Form 8854, Initial and Annual Expatriation Statement, is an IRS information form used by certain former U.S. citizens and former long-term residents who have expatriated.
For tax purposes, expatriation generally means:
- A U.S. citizen has relinquished U.S. citizenship.
- A long-term resident has ended lawful permanent resident status for U.S. federal tax purposes.
The form helps the IRS determine whether you complied with your federal tax obligations before expatriating, whether you’re a covered expatriate, and whether special expatriation tax rules apply. It also satisfies certain initial and annual reporting requirements under Internal Revenue Code section 6039G.
Form 8854 doesn’t end your citizenship or immigration status. Those legal events occur separately. The form reports the tax consequences after an expatriating event has occurred.
Who needs to file Form 8854?
You may need to file Form 8854 if you’re:
- A U.S. citizen who relinquished U.S. citizenship.
- A long-term resident who ended U.S. residency for federal tax purposes.
- A person with an ongoing annual filing requirement related to an earlier expatriation, such as certain deferred compensation, specified tax-deferred accounts, non-grantor trusts, or an election to defer payment of expatriation tax.
The expatriation rules discussed here generally apply to U.S. citizens who relinquished citizenship and long-term residents who ended residency on or after June 17, 2008. Special rules apply to people who expatriated during earlier periods.
Who is a long-term resident?
A long-term resident generally means someone who was a lawful permanent resident of the United States, commonly called a Green Card holder, in at least 8 of the 15 tax years ending with the year their residency ends.
A tax year may count even if you held permanent resident status for only part of that year. However, a year may not count in the same way if you were treated as a resident of another country under an applicable tax treaty and properly reported that treaty position.
Simply allowing a Green Card to expire doesn’t necessarily end residency for U.S. tax purposes. The date and manner in which lawful permanent resident status ends can affect whether an expatriation has occurred.
What is a covered expatriate?
A person who expatriates on or after June 17, 2008, is generally a covered expatriate if any one of the following tests applies:
- Net-worth test: Your net worth is $2 million or more on your expatriation date.
- Tax-liability test: Your average annual net U.S. income tax liability for the five tax years ending before expatriation is more than the inflation-adjusted threshold for your expatriation year.
- Tax-compliance test: You can’t certify on Form 8854 that you complied with all U.S. federal tax obligations for the five tax years before expatriation.
Meeting just one of these tests is generally enough to make you a covered expatriate.
Net-worth test
The net-worth threshold is $2 million or more on the date of expatriation. It isn’t limited to property located in the United States.
The calculation generally considers worldwide assets and liabilities. This may include:
- Cash and bank accounts
- Investments
- Real estate
- Retirement accounts
- Business interests
- Trust interests
- Certain life insurance interests
- Personal property
- Outstanding debts and other liabilities
Valuing these items can become complicated, especially when property is jointly owned, held through an entity, or difficult to sell.
Average annual net income tax liability test
This test uses your net income tax liability, not your income or taxable income, for the five tax years immediately before expatriation.
The threshold is adjusted for inflation. For expatriations during 2025, the threshold was $206,000. The final 2026 threshold wasn’t identified in the available current Form 8854 instructions as of September 4, 2026, so taxpayers expatriating in 2026 should check the final 2026 instructions before applying this test.
Five-year tax-compliance test
You must certify that you complied with all federal tax obligations for the five tax years before expatriation.
This requirement may include more than filing five income tax returns. Depending on your circumstances, compliance could also involve:
- Paying required federal taxes
- Filing amended or delinquent returns
- Reporting foreign income
- Filing required international information returns
- Reporting foreign financial assets or business interests
- Satisfying other applicable federal tax obligations
If you can’t make the certification, you’re generally treated as a covered expatriate even if your net worth and average tax liability are below the other thresholds.
Are there exceptions to covered expatriate status?
Limited exceptions may apply to certain dual citizens at birth and certain minors. These exceptions generally apply only to the net-worth and tax-liability tests.
Even if an exception applies, the taxpayer must generally satisfy the five-year federal tax-compliance certification. The exception also doesn’t automatically eliminate the requirement to file Form 8854.
Because the conditions are narrow, don’t assume that having another citizenship or expatriating at a young age automatically prevents covered-expatriate status.
What is the expatriation or exit tax?
Covered expatriates may be subject to tax under Internal Revenue Code section 877A. This is often called the exit tax.
Under the mark-to-market rule, most property is generally treated as if it were sold for fair market value on the day before expatriation. Net unrealized gain may then be included in taxable income, subject to an inflation-adjusted exclusion amount.
For 2025, the exclusion amount was $890,000. The amount for a 2026 expatriation should be confirmed using the final 2026 Form 8854 instructions.
Not every asset follows the standard mark-to-market calculation. Separate rules may apply to:
- Eligible and ineligible deferred compensation
- Certain tax-deferred accounts
- Interests in non-grantor trusts
- Property for which payment of the exit tax is deferred
Being classified as a covered expatriate doesn’t automatically mean you’ll owe exit tax. The amount depends on your assets, unrealized gains, account types, available exclusion, and other applicable rules.
What information is reported on Form 8854?
Depending on your filing situation, Form 8854 may request:
- Your identification and contact information
- Your expatriation date
- Your citizenship or long-term residency history
- Your U.S. tax liability for the previous five years
- Certification of five years of federal tax compliance
- Your worldwide assets and liabilities
- The fair market value and tax basis of your property
- Information about deferred compensation and tax-deferred accounts
- Interests in non-grantor trusts
- Mark-to-market gain or loss calculations
- Information about any election to defer payment of tax
Gathering accurate asset values and tax basis information before beginning the form can make the process easier.
When and how do I file Form 8854?
For a current-year expatriation, attach Form 8854 to the federal income tax return that applies to your filing status for the expatriation year.
Depending on when your expatriation occurred and your tax residency during the year, the return may involve Form 1040, Form 1040-NR, or a dual-status filing. The applicable Form 8854 instructions explain whether an additional copy must be sent separately.
Some taxpayers must continue filing the form annually after the initial expatriation year. An annual requirement may apply while certain deferred tax arrangements, trust interests, or other continuing obligations remain open.
Don’t assume the initial form is always the final one.
What happens if I don’t file Form 8854?
Failure to file a complete and accurate Form 8854 when required may result in a $10,000 penalty. An incomplete form may also prevent you from making the five-year tax-compliance certification, which could cause you to be treated as a covered expatriate.
The consequences can extend beyond the penalty. Missing or incorrect reporting may affect the calculation of exit tax and create continuing filing issues.
The IRS maintains relief procedures for certain former citizens who meet specific requirements and want to resolve prior U.S. tax and reporting noncompliance. Those procedures are limited, and relinquishing citizenship has serious, generally irreversible consequences.
Program Entry
Follow this path:
- Select Federal.
- Select Miscellaneous Forms.
- Select Other Miscellaneous Forms.
- Select Initial and Annual Expatriation Statement.
Before starting, have your expatriation information, five-year tax history, worldwide asset values, adjusted tax bases, liabilities, deferred compensation details, retirement account information, and trust documents available.
Our software can help prepare the form from the information you enter. However, it can’t determine the legal date on which citizenship or residency ended, value complex assets, or provide legal advice about whether expatriation is the right choice.