Guide
Form 8854: the certification that decides your status
Updated
Most of the exit tax turns on valuations. One part of it turns on a signature, and that is the part people lose.
Talk to a specialist The expatriation date decides the year, the year decides the exclusion.
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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).
What the form does
Form 8854 is the Initial and Annual Expatriation Statement. It reports the deemed sale and net worth. The expatriate also certifies under penalty of perjury that federal tax obligations were met for the 5 tax years preceding the expatriation date (instructions). Failing that certification is the third covered expatriate test in its own right, under section 877(a)(2)(C).
Who has to file
- Anyone who relinquished US citizenship in the year, or whose long-term resident status ended in the year.
- Anyone who expatriated in an earlier year and deferred tax under a section 877A(b) election, so the deferred balance stays reported.
- Anyone who expatriated in an earlier year and holds eligible deferred compensation items or an interest in a non-grantor trust, because those regimes run on after the expatriation year.
The related forms
Form W-8CE, Notice of Expatriation and Waiver of Treaty Benefits, is given to payors of deferred compensation and to trustees. It switches on the 30% withholding regime for eligible deferred compensation items and non-grantor trust distributions. It is also why treaty relief cannot then reduce that 30% (Notice 2009-85, section 5).
The green card trap
Long-term resident status is measured in tax years, not calendar days. A green card held for part of 8 separate tax years can be enough.
Notice 2009-85 confirms that, for section 877A purposes, lawful permanent resident status ends not only when the card is revoked or abandoned. It also ends when the holder starts being treated as a treaty-country resident, does not waive the treaty benefits, and notifies the IRS on Forms 8833 and 8854. People trigger expatriation this way without ever handing anything back.
Renouncing at a consulate is a separate act with a separate consular fee, and it is the immigration step, not the tax step. The tax consequences follow the expatriation date defined in section 877A(g)(3), and they follow whether or not Form 8854 is filed on time.