Those who wish to wish to explore expatriation by giving up U.S. citizenship or their green card will have to timely file IRS Form 8854 and compute if applicable, an exit type tax if they are considered a “Covered Expatriate” (“CE”) under Section 877A of the IRS Code.
The exit tax is composed of a market to market tax on certain unrealized gains in excess of $690,000 (2015) and a 30% tax on future receipt of certain deferred items. The market to market tax may be deferred if you meet certain conditions.
Covered expatriate status which is otherwise dependent on an average federal income tax liability greater than $160,000 (2015) for the 5 years ending before the date of expatriation or having a net worth of at least $2M at the expatriation date will be automatic if you have not complied with 5 years of tax returns prior to expatriation. There are certain exceptions to CE status for certain dual citizens and minors.