Form 8854 is a crucial document that anyone giving up U.S. citizenship or a long-term residency (such as a Green Card) must file. This form helps the U.S. government confirm that you have settled all your tax obligations. Additionally, it determines whether you are classified as a "covered expatriate." If you fall into this category, you might have to pay an exit tax.
You are considered a "covered expatriate" if you meet any of the following criteria:
- Your net worth exceeds $2 million on the date you give up your citizenship or residency.
- Your average annual net income tax liability for the past five years is above a certain threshold
- You have not filed a tax return for each of the past five years and cannot certify this on Form 8854.
Who needs to file IRS Form 8854?
- U.S. citizens relinquishing their citizenship.
- Long-term residents giving up their Green Card, where "long-term" means having held the Green Card for at least eight out of the last 15 years.
If you meet these conditions and fail to file Form 8854 when required, you could face a fine of up to $10,000.
Where do I enter Form 8854?
To enter Form 8854 follow this path
- Federal
- Miscellaneous Forms
- Other Miscellaneous Forms
- Initial and Annual Expatriation Statement