What is Expatriation?
The act of renouncing US citizenship or abandoning long-term resident (green card) status, triggering special tax rules.
Definition
Expatriation for tax purposes refers to either the renunciation of US citizenship or the abandonment of long-term resident (green card) status. The expatriation date triggers special tax provisions including the potential exit tax, Form 8854 filing requirements, and changes to future US tax obligations. After expatriation, the individual is generally taxed as a nonresident alien on US-source income only, but covered expatriates may face additional withholding requirements on certain US-source payments.
Who Needs to Know This?
US citizens considering renouncing citizenship and long-term residents planning to abandon green card status, who need to understand the tax consequences.
Key Deadline
Form 8854 filed with final US return; expatriation effective on the date of the act
Potential Penalties
Failure to comply with expatriation tax rules may result in continued US tax obligations
Related Forms
Common Mistakes to Avoid
- 1Not understanding the difference between citizenship renunciation and green card abandonment
- 2Failing to file all required forms before and after expatriation
- 3Not planning the expatriation date to optimize tax consequences
- 4Assuming expatriation immediately ends all US tax obligations
Related Terms
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