Comprehensive U.S. Expatriation Tax Services

Expatriation the process of renouncing U.S. citizenship or relinquishing a long-term green card is a momentous life decision with profound and permanent tax consequences. The U.S. imposes a complex set of rules, including a potential “exit tax,” on individuals who sever their ties with the U.S. tax system. Navigating this process requires meticulous planning and flawless execution to avoid costly errors. As of July 25, 2025, these rules remain stringent. At [Your Expat CPA Firm Name], we provide complete, end-to-end expatriation tax services to ensure your departure is handled correctly and efficiently, safeguarding your financial future.

Phase 1: Expatriation Planning & Covered Expatriate Analysis

The first and most critical step is to determine if you will be classified as a “Covered Expatriate.” This status triggers the exit tax and has lasting consequences. You are a Covered Expatriate if you meet just one of the following three tests on your expatriation date:

The Three Covered Expatriate Tests

• The Net Worth Test: Your net worth is $2 million or more. This includes all your worldwide assets, valued at fair market value.
• The Tax Liability Test: Your average annual net U.S. income tax liability for the five years preceding expatriation is above a certain threshold (e.g., $206,000 for 2025, adjusted annually for inflation).
• The Certification Test: You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the five years preceding your expatriation date.

Our services in this phase include a thorough analysis of your financial situation to determine your status, calculation of your potential exit tax liability, and strategic advice on planning opportunities to potentially mitigate or avoid Covered Expatriate status.

Phase 2: Pre-Expatriation Tax Compliance

Passing the Certification Test is non-negotiable. You cannot successfully expatriate without being fully compliant for the prior five years. Many individuals, especially “Accidental Americans,” discover they have years of unfiled tax returns and FBARs.

We specialize in bringing clients into full compliance before they expatriate. This often involves using IRS amnesty programs like the Streamlined Filing Compliance Procedures to file back taxes and information returns (such as FBARs and Form 8938) efficiently and with reduced or waived penalties. Correcting your record is an absolute prerequisite to a successful expatriation.

Phase 3: The Final Expatriation Filing (Form 8854)

In the year of your expatriation, a specific and complex final filing is required. Our firm handles every aspect of this critical submission.

• Dual-Status Tax Return: We prepare your final tax return, which is a “dual-status” return. It includes Form 1040 for the portion of the year you were a U.S. person and Form 1040-NR for the portion of the year after your expatriation date.
• Form 8854, Initial and Annual Expatriation Statement: This is the official expatriation form. We meticulously prepare Form 8854, which serves to:
  • Certify your tax compliance for the past five years.
  • Present a detailed balance sheet of your worldwide assets and liabilities.
  • Calculate the exit tax for Covered Expatriates, based on a “mark-to-market” regime that treats your assets as if they were sold for fair market value on the day before you expatriated. Note that the first $890,000 (for 2025, adjusted annually for inflation) of deemed gains is excluded from taxation.

Special Relief Procedures for Certain Former Citizens

The IRS recognizes that many individuals, particularly “Accidental Americans,” were unaware of their U.S. tax obligations and face insurmountable barriers to expatriating. In response, the IRS created a special relief program.

Who Qualifies for This Relief?

This procedure is a lifeline for those who meet a specific set of criteria:

• You have relinquished your U.S. citizenship after March 18, 2010, or plan to do so.
• Your failure to be tax compliant was non-willful (e.g., due to negligence, inadvertence, or a good faith misunderstanding).
• You have no U.S. tax filing history as a U.S. citizen or resident (or meet very limited filing exceptions).
• Your net worth is less than $2 million.
• Your total aggregate tax liability for the five years prior to expatriation plus the year of expatriation is $25,000 or less (after applicable deductions, credits, etc., but excluding penalties and interest).

If you qualify, we can use this procedure to file all necessary returns and achieve expatriation status without penalties or interest, and often with minimal or no back taxes due. This is the single most beneficial path for eligible Accidental Americans seeking to formally exit the U.S. tax system.

Post-Expatriation Advisory Services

For Covered Expatriates, the consequences do not end with filing Form 8854. U.S.-based heirs who receive gifts or bequests from you will be subject to a steep inheritance tax at the highest prevailing rates (currently up to 40%). We provide crucial advisory services on the long-term implications for your estate and succession planning, including strategies to minimize these impacts.

Why Professional Guidance is Essential

Expatriation is a one-time event with zero margin for error. A mistake on Form 8854, an incorrect net worth calculation, or a failure to properly certify compliance can result in being permanently labeled a Covered Expatriate, triggering a massive and unnecessary tax liability. The rules are complex, and the stakes are too high to attempt alone.

Let our team of expatriation specialists manage this complex process for you from start to finish. Contact us today for a confidential consultation to discuss your situation and plan your successful exit from the U.S. tax system.