Initial and Annual Expatriation Statement
If you are a U.S. citizen who has renounced your U.S. citizenship or a long-term resident (LTR) who has abandoned their permanent residence status, you have expatriated.
If you expatriated, you are required to complete Form 8854 for the year you expatriated. Under normal circumstances this is the only time you have to file this form. However, there are some limited circumstances where you must file the form on an annual basis. Failure to file the form results in the IRS continuing to tax you as a U.S. citizen or resident on your worldwide income – despite the fact you expatriated!
The tax consequences of expatriation depend on whether you are a “covered expatriate” or not. You are a covered expatriate if you have not been tax compliant for a certain number of years, have a net worth over a certain threshold, or have an average annual income tax liability over a certain amount.
As a covered expatriate you are subject to an exit tax and your U.S. heirs will be taxed at the highest gift or estate tax rate on any gifts or inheritances they receive from you.
The rules governing expatriation are complicated and not every tax consultant is familiar with the process. The specialized expertise of Esquire Group is what you will need to navigate this form.
Esquire Group will determine your filing requirements related to your expatriation, analyze your tax consequences, and complete your Form 8854 to accurately report your expatriation.