Do I file Form 8854 if I gave up my green card?
Long-term permanent residents who abandon that status file the statement, not only citizens who renounce. The form is where you certify your tax compliance and work out the mark-to-market consequences of leaving the US tax system. People are caught out in both directions: someone who never held a US passport assumes the expatriation rules are not theirs, and someone who handed a card back years ago assumes the matter closed itself. The status you gave up, and how long you held it, decide whether the statement is due.
What makes someone a covered expatriate?
Three separate tests, and failing any single one is enough. There is an income test, which for the 2025 tax year is an average annual net income tax above US$206,000. There is a net-worth test of US$2 million which, unlike the income test, is not adjusted for inflation. And there is a certification: you must certify on the form that you have complied with all federal tax obligations for the five tax years preceding expatriation. Meeting two of the three comfortably does not help if the third one catches you, and the certification is the one that catches people with modest finances.
Do I still file Form 8854 if I owe no US tax?
Yes. The statement is where compliance is certified, and a certification cannot be made by staying silent. Owing nothing is a fact about your tax position; it is not a substitute for the document that says your filings are in order. This is the part of expatriation that most often goes wrong, because the consular or immigration step feels like the end of the process and the tax step comes afterwards, in a year when there is no tax bill to prompt anybody.
Does the exit tax apply to all of my gains?
Only covered expatriates face the mark-to-market computation, and it does not reach every dollar of accrued gain. For the 2025 tax year the net unrealised gain exclusion is US$890,000, so the computation runs on the excess above that figure rather than on the whole. The real work is in the valuations feeding it: private company shares, an interest in a family business, property held for years without a recent appraisal. Those are the numbers that decide the result, and they need support before the date rather than after it.
Do I need Form 8854 if I expatriated a long time ago?
The current regime applies to expatriations after 16 June 2008, so the date you gave up citizenship or permanent residence decides which rules you are looking at. That date is also the one most often remembered wrongly, because the expatriating act and the paperwork confirming it can sit in different years. We start by pinning the date down from the documents rather than from memory, and the analysis follows from it.
Can I avoid covered expatriate status if my net worth is low?
Not on net worth alone. The three tests are alternatives rather than a combined score, so a person well under the US$2 million net-worth threshold for the 2025 tax year, and well under the income test, can still be a covered expatriate for failing to certify compliance for the five tax years preceding expatriation. In practice that is the common route into covered status: not wealth, but an unfiled year somewhere in the five, found after the expatriating act has already happened. Sequencing the filings before the departure is what keeps that door shut.
What is the US exit tax and who actually pays it?
How much it is depends on your unrealised gains rather than on a rate, because it is the expatriation regime rather than a fee. A citizen who gives up citizenship, or a long-term permanent resident whose status ends, is tested against three conditions; meet any one and you are a covered expatriate, treated as having sold your worldwide assets the day before you left, with an exclusion for a slice of the resulting net gain — $890,000 for 2025. Deferred compensation, retirement accounts and interests in trusts are handled under separate rules rather than the deemed sale. Form 8854 reports it. See Form 8854.
What is a "dual-status alien spouse", and why is my software asking?
The question comes from the filing-status screens, and it is asking whether your spouse was a non-resident or part-year resident for the year — because if they were, a joint return is not available by default. An election exists to treat a non-resident spouse as a resident for the whole year, which unlocks joint filing at the price of bringing their worldwide income into the US return and their accounts into its reporting. See a US person with a non-resident spouse.
