Introduction
When it comes to renouncing U.S. citizenship or giving up legal permanent resident status, it is more than just a legal decision, but also a financial one. For IRS purposes, the analogy to a “covered expatriate” is “covered by a U.S. tax liability” at the moment of expatriation. One of the more important forms to consider is 8854 because it forms a part of the IRS requirements from you, and also ensures that you don’t forget the IRS’ obligations to track what you do.
The more common point of confusion that people run into is the timeline: is Form 8854 one that is completed upon renunciation or is it one that is completed the year after. Let’s break it down.
When You Must File
The day of renunciation is not the day of the signing of Form 8854, contrary to popular belief. Instead, it is filed along with your tax return that signifies the last year you were living in the US. As such:
- If you renounce in 2025, you will file Form 8854 by 2026 together with the IRS tax return that is due in 2025.
- It must be filed together with your last IRS Form 1040 that is associated with the US tax return covering part of the year before renunciation and/or with your dual status tax return, subject to your personal situation.
The completion of this step allows them to understand how much your income, assets and incorporation is compliant until the point that you expatriate.
Filing Example
Think of a hypothetical case:
- You officially give up your citizenship for the United States of America on the 15th of June 2025.
- For taxation purposes, you are regarded as a US taxable person from the 1st of January 2025 to the 15th of June 2025.
- Your 2025 tax return which includes the 1040 and 8854 forms have to be submitted on the 15th of April 2026, or you would have to submit an extension by the 15th of October 2026.
You will file the Form 8854 along with your 2025 return in 2026, rather than 2025 which is the year you were supposed to have gained citizenship renunciation.
Common Misunderstandings
- Filing as soon as renunciation is done: Some people think that the Form 8854 is supposed to be filed at the embassy the moment renunciation is done. This is not correct because it is filed along with your tax return.
- The confusion of the dual year form: Many people think that because expatriation is done in the middle of the year, two different Form 8854 extra filings are needed, which is not the case since only one form is filed for the year in which you expatriate.
- IRS sendings: Even though the form is supposed to go with the return, it is also sent as a separate file to a specific address from the IRS. Not explaining this properly can lead to a lot of confusion with the person.
Consequences of Late Filing
Not filing Form 8854 in a timely manner can lead to negative implications, such as:
- You may be deemed a ‘covered expatriate’ without regard to your net worth or tax liability, which automatically subjects you to the exit tax.
- You can incur penalties for not complying with information requests.
- Not complying with the instructions may change the nature of your future dealings with the IRS, especially if you have U.S. assets or U.S. liable heirs.
Filing within the due date is also very important in order not to incur additional and avoidable financial risks.
Extensions and Deadlines
If you request extension for your income tax return (form 1040), that extension applies to Form 8854 as well. For supposed scenarios,
- Regular due date: April 15 of the year after the year of expatriation.
- Extended: October 15 (when a filing extension is requested)
This automatically assists with additional time when working with tax professionals so you can gather the necessary information.
Conclusion
Form 8854 is a foundation document for complying with U.S expatriation. It is counterintuitive to say that the form is due in the year following the one in which you expatriate. It is also simultaneously due with the last U.S. tax return you fill out. Early planning will save you from a myriad of issues such as penalties, covered expatriate classification, and expensive errors.
If you are considering expatriation, consult Dimov Tax to understand the complexities of Form 8854 and the exit tax. Proper planning will help you transition smoothly without unexpected tax surprises.
FAQs
Do you file Form 8854 in the year you renounce?
No—file it for your expatriation year with your final U.S. return that’s due the following year.
What is the deadline for filing Form 8854?
The same as your final return: typically April 15 of the year after expatriation (or Oct 15 with an extension).
Can I file Form 8854 late?
Yes, but late filing can trigger penalties and covered-expatriate treatment—file ASAP and correct any prior returns as needed.
What happens if you forget to file Form 8854?
You’re generally treated as a covered expatriate, risking exit tax, penalties, and loss of treaty benefits until you comply.
Is Form 8854 filed with the 1040 or separately?
Both—attach it to your final Form 1040/dual-status return and send the required copy to the IRS address in the instructions.