“Expatriate” to the U.S. tax authorities means someone who:
relinquishes his/her U.S. citizenship; or
cancels his/her U.S. permanent residency (AKA “green card”) status, where U.S. residency has continued for at least 8 years.
We help people expatriate — we handle their wranglings with the State Department and the Internal Revenue Service. So I watch for new developments in this area.
Something just came up that I have already shared with our expatriate clients, but I figured it is worth publicizing a bit more for others who might be in this boat.
The IRS just posted something yesterday on its website — guidance to expatriates about what tax forms to file with the U.S. government. Here it is:
Special Guidance for Certain Expatriates
This information applies to certain individuals who have expatriated by relinquishing their U.S. citizenship or by ceasing to be treated as long-term residents of the United States.
An individual who expatriated before June 17, 2008, and needs to file an initial Form 8854, Initial and Annual Expatriation Information Statement, may either wait until the new Form is ready or use the 2007 Form 8854. If the 2007 Form 8854 is used, the individual should strike out “2007” and replace it with “2008.” There is no due date and therefore no potential penalties. However, the individual will continue to be subject to tax as a U.S. citizen or resident until the Form 8854 is filed.
An individual who expatriated before June 17, 2008, and needs to file an annual Form 8854 will generally not be required to file the form until June 15, 2009, because he or she is overseas. The revised Form 8854 should be available before June 15. An individual who falls into this category and has an April 15 due date should use the 2007 Form 8854 and strike out “2007” and replace it with “2008.” If unable to file by April 15, the IRS will waive the $10,000 penalty for late filing under the reasonable cause exception.
An individual who expatriated after June 16, 2008, and before Jan. 1, 2009, is required to file Form 8854 for 2008. The Form 8854 must be filed by the due date for the 2008 Form 1040 or 1040NR, with extensions. In many cases, someone in this category will have until June 15, 2009, if living and working outside the United States on April 15. However, if the return is due on April 15 and an individual has not requested an extension, he or she should do so immediately. Individuals who file Form 8854 by the due date, with extensions, will not be subject to the $10,000 penalty for late filing.
For further information, see the Instructions for Form 8854.
Philip D. W. Hodgen is the principal attorney of HodgenLaw PC, an international tax law firm based in Pasadena, California. He earned his undergraduate degree from Claremont McKenna College and his law degree from the School of Law at the University of California, Los Angeles. He then went on to earn a Master of Laws degree with a specialty in taxation from the University of San Diego School of Law. Admitted to the California bar in 1982, Phil spent nine years in law firms and with a large U.S. bank before starting his own firm in 1991.
Phil is a past chair of the International Tax Committee of the State Bar of California's Tax Section and was a member of the Executive Committee of the State Bar of California's Tax Section for 2004-2007. Phil frequently speaks on a variety of international tax, trust and estate topics to attorneys, accountants, and real estate professionals.
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Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.