New IRS rules address expatriate gifts

January 25, 2025

The IRS has issued final regulations concerning taxes on gifts and bequests received from individuals who renounced their U.S. citizenship or residency.

The regulations, effective Jan. 14, 2025, provide guidance on reporting and paying the tax imposed under Section 2801 of the Heroes Earnings Assistance and Relief Tax Act of 2008.

This section mandates that U.S. citizens or residents receiving "covered gifts" or "covered bequests" from "covered expatriates" must pay tax at the highest applicable gift or estate tax rate.

The IRS defines a covered expatriate as someone who expatriated after June 17, 2008, and meets specific income and net worth criteria.

The IRS noted that the final regulations revise several provisions, including the definition of covered bequests and the indirect acquisition of property. Learn more.

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