April 15, 2009 - Phil Hodgen

IRS tells expatriates about filing obligations

“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.