Form 8854 initial and annual expatriation statement instructions: who must file and when
At a glance
- Who must file: US citizens who relinquish citizenship, long-term residents who end US tax residency, and certain individuals with ongoing reporting obligations for deferred tax, eligible deferred compensation, or nongrantor trust interests.
- When to file: Attach the initial Form 8854 to the tax return for the year that includes your expatriation date, and file it by that return’s due date, including extensions. If you do not have to file a return, mail the form by the date that the return would otherwise have been due.
- When the exit tax applies: The exit tax generally applies only if you are a covered expatriate.
- Covered expatriate tests: Covered expatriate status is usually triggered by the tax liability test, the $2 million net worth test, or failure to certify 5 years of US tax compliance.
- 2025 thresholds for 2026 filing: For 2025 expatriations filed in 2026, the tax liability threshold is $206,000, and the mark-to-market exclusion amount is $890,000.
- Final-year return: Many expatriates file a dual-status return, so whether you end the year as a resident or nonresident can affect the form you file, your deadline, and your filing status.
If you are preparing for expatriation, TFX’s expatriation filing services are designed to handle the process on your behalf, including Form 8854 and your final-year tax return.
IRS now has the 2025 Form 8854 and the 2025 Instructions for Form 8854 available for the 2026 filing season. If you expatriated in 2025, your initial Form 8854 is generally filed with your 2025 tax return, which you submit in 2026. This form is also key to determining whether the exit tax rules under Internal Revenue Code section 877A apply to you.
The current Form 8854 instructions for the 2026 filing season explain who must file, when the form is due, and how covered expatriate status is determined. They also clarify the reporting rules for deferred tax items, eligible deferred compensation, and interests in nongrantor trusts.
What is Form 8854?
The IRS Form 8854 is the reporting and certification statement former US citizens and former long-term residents use to meet their initial or annual reporting obligations under section 6039G and to certify compliance with federal tax obligations for the 5 tax years before expatriation. Form 8854 is not the exit tax itself; it is the reporting and certification form that determines whether the exit tax applies.
The tax Form 8854 does not calculate every expatriation tax result by itself. Instead, it identifies whether the filer is a covered expatriate, captures balance-sheet and asset information, and connects the filing to the final income tax return and the IRS expatriation tax rules.
Under Form 8854 IRS guidance, a citizen who renounces this year files the initial statement for the tax year that includes the renunciation date. A long-term green card holder who ends residency in that year, including under treaty-residency rules, follows the same basic timing rule.
Who needs to file Form 8854?
Who must file Form 8854?. In most cases, the people who file are former US citizens, long-term residents ending US tax residency, or certain individuals with ongoing reporting obligations from a prior expatriation year. The exact answer depends on whether the filing is an initial statement for the year of expatriation or an annual statement after an earlier expatriation.
Most filers fall into 1 of 4 categories: former citizens, long-term green card holders, annual filers from earlier years, and people who usually do not need to file.
The key rule is simple: Form 8854 is generally required only when a US citizen expatriates, a long-term resident ends residency, or a prior expatriate still has continuing reporting tied to deferred tax items, deferred compensation, or nongrantor trusts.
| Filer type | Must file? | Main trigger | What to file |
|---|---|---|---|
| US citizens | Yes, if citizenship was relinquished in the year | Expatriation date occurs in that tax year | Initial statement – Part I and Part II |
| Long-term green card holders | Yes, if long-term residency ended in the year | Lawful permanent resident in at least 8 of the last 15 counted tax years | Initial statement – Part I and Part II |
| Annual filers after expatriation | Yes, in limited cases | Deferred tax, eligible deferred compensation, or nongrantor trust reporting from a prior year | Annual statement – Part I and Part III |
| Most other filers | Usually no | No expatriation event, or no long-term resident status | No Form 8854 filing in most cases |
US citizens
For US citizens, when the question of who must file Form 8854 arises, it usually means anyone whose expatriation date falls in that tax year. That person files the initial statement for the year in which citizenship was relinquished.
The expatriation date is the earliest of the following: the date of renunciation before a US diplomatic or consular officer later confirmed by a certificate of loss of nationality, the date of a signed statement of voluntary relinquishment later confirmed by a certificate of loss of nationality, the issue date of the certificate of loss of nationality, or the date a court cancels the person’s naturalization.
Long-term green card holders
Who needs to file Form 8854 as a green card holder usually comes down to the 8-of-15-year test, and whether the filing is initial or annual. A long-term resident is someone who was a lawful permanent resident in at least 8 of the last 15 tax years ending with the year residency ends.
A treaty-residency year does not count if the individual was treated as a resident of the treaty country and did not waive treaty benefits, and notified the IRS of that treatment. That is why the 8-year total can be lower than someone expects, even after holding a green card for several calendar years.
A long-term resident can end residency in 1 of 4 main ways:
- by filing Form I-407,
- becoming subject to a final administrative or judicial abandonment order,
- becoming subject to a final removal order, or
- beginning treaty-residency treatment in another country and notifying the IRS.
Annual filers after expatriation
Annual filing can continue after the year of expatriation. You still file if you expatriated before 2025 and previously deferred mark-to-market tax, reported an eligible deferred compensation item, or reported an interest in a nongrantor trust.
Who usually does not file
Most current green card holders do not file unless they are ending long-term residency and meet the counted 8-of-15-year rule. Someone who held a green card for fewer than 8 counted tax years, or someone who was never a US citizen or lawful permanent resident, usually does not file this statement.
Also read. Resident and nonresident alien tax guide
The concept of a covered expatriate
An IRS exit tax Form 8854 review starts with 3 covered-expatriate tests for 2025 expatriations. You are a covered expatriate if your average annual net income tax liability for the 5 tax years before expatriation is more than $206,000, your net worth is $2 million or more on the expatriation date, or you fail to certify 5 years of federal tax compliance.
The following 3 tests determine covered-expatriate status:
- Tax liability test – Your average annual net income tax liability for the 5 tax years before expatriation is more than $206,000 for 2025 expatriations.
- Net worth test – Your net worth is $2 million or more on the expatriation date.
- 5-year compliance test – You do not certify, under penalties of perjury, that you complied with all federal tax obligations for the 5 tax years before expatriation.
A Form 8854 exit tax problem can arise even when wealth and average tax liability are below the thresholds. Failing the certification test by itself can make you a covered expatriate.
How to file Form 8854
For a 2025 expatriation, the initial filing is Part I plus Part II, attached to Form 1040, 1040-SR, or 1040-NR for the tax year that includes the expatriation date, with many taxpayers also needing to understand the dual-status rules for filing a US income tax return.
Annual filers use Part I plus Part III, and if they file an income tax return, they also send a copy marked "Copy" to the IRS address in Austin.
The following 5 steps are the cleanest way to handle the filing:
- Determine whether you are an initial or annual filer. Initial filers expatriated in the year at issue. Annual filers expatriated earlier and still have deferred tax, eligible deferred compensation, or a nongrantor trust reporting obligation.
- Identify the expatriation date. The filing year is the tax year that includes that date, and the date also controls which 5 prior tax years are used for the certification and tax-liability tests, which can be especially important for taxpayers who still need to file back taxes for multiple years.
- Complete the correct parts and statements. Initial filers complete Part I and Part II. Annual filers complete Part I and Part III, and many filers also need balance-sheet detail, valuation schedules, or deferred-compensation statements.
- Attach the form to the right return or mail it. If a return is required, attach it to Form 1040, 1040-SR, or 1040-NR. If no return is required, mail the original to the Internal Revenue Service, 3651 S IH35, MS 4301 AUSC, Austin, TX 78741, by the date the return would have been due, including extensions.
- Keep your support schedules. Save valuation workpapers, payor notices, copies of Form W-8CE if relevant, treaty-residency filings, CLN or I-407 documents, and any schedules used to support net worth and gain calculations.
How to complete Form 8854, part by part
The IRS 8854 form is only 5 pages, but each part has a separate job. Part I identifies the filer and expatriation date, Part II is the initial statement for 2025 expatriations, and Part III is the annual statement for earlier expatriates who still have ongoing reporting.
Part I
Part I is for all filers. It captures your mailing address, principal foreign residence, country of tax residence, whether you are filing an initial or annual statement, the expatriation date, your citizenship information, and the green card dates that matter for long-term residents.
This part is also where long-term residents identify a treaty-residency exit from US residency for tax purposes. If treaty residency is involved, make sure the treaty position and any related Form 8833 filing are consistent with the dates shown here.
Part II
Part II is the initial statement for persons who expatriated in 2025. Section A asks for the 5 years of US income tax liability, your net worth on the expatriation date, whether there were significant asset or liability changes in the previous 5 years, whether the dual-citizen or minor exception applies, and whether you certify 5 years of compliance.
Section B is the balance sheet, which is often where valuation work becomes important. Section C applies to covered expatriates and reports property owned on the expatriation date, while Section D is used if you elect to defer payment of mark-to-market tax on specific property.
Part III
Part III is the annual statement for persons who expatriated before 2025 and after June 16, 2008, and still have an ongoing reporting obligation for deferred tax, eligible deferred compensation, or no-distribution certification, and nongrantor trust information. Some older pre-June 17, 2008 cases follow legacy section 877 rules instead.
Annual filing is easy to miss because the expatriation event has already happened. That is one reason the form still matters after the year of expatriation in a small but important group of cases.
What is the penalty if you fail to file Form 8854?
The penalty can be $10,000 for a required year if the form is late, missing, incomplete, or incorrect. The IRS can waive that penalty if the failure was due to reasonable cause and not willful neglect.
Late or missing
Not filing at all can trigger the penalty for the year the form was required. That can apply whether the missed filing was the initial statement or a required annual statement.
Incomplete or incorrect
The penalty is not limited to total nonfiling. A form with missing information, unsupported entries, or incorrect reporting can also create a penalty issue.
Certification consequences
A filing problem can do more than create a penalty. If the 5-year certification is not valid, the filer may also become a covered expatriate even if the $206,000 and $2 million tests are not met.
Form 8854 due date: when to file in the current tax season
The Form 8854 due date for a 2025 expatriation usually follows the due date of the 2025 return filed in 2026. If a return is required, attach the initial statement to that return and file by the return’s due date, including extensions. If no return is required, mail the form by the date that return would have been due, including extensions.
If you end 2025 as a resident and file Form 1040 or 1040-SR on a calendar-year basis, the general deadline is April 15, 2026. If you qualify for the automatic 2-month extension available to US citizens and resident aliens abroad, that deadline can move to June 15, 2026, before any additional extension request.
If you end 2025 as a nonresident and file Form 1040-NR, the general deadline is April 15, 2026, if you received wages subject to US withholding. If you did not receive wages subject to withholding, the general deadline is June 15, 2026.
When to file Form 8854 turns on the due date of the return for the year that includes expatriation and any valid extension. In practice, that means the exact answer depends on whether you end the year resident or nonresident and whether wages subject to withholding exist.
Form 8854 late filing and reasonable-cause relief
Form 8854 late filing does not automatically end in a $10,000 penalty if the filer can show reasonable cause and not willful neglect, but it can still create covered-expatriate problems if the 5-year certification is not satisfied.
- Late but otherwise compliant. If the return history is complete and the facts are documented, the main question is whether the filer can explain the delay well enough to support reasonable-cause relief. The sooner the form is corrected, the better the record usually looks.
- Missing 5 years of returns. When the underlying returns were not filed or were materially incomplete, the problem is larger than timing. The certification test may fail, which can cause covered-expatriate status even when the filer is below the wealth and tax thresholds.
- Trying to avoid covered-expatriate status. Some former citizens may qualify for the IRS relief procedures for certain former citizens, but the eligibility rules are specific, and the process is not a general fix for every late case. If back returns are part of the issue, our guide to filing back tax returns from abroad is the best place to start.
Exit tax and how to avoid it
For 2025 expatriations, the mark-to-market regime generally treats a covered expatriate’s property as sold the day before expatriation, but the first $890,000 of net gain is excluded for 2025. Not every asset category follows the same rule, so this is the section where many avoidable mistakes happen.
How the exit tax works
The expatriation tax Form 8854 rules matter only if you are a covered expatriate. Gain and loss are computed as if assets were sold the day before expatriation, and the result then feeds into the final-year income tax return.
What assets are treated differently
The following 4 categories are not handled under the basic mark-to-market rule, and each one needs its own reporting treatment:
- Eligible deferred compensation items – These are generally subject to withholding if the payor and notice rules are met, and the filer must notify the payor on Form W-8CE and continue annual Form 8854 reporting for distributions or no distributions.
- Ineligible deferred compensation items – These are generally included at present value on the day before expatriation.
- Specified tax-deferred accounts – These generally include items such as most IRAs, qualified tuition programs, ABLE accounts, Coverdell accounts, HSAs, and Archer MSAs, and they are not handled under the normal deemed-sale rule.
- Interests in nongrantor trusts – These follow separate withholding and reporting rules rather than the standard mark-to-market approach.
Exceptions for dual citizens and minors
Dual citizens and certain minors can avoid covered-expatriate status based solely on the tax-liability or net-worth tests, but they still must satisfy the 5-year compliance certification test.
The dual-citizen exception requires citizenship in both countries at birth plus tax residency in the other country on the expatriation date, while the minor exception requires expatriation before age 18½ and no more than 10 of the 15 tax years ending with the expatriation year.
How planning can reduce mistakes
The biggest filing errors usually come from weak valuation work, missing deferred-compensation detail, and last-minute attempts to fix 5 years of compliance. Before filing, confirm your counted green card years, review the final-year return status, gather valuation support, and contact a tax pro for your expatriation return support.
Form 8854 and married filing jointly: what final-year filers should know
Expatriation is individual, but the final-year return can change timing and filing status. In a dual-status year, you generally cannot file jointly, and a nonresident filing Form 1040-NR cannot use married filing jointly, but a dual-status individual married to a US citizen or resident may elect to file a joint return with that spouse.
That election is not automatic. If it is made, both spouses are generally treated as US residents for the year and must report worldwide income for the year, so the choice can change the return materially.
The US Form 8854 is still filed individually. A Form 8854 married filing jointly issue is really a final-year return-status issue, not a question of filing the expatriation statement as a couple.
For more on the return mechanics, see our explanation of dual-status income tax return filing.
Bottom line
If you expatriated in 2025, your Form 8854 belongs with your 2025 return filed in 2026. The critical questions are whether you are required to file, whether you are a covered expatriate, and whether your final-year return is dual-status.
If your case includes a CLN, an I-407, a dual-status return, or a trust or pension entry, TFX can help with the filing package. You may also want to review our guides on renouncing US citizenship and ongoing US tax rules for Americans abroad.
FAQ
It is the initial and annual expatriation statement used to certify 5 years of federal tax compliance and report expatriation information under section 6039G. The IRS Form 8854 is not the tax itself, and Form 8854 IRS references point to the same reporting statement.
For a 2025 expatriation, file it with the 2025 return filed in 2026 by the return’s due date, including extensions. The exact answer to when to file Form 8854 depends on whether the final return is on Form 1040, 1040-SR, or 1040-NR and whether a nonresident had wages subject to withholding.
Yes, if the green card holder is a long-term resident and ends their US residency for tax purposes. A Form 8854 green card case turns on whether the person was a lawful permanent resident in at least 8 of the last 15 counted tax years, with treaty-residency years excluded when the IRS rules allow that exclusion.
A $10,000 penalty can apply if the form is late, missing, incomplete, or incorrect, unless reasonable cause and not willful neglect is shown. Form 8854 late filing can also leave the 5-year certification unresolved, which may turn an otherwise non-covered filer into a covered expatriate.
Yes. Annual filing still applies after expatriation if you previously deferred tax, reported an eligible deferred compensation item, or reported an interest in a nongrantor trust.
The statement itself is individual. A dual-status individual generally cannot file jointly, but may elect to file a joint return with a US citizen or resident spouse, and if that election is made, both spouses generally report worldwide income for the year.
A US citizen renounces in September 2025 and files the initial statement with the 2025 final return in 2026. A second example is a long-term green card holder who files Form I-407 in 2025 after 9 counted years as a lawful permanent resident and files the same year’s initial statement with the final return while checking the $206,000, $2 million, and certification tests.
Mail the original to Internal Revenue Service, 3651 S IH35, MS 4301 AUSC, Austin, TX 78741. The IRS 8854 form is mailed there when no return is required, and annual filers who do file a return must also send a copy marked Copy to that address.
