By working through the tests, because covered status is determined by three of them and any one is enough. There is an income test, a net-worth test and a compliance certification, and they are independent: satisfying two comfortably does not help if the third catches you. The mistake is assuming a modest balance sheet settles the question. The certification concerns your filing history rather than your wealth, so someone well inside the financial tests can still be covered on their record alone.
Expatriation tax (US s.877A) — what should I check first?
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An income test, a net-worth test and a compliance certification each independently create covered status. One question decides whether this is a filing or a project.
What to check first
An income test, a net-worth test and a compliance certification each independently create covered status. Because the certification looks back over prior years, the planning is done before the expatriation, not at the final return.

The exception worth knowing
The US exit regime applies a mark-to-market charge to a covered expatriate — and covered status is determined by three tests, any one of which is enough.
Your next step
The full treatment — who it binds, the deadline, the penalty and the fixed fee — is on Expatriation tax (US s.877A). The first call establishes whether there is work to do. Everything after that is quoted.
Reviewed for accuracy for the 2025 and 2026 filing seasons by Udit Gupta, International Tax, Cross-Border Tax & Transfer Pricing Expert, Legal Quotient Consultants. This is general information rather than advice about your file — a short call is the way to get the second.
Cross-border situations we are engaged for
A renunciation appointment moved once the tests were run
A client came to us with an embassy appointment already booked and an assumption that their modest balance sheet settled the matter. We ran each of the tests against the actual facts. The financial ones were comfortably clear; the compliance certification was not, because several years had never been filed. The appointment was rescheduled to allow the filings to be completed properly first. The engagement produced a written assessment of each test, a filing plan, and an expatriation date chosen after the record was in order.
Read how this one runsNet worth well inside the test but the filing record was not
A client was confident about the net-worth test and was right about it. The work that mattered lay elsewhere. We established which years had actually been filed, obtained the record from the authority rather than relying on recollection, and identified the gaps and the information reporting that had been overlooked alongside the returns. The engagement produced a reconstructed filing history, the outstanding years prepared and filed, and a documented basis for the certification instead of a hopeful answer to it.
Read how this one runsValuing private company shares before the departure date
A client's wealth sat largely in an operating company with no quoted price, and a mark-to-market charge needs a value for the relevant day. Assembling that evidence afterwards would have meant arguing backwards. We gathered the financial statements, shareholder agreements and comparable evidence in advance, commissioned the valuation work on a defined basis, and documented the assumptions. The work produced a valuation file dated before the expatriation, capable of supporting the figure reported without reconstruction long after the event.
Read how this one runsReporting a completed expatriation that had never been filed
A client had expatriated some years earlier, filed nothing about it, and hoped the matter had closed itself. Planning was no longer available; accurate reporting was. We fixed the expatriation date from the documents, established the asset position as it stood on that day, and documented the mark-to-market position on that evidence, then addressed the prior years that remained open. The engagement produced a filed final-year position and a set of catch-up filings, with the reasoning behind each figure recorded.
Read how this one runsA couple expatriating together and tested one at a time
A married couple planned to expatriate on the same day and assumed the analysis was a joint one. The tests apply person by person. We looked at each of them separately: how assets were actually held between them, each one's own income history, and each one's filing record, which differed more than they expected. The work produced a separate written assessment for each spouse, a decision about whether to expatriate on the same date, and one plan reflecting both positions.
Read how this one runsSorting which Canadian holdings needed valuation and which needed treaty analysis
A client living in Canada held registered plans, an interest in a private company and Canadian real property, and had been given one blanket answer about all of it. We went through the holdings and split them: those needing valuation evidence for a deemed disposal, and those whose treatment turned on the treaty and on how each is characterised. The engagement produced a schedule of holdings with the work each required, and a final-year position built on that analysis rather than on a single assumption.
Read how this one runsA TFSA That Costs More Than It Saves
Canadian tax-free accounts are not tax-free to a US person, and some of them carry a reporting form of their own. The file is a review of what is held, what each account triggers on the US side, and whether the account is worth keeping once the reporting is priced in.
Read how this one runsA Non-Resident Estate Holding US Assets
US situs assets sit inside the US estate tax net regardless of where the owner lived, and the exemption available to a non-resident is not the resident one. The file establishes situs asset by asset before any relief is claimed.
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Core International & Cross-Border Tax Services
Strategy and compliance for income, assets and families spread across borders.
Industries & Client Types We Serve Worldwide
- Foreign VAT / GST / sales tax registrations
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Related-party purchasing, customs value versus transfer price, and foreign-affiliate structures put trading businesses inside the s.247 documentation rules.
Goods crossing a border move the tax question from income to indirect: registration thresholds, place of supply, the customs value and the transfer price between related entities all have to agree with each other. When they do not, the adjustment arrives from two authorities at once and each one uses the other's number.
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- Reg 105 & U.S. CWA agreements
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Expatriation tax (US s.877A): further questions
This is the test people find out about last, and it is the one with the longest lead time. The compliance certification looks back over prior years, so it is a statement about a filing history that either exists or has to be built. If years are missing, the work is filing them properly before the expatriation, not attaching an explanation to the final return. Once the expatriation has happened, the look-back period is fixed and the record is whatever it was on the day.
Yes, for a covered expatriate, and that is the feature that catches people financially rather than technically. The regime applies a mark-to-market charge, which treats assets as disposed of rather than waiting for an actual sale. So a charge can arise in a year with no transaction and no cash coming in. Anything without a quoted price — private company shares, an interest in a partnership, property — needs a defensible valuation as at the relevant day, and that evidence is easier to assemble beforehand.
Much less than before, which is why the planning is done before the expatriation rather than at the final return. Before the date, the levers are real: the timing itself, the composition of the balance sheet, realising losses, and getting the filing record into the state the certification requires. Afterwards the facts are fixed and the work becomes reporting them accurately and, where years are missing, catching up. Plenty still needs doing after the event; it is simply no longer planning.
Yes. The compliance certification stands on its own footing, alongside the income and net-worth tests, and any one of the three is sufficient. So a person whose income and assets sit well inside both financial tests can still be covered because of the state of their filings. It is worth saying plainly, because it is the test most easily fixed in advance and the one most often discovered too late. Establish what was filed, and for which years, before anything else is decided.
The filing record, then the balance sheet, then the date. The record comes first because the certification looks back over prior years and fixing gaps takes the longest. The balance sheet comes next, both for the net-worth test and because a mark-to-market charge needs values for assets that have no market price. The date comes last, once the first two are understood, since it is the variable you control. Reversing that order is how people book an appointment and then discover the problem.
Yes. A lawful permanent resident is a US tax resident, taxed on worldwide income, and that status does not end simply because you moved away — it ends when it is formally abandoned or administratively terminated. Two traps follow. Filing as a non-resident on a treaty claim can put the immigration status itself at risk. And ending the status after holding it long-term can bring you inside the expatriation regime. See giving up a green card.
If you are a US citizen or a green card holder, yes — the United States taxes on status, not location, and living abroad changes the reliefs available rather than the obligation to file. If you are neither, residence turns on the substantial presence test, a weighted day count over three years, with exceptions for certain visa categories and a closer-connection claim available in some circumstances. The two paths lead to completely different returns. See filing US taxes from abroad.



