There is a need to file forms when it comes to renouncing your citizenship in the United States. One of them is IRS Form 8854. To get all the recent updates related to IRS Form 8854, stay tuned at USTAXFiling right away!

When you have to renounce your citizenship in the United States, you have to file a range of forms. One of them is IRS Form 8854. Until you file the form, you are considered a citizen by the IRS. What is IRS Form 8854, and how must you complete it? Here is something that you should know:


  • Citizens of the United States should file Form 8854 to renounce their citizenship.
  • 8854 Form is used to consider whether a US individual might have to pay the exit tax when terminating their residency or even renouncing their citizenship.

What Is IRS Form 8854? 

IRS Form 8854 is an Internal revenue service tax form that is used to show that you have settled your income taxes in the US once and for all. Until you have achieved this, the government of the United States may consider you a citizen and will expect you to continue filing United States income taxes. IRS Form 8854 also considers whether you are a non-covered or covered expat. If you are a covered expat, you have to file an exit income tax in order to finalize your renunciation.

Who has to File IRS Form 8854? 

Citizens of the United States who are renouncing their citizenship should file IRS Form 8854. Specific long-term residents should file the form when they terminate their residency in the United States. Also, residents of the United States should have Green cards for a minimum of eight out of the previous 15 years to file IRS Form 8854 if they want to be considered non-residents.

What Is the Penalty for Failing to File IRS Form 8854? 

There is a penalty if you fail to file IRS Form 8854. First, there is a non-compliance penalty of up to $10,000. Also, the penalty only implies to covered expats.

Apart from this, as you may be determined as a citizen of the United States until you have filed IRS Form 8854, you may continue to be subject to United States income taxes. It means that you have to pay any unpaid income taxes you incurred before filing, along with any linked penalties or interest. Regardless of whether you are a non-covered or covered expat, it is always a better option to file the IRS Form 8854 as needed.

What Is a Covered Expatriate? 

The question that comes into mind is whether you are a non-covered or covered expat, which may have a huge impact on the expenses of renouncing your citizenship. Also, it is the main factor to consider whether renouncing your citizenship makes any financial sense.

So, what is the difference between a non-covered and a covered expat? Also, a covered expat has to pay to terminate their residency in the US or exit tax to renounce their citizenship. On the other hand, a non-covered expat may terminate their residency or renounce their citizenship without any need to pay an exit tax. The Internal Revenue Service might determine you a covered expatriate if any of the following standards implies:

  • You might have failed to pay or file your income taxes as needed during any of the last five years
  • You should have a personal net worth of more than $2 million
  • Your average income taxable for the previous five years exceeds specific criteria ($178000 for the financial year)

If you meet any of the above criteria, you may have to pay an exit tax, or you are a covered expat. Also, the exit tax does not imply that you are a non-covered expat. Either way, you have to file IRS Form 8854 to consider your status, whether non-covered or covered.


There are also rare exceptions when you might not be determined as a covered expat even if you meet the usual standards. Also, if you expatriated from the United States for 19 years or if you became a dual citizen, you may eliminate the exit tax even if it might apply. These things are complex. You must consult an expat tax expert to know more about it.

How to File IRS Form 8854? 

IRS Form 8854 is a complicated form to complete. We do not suggest completing this Form 8854 yourself, as even a minor miscalculation or mistake might have a huge range of tax implications.

For instance, to eliminate being considered a covered expat, you should certify on IRS Form 8854 that you were completely tax-compliant for the past five years. It is a huge claim, and you must face severe charges if you are wrong about it. For the sake of peace of mind and safety, you must consult an eligible tax expert to make sure that you file IRS Form 8854 correctly.

What If You Are Behind On Your Expat Taxes?

One of the common factors where expats are eligible as covered expats is that they are not updated on their income taxes when they renounce their citizenship. This is due to the fact that several Americans are unaware that they should file an income tax return in the US even after they shift abroad.

If you are behind on your expat income taxes, don’t worry at all. The Internal Revenue Service offers an amnesty program for expats in your case. It is known as the procedure of Streamlined Filing compliance.

To use the program, you should:

  • You must file up to three delinquent income tax returns and pay delinquent income taxes that you owe depending on these returns.
  • You should self-certify that you failed to file by accident and not choose to violate any US tax regulation.
  • You must file FBAR or Foreign Bank Account Reports for the past six years.

Once you complete these major steps, the Internal Revenue Service may consider you to be in basic compliance with the US tax regulation. Also, in order to become a non-covered expat, you should certify that you have been compliant for at least the past five years. If your non-compliance stretches back farther than the three years needed by the Streamlined Filing Compliance process, you might have to file any additional income tax returns required to meet that standard.

Pro Tip

If you are delinquent in your expat income taxes for any amount of time, you should not wait to use the program. If the IRS connects with you regarding delinquency before you begin the process yourself, you might lose the opportunity of claiming amnesty.

Still, Have Any Doubts About IRS Form 8854 and Expat Taxes?

We hope this blog has helped you know what IRS Form 8854 means to you as a US expat. Our USTAXFiling experts are always there to assist you. If you have any doubts or need advice on your particular tax situation, you can connect with the USTAXFiling team anytime, and they will make sure to resolve your issues at the earliest. Our USTAXFiling team is highly dedicated and updated with all the US tax updates so that you may sit back and relax while they take care of everything! Book your consultation with your US tax expert at USTAXFiling right now!

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