Guide
Am I a covered expatriate? The three tests for 2026
Updated
The exit tax does not apply to everyone who leaves. It applies to covered expatriates, and that is a three-part test where meeting any single limb is enough.
Talk to a specialist The expatriation date decides the year, the year decides the exclusion.
Email me this result
We will send you these figures and a link back to them. One email, nothing else unless you tick the box.
How this calculator works
- The three covered expatriate tests are in section 877(a)(2), applied by section 877A(g)(1). First, net worth of $2,000,000 or more (a fixed statutory figure, not inflation adjusted). Second, average annual net income tax above an inflation-adjusted amount. Third, failure to certify 5 years of federal tax compliance on Form 8854 (IRS).
- The income tax test amount is $211,000 for a calendar year 2026 expatriation date, set by Rev. Proc. 2025-32 section 4.37. The IRS expatriation page still lists figures up to $206,000 for 2025; use the year your expatriation date falls in.
- The exclusion is $910,000 for taxable years beginning in 2026 under section 877A(a)(3) (Rev. Proc. 2025-32 section 4.38). It is a once in a lifetime allowance and is allocated pro rata across gain assets, per section 3.C of Notice 2009-85.
- Section 877A treats all property as sold at fair market value the day before the expatriation date. Losses are taken into account, so the input here is the net figure across your whole balance sheet.
- The rate is an input, not computed. Section 877A sets no rate: the deemed gain joins gross income under normal rules, so asset character matters. Long-term gains top out at 20% (IRS Topic 409), collectibles at 28%, unrecaptured section 1250 gain at 25%. Net investment income tax may also apply. Take advice before relying on one rate.
- Deferred compensation items, specified tax deferred accounts such as IRAs and 529 plans, and interests in non-grantor trusts are outside this calculation. They are handled by sections 877A(d), (e) and (f), which impose 30% withholding on eligible deferred compensation and on non-grantor trust distributions to covered expatriates (Notice 2009-85).
- The two statutory exceptions in section 877A(g)(1)(B), for certain dual citizens from birth and for people relinquishing before age 18 and a half, are not modelled here. They disapply only the net worth and income tax tests: the Form 8854 certification test still has to be met (Form 8854 instructions).
The three tests
Section 877A(g)(1)(A) defines a covered expatriate as an expatriate who meets the requirements of subparagraph (A), (B) or (C) of section 877(a)(2). Any one of the three is enough.
- Net worth test
- Your net worth is $2,000,000 or more on the date of expatriation or termination of residency. This figure sits in the statute and is not indexed for inflation, so it has not moved since 2004 (IRS).
- Income tax test
- Your average annual net income tax for the 5 taxable years ending before the expatriation date exceeds an inflation-adjusted amount: $211,000 for a 2026 expatriation date (Rev. Proc. 2025-32 s4.37). This is tax paid, not income earned.
- Certification test
- You fail to certify under penalty of perjury on Form 8854 that you have complied with all federal tax obligations for the 5 preceding tax years, or fail to submit the evidence the IRS requires (Form 8854 instructions).
The certification test catches people the money tests never would. Someone with a modest net worth and five years of unfiled returns is a covered expatriate for that reason alone.
Who counts as an expatriate at all
Section 877A(g)(2) covers two groups: US citizens who relinquish citizenship, and long-term residents who cease to be lawful permanent residents.
A long-term resident held a green card in at least 8 of the last 15 tax years, ending with the year the status ends (section 877(e)(2)). Years in which you claimed treaty residence in another country and notified the IRS on Forms 8833 and 8854 do not count.
The two exceptions, and their limit
Section 877A(g)(1)(B) carves out two groups.
- Individuals who became at birth both a US citizen and a citizen of another country. As of the expatriation date they must remain a citizen of, and be taxed as a resident of, that other country. They must also have been US residents for no more than 10 of the 15 taxable years ending with the year of expatriation.
- Individuals who relinquish before turning 18 and a half and who were US residents for no more than 10 taxable years before that.
Read the exception carefully. It disapplies only the net worth test and the income tax test. The certification test still applies, so a qualifying dual citizen who cannot certify five clean years on Form 8854 is a covered expatriate anyway.
If you are not covered
No mark-to-market charge, no deemed sale, no section 877A tax. You still file Form 8854 for the year of expatriation, and you still file a final dual-status or part-year return.
The IRS also runs relief procedures for certain former citizens with no filing history. They cover non-willful failures that gave an aggregate tax liability of $25,000 or less over six years, with net worth below $2,000,000.