dollars, depending your assets), interest on back taxes due and restitution.

Once you move assets to foreign banks, you’ll still need to file FBARs and comply with the provisions set forth in FATCA or you could risk additional criminal and civil penalties.

Before you act

If you are seriously considering a move out of the U.S. after November 8, tread carefully and with due diligence. Don’t make the decision without consulting a financial expert and a tax attorney to ensure that you have considered the practical tax implications of your proposed relocation.