Episode 89: The U.S. Exit Tax and the 8-Out-of-15-Year Rule

What Canadian Green Card Holders Need to Know Before They Surrender Status
Guest: Robert Clegg, CanadAmerican Tax Services  |  Host: Gerry Scott
Episode Overview
A lot of Canadians who built a life in the United States assume that walking away from a green card is as simple as handing it back at the border. It is not. In this episode, Gerry sits down with cross-border tax specialist Robert Clegg of CanadAmerican Tax Services to unpack the U.S. Exit Tax, the rule that can turn a routine move back to Canada into a six-figure tax bill.
Robert walks through how the IRS decides who counts as a covered expat, why the 8-out-of-15-year rule catches long-term green card holders off guard, and what really happens at the border when an officer decides your green card has been abandoned. Real client scenarios, including a near miss at the seven-year mark, illustrate just how much timing matters.
Whether you are holding onto a green card out of habit, weighing citizenship, or planning your eventual return to Canada, this conversation lays out exactly what to check before you make a move.
What You'll Learn

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What the U.S. Exit Tax actually is, and how it mirrors Canada's departure tax with a mark-to-market calculation on the day you renounce or abandon status

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The $2 million net worth threshold that determines whether you're a covered expat, and the roughly $800,000 exclusion available against any deemed gain

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Why deferred compensation, including 401(k)s and RRSPs, faces a 30 percent withholding if you're a covered expat, and why CPP, OAS, and Social Security are treated differently

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The 8-out-of-15-year rule for green card holders, including how even one day of residency in a given year counts toward the eight

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Why a green card does not simply expire after ten years for tax purposes, and the official abandonment process required to stop U.S. filing obligations

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How border officers assess whether you've abandoned your green card by living in Canada, and what filing a Canadian tax return as a resident signals

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What a reentry permit is and how it protects green card holders who plan to spend up to two years outside the U.S. without losing status

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Why there's no do-over once a green card is surrendered, and the limited exceptions for U.S. citizen spouses or children

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The case for taking U.S. citizenship before moving back to Canada if you ever want unrestricted reentry, including the Medicare timing consideration for retirees under 65

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Practical consequences of renouncing, from B-2 visitor day limits to firearm import restrictions to how a Canadian DUI or criminal record can bar reentry for former citizens


Resources & Links

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Guest: Robert Clegg, CanadAmerican Tax Services - cross-border personal, corporate, and partnership tax planning https://www.canadamericantax.com/meet-us.php

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IRS Form 8854, Initial and Annual Expatriation Statement: https://www.irs.gov/forms-pubs/about-form-8854

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USCIS Form I-131, Application for Travel Document (includes the reentry permit for green card holders): https://www.uscis.gov/i-131

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USCIS naturalization eligibility tool: https://www.uscis.gov/citizenship

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snowbirdsheadingsouth.com (http://snowbirdsheadingsouth.com)

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