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Expatriation tax provisions apply to U.S. citizens who have relinquished their citizenship and long-term residents who have ended their residency (expatriated). Form 8854 is used by individuals who have expatriated on or after June 4, 2004, to provide information required by section 6039G.
The date on which you are considered to have expatriated determines whether you must file Part A or Part B. You are considered to have expatriated on the date you relinquished your citizenship (in the case of a former citizen) or terminated your long-term residency status (in the case of a former U.S. resident). If you expatriated after June 3, 2004, and before June 17, 2008, complete General Information and Part A. If you expatriated after June 16, 2008, complete General Information and Part B.
You are considered to have relinquished your U.S. citizenship on the earliest of the following dates.
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The date you renounced your U.S. citizenship before a diplomatic or consular officer of the United States (provided that the voluntary renouncement was later confirmed by the issuance of a certificate of loss of nationality).
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The date you furnished to the State Department a signed statement of your voluntary relinquishment of U.S. nationality confirming the performance of an expatriating act (provided that the voluntary relinquishment was later confirmed by the issuance of a certificate of loss of nationality).
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The date the State Department issued a certificate of loss of nationality.
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The date a U.S. court canceled your certificate of naturalization.
If you were a U.S. long-term resident (LTR), you terminated your lawful permanent residency on the earliest of the following dates.
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The date you voluntarily abandoned your lawful permanent resident (LPR) status by filing Department of Homeland Security Form I-407 with a U.S. consular or immigration officer, and the Department of Homeland Security determined that you had, in fact, abandoned your LPR status.
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The date you became subject to a final administrative order for your removal from the United States under the Immigration and Nationality Act and you actually left the United States as a result of that order.
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If you were a dual resident of the United States and a country with which the United States has an income tax treaty, the date you commenced to be treated as a resident of that country and you determined that, for purposes of the treaty, you are a resident of the treaty country and gave notice to the Secretary of such treatment on Forms 8833 and 8854. See Regulations section 301.7701(b)-7 for information on other filing requirements if you are such an individual.
You are an LPR of the United States if you have been given the privilege, according to U.S. immigration laws, of residing permanently in the United States as an immigrant. You generally have this status if you have been issued an alien registration card, also known as a “green card.”
The rules in this section apply to persons who are considered to have expatriated after June 3, 2004, and before June 17, 2008.
For purposes of filling out Part A, the date of your expatriation will be the later of the date you notify the relevant agency of your expatriating act or the date this form is filed in accordance with these instructions. Apply the rules of section 7502 to determine the date on which this form is filed. Generally, the postmark date is the filing date.
Until you file Form 8854 and notify the Department of State or the Department of Homeland Security of your expatriating act, your expatriation for immigration purposes will not relieve you of your obligation to file U.S. tax returns and report your worldwide income as a citizen or resident of the United States.
You must file Form 8854 to:
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Establish that you have expatriated for tax purposes; or
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Comply with the annual information reporting requirements of section 6039G, if you are subject to tax under section 877.
Note. If you were a naturalized citizen, but lost your citizenship because a federal court revoked your naturalization under section 340 of the Immigration and Nationality Act, you do not need to complete this form if, after the revocation, you hold the status under the Immigration and Nationality Act of an alien lawfully admitted for permanent residence. You must complete this form, however, if you were a naturalized citizen and you gave up your citizenship by expatriation under section 349 of the Immigration and Nationality Act.
You are subject to taxation under section 877 if you are a former U.S. citizen or former LTR and any one of the following applies to you.
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Your average annual net income tax liability for the 5 tax years ending before the date of your expatriation is more than the amount listed next.
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$124,000 if you expatriated in 2004.
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$127,000 if you expatriated in 2005.
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$131,000 if you expatriated in 2006.
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$136,000 if you expatriated in 2007.
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$139,000 if you expatriated in 2008.
This amount is subject to cost-of-living adjustments. The IRS will announce the amounts applicable to future years in annual revenue procedures that will be published in the Internal Revenue Bulletin. The Internal Revenue Bulletins can be accessed at www.irs.gov/irb.
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Your net worth is $2 million or more on the date of your expatriation.
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You fail to certify on Form 8854 that you have complied with all of your federal tax obligations for the 5 tax years preceding the date of your expatriation.
If you are subject to tax under section 877, you are no longer taxed as a citizen or resident on your worldwide income. However, you must compute your tax as a nonresident in accordance with the special rules of section 877. These rules expand the categories of income and gain on which you owe tax. You are also subject to special rules for gift and estate tax purposes that differ from those applicable to other nonresident aliens.
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You became at birth a U.S. citizen and a citizen of another country, you continue to be a citizen of the other country, and you have no substantial contacts with the United States.
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You became at birth a U.S. citizen, neither of your parents was a U.S. citizen at the time of your birth, your loss of citizenship occurred before you attained age 18½, and you were not present in the United States for more than 30 days during any of the 10 calendar years preceding your loss of citizenship.
You can be present in the United States for up to 60 days without being treated as a U.S. citizen or resident if you are performing personal services in the United States for an employer who is not related (within the meaning of sections 267 and 707) to you and you meet either of the following requirements.
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You were a U.S. citizen and, within a reasonable period following your expatriation, you became a citizen or resident fully liable to tax in the country in which you, your spouse, or either of your parents was born; or
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For each year in the 10-year period ending on the date of expatriation, you were physically present in the United States for 30 days or less.
See Pub. 519, U.S. Tax Guide for Aliens, for details about what constitutes a day of presence in the United States.
The rules in this section apply to persons who are considered to have expatriated after June 16, 2008.
If you expatriated after June 16, 2008, the expatriation rules apply to you if any of the following statements apply.
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Your average annual net income tax for the 5 tax years ending before the date of expatriation is more than $139,000.
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Your net worth was $2 million or more on the date of your expatriation.
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You fail to certify on Form 8854 that you have complied with all federal tax obligations for the 5 tax years preceding the date of your expatriation.
Dual-citizens and certain minors (defined next) are not subject to the expatriation tax even if they meet (1) or (2) above. However, they still must provide the certification required in (3) above.
You may qualify for the exception described above if you meet the following requirements.
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You became at birth a U.S. citizen and a citizen of another country and you continue to be a citizen of, and are taxed as a resident of, that other country.
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You were a resident of the United States for not more than 10 years during the 15-tax-year period ending with the tax year during which the expatriation occurred. For the purpose of determining U.S. residency, use the substantial presence test described in chapter 1 of Publication 519.
You may qualify for the exception described above if you meet all of the following requirements.
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You expatriated before you were 18½.
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You were a resident of the United States for not more than 10 tax years before the expatriation occurs. For the purpose of determining U.S. residency, use the substantial presence test described in chapter 1 of Publication 519.
In the year you expatriate, you are subject to income tax on the net unrealized gain in your property as if the property had been sold for its fair market value on the day before your expatriation date (“mark-to-market tax”). This applies to most types of property interests you held on the date of your expatriation. But see Exceptions below.
Gains from deemed sales are taken into account without regard to other U.S. internal revenue laws. Losses from deemed sales are taken into account to the extent otherwise provided under U.S. internal revenue laws. However, section 1091 (relating to the disallowance of losses on wash sales of stock and securities) does not apply. The net gain that you otherwise must include in your income is reduced (but not below zero) by $600,000.
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Eligible deferred compensation items.
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Ineligible deferred compensation items.
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Specified tax deferred accounts.
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Interests in nongrantor trusts.
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You make the election on a property-by-property basis.
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The deferred tax on a particular property is due on the return for the tax year in which you dispose of the property.
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Interest is charged for the period the tax is deferred.
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The due date for the payment of the deferred tax cannot be extended beyond the earlier of the following dates.
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The due date of the return required for the year of death.
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The time that the security provided for the property fails to be adequate. See item (6) below.
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You make the election in Part B, Section III.
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You must provide adequate security (such as a bond) under rules to be issued by the IRS.
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You must make an irrevocable waiver of any right under any treaty of the United States that would preclude assessment or collection of any tax imposed by section 877A.
If you expatriated after June 16, 2008, and before January 1, 2009, this form should be filed by the due date of your income tax return (including extensions). For most individuals, the due date before extensions will be June 15, 2009.
If you expatriated after June 16, 2008, attach Form 8854 to your Form 1040 or Form 1040NR and send a copy of Form 8854 to the address below. If you are not otherwise required to file a U.S. tax return, send Form 8854 to:
Internal Revenue Service
P.O. Box 331
Drop Point S607-F8854
Bensalem, PA 19020
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