US Citizenship Renunciation & Expatriation Tax
Form 8854, Form 1040, FinCEN 114, Form 1040-NR
A planned multi-year route out of the US tax system: catch-up filing, five compliant years, then renunciation with Form 8854 and a final return.
What does US Citizenship Renunciation & Expatriation Tax involve?
US citizens must file on their worldwide income every year, wherever they live. Renouncing citizenship ends that obligation. A clean exit takes planning over several years, and we run it as one engagement from the first catch-up return to the final Form 8854.
Three steps to a clean exit
For someone behind on US filing, the route runs over several tax years. Each step sets up the next, and the order matters because the renunciation date fixes the five years that Form 8854 asks you to certify.
Step 1: Get compliant through SFOP
File three years of delinquent US returns and six years of FBARs under the Streamlined Foreign Offshore Procedures, with a non-wilful certification on Form 14653. For those who qualify, the cost is the tax and interest due, with no penalty.
Step 1: SFOPStep 2: Reach five years of compliance
Keep filing on time once the streamlined submission is in. The three streamlined years and the next two years filed in the normal way give five years of US tax compliance, which is what Form 8854 asks you to certify.
Step 3: Renounce in the sixth year
Renounce US citizenship in the sixth year. For that year, file a final dual-status return with Form 8854 attached, certifying the five years before it.
Forms and filings involved
- Form 8854
The form that closes out US tax status after renouncing citizenship or giving up a long-term green card, and sets whether the exit tax applies.
- Form 1040
The annual federal return for US citizens, green card holders and US residents, reporting worldwide income wherever the filer lives.
- FinCEN 114
The annual report of foreign accounts filed with FinCEN, separate from the tax return, once combined balances pass the threshold.
- Form 1040-NR
The federal return for people who are not US citizens or residents but have US-source income, a US business or a refund to claim.
- Form W-8BEN
The certificate a non-US individual gives a US payer to confirm foreign status and claim treaty-reduced withholding on US income.
Leaving the US tax system properly
The United States taxes its citizens on worldwide income wherever they live, so an American settled in the UK files a US return and FBARs every year for life.
Renunciation is how a citizen ends that. It is a State Department process, but the tax result is decided separately, by whether the person leaving is a covered expatriate, and that depends on the years before the renunciation date.
A person is a covered expatriate if any one of three tests is met: net worth of $2 million or more, average annual net income tax over the prior five years above $206,000, or failure to certify on Form 8854 five years of full US tax compliance. The third test catches people of modest means. Failing the certification alone makes someone covered, whatever their wealth. Net worth is measured on worldwide assets, including pensions and a share of jointly owned property.
A covered expatriate is treated as having sold worldwide assets at market value on the day before expatriation, and gain above an exclusion of $890,000 is taxed. Deferred compensation and certain tax-deferred accounts have their own rules, which can mean withholding on later payments or an immediate deemed distribution, and UK pensions need particular care here. Gifts and bequests from a covered expatriate to US persons can also be taxed in the recipient's hands, which matters where children remain American.
What the engagement covers
- 01
- Streamlined catch-up: three years of returns and six years of FBARs
- 02
- Two further years of US returns and FBARs filed on time
- 03
- Covered expatriate tests applied to your balance sheet and tax history
- 04
- Mark-to-market computation with the exclusion allocated across assets
- 05
- Final dual-status return and Form 8854 for the year of renunciation
- 06
- Withholding position afterwards, including Form W-8BEN for remaining US income
Who this is for
Americans in the UK who are behind on filing and want a clean exit
- Accidental Americans with no plans to live in the US
- Long-term green card holders returning to the UK for good
- Dual citizens from birth checking whether the exception applies
- Families weighing the effect on gifts and bequests to US children
Why US UK Tax Returns
Each return is prepared with the other country's return open beside it, so a credit, election or disclosure on one is supported by the other.
One File
US and UK returns prepared in the same engagement and reconciled line by line.
Primary Sources
Every position traced to the Code, the treaty, IRS instructions or HMRC guidance.
Scope First
Returns, forms, years and fee agreed in writing before work begins.
The Same People
The team that files this year carries the elections and credits into the next.
Questions we are asked
I am not wealthy. Can I still be a covered expatriate?
Yes. The net worth and tax liability tests are only two of the three. The third asks you to certify on Form 8854, under penalty of perjury, that you have met all US federal tax obligations for the five preceding years. If you cannot, or if you never file the form, you are a covered expatriate regardless of your means. With modest assets the exit tax itself may be nil, but the status has other effects.
Do I have to be up to date with my US taxes before I renounce?
Renunciation itself is a State Department process and does not generally depend on tax filings. The tax consequences do. To avoid covered expatriate status you must be able to certify five years of compliance on Form 8854, so returns, FBARs and information returns for those years need to be in order first. People who are behind usually regularise their position before the appointment, because the expatriation date fixes the years that count.
How long does the whole process take?
For someone starting behind on filing, it usually runs across six tax years: the streamlined catch-up covers the first three, two further years are filed in the normal way, and the renunciation falls in the sixth. Someone who is already compliant for five years can move straight to the final step. The timetable also depends on when the catch-up is filed and on appointment availability at the embassy.
Are there exceptions for dual citizens from birth or for minors?
There are narrow exceptions from the net worth and tax liability tests for certain dual citizens from birth and for certain people who renounce while still young. They do not remove the certification requirement: anyone who cannot certify five years of compliance on Form 8854 is still a covered expatriate. Whether an exception applies turns on residence history and dates, which we check before any appointment is booked.
Does giving up my green card count as expatriation?
It can. The expatriation rules apply to long-term residents, meaning people who have held a green card across a sufficient number of recent tax years. For them, formally abandoning the card is an expatriating act, and so is claiming to be a UK resident under the treaty tie-breaker. Simply moving away or letting the card lapse does not end US tax residence. Whether you are a long-term resident depends on counting the years carefully.
Primary sources
What this page says is drawn from the official material below. Read it yourself; we would rather be checked than trusted.
Last reviewed
Part of our guide
Behind on US Taxes in the UK: IRS Streamlined Filing, Accidental Americans and Renunciation
From the Blog
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