Instructions for Filling Out Form 8854

This document offers comprehensive guidance on completing Form 8854, a form required for individuals who have expatriated from the United States. It covers filing requirements, the form's purpose, and specific instructions for each section, ensuring compliance with tax obligations and reporting under section 6039G.

In this article, we'll provide valuable information on Form 8854 and a step-by-step guide on how to fill it out, making the process straightforward and efficient.

What is Form 8854?

Form 8854, also known as the Initial and Annual Expatriation Statement, is a document used by expatriates to certify their compliance with tax obligations in the five years prior to expatriation and to fulfill their initial and annual information reporting obligations under section 6039G. The form is required for U.S. citizens who have relinquished their citizenship and long-term residents who have ended their residency (expatriated) on or after June 17, 2008. Additionally, individuals who expatriated before 2023 and deferred the payment of tax, have an item of eligible deferred compensation, or are a beneficiary of a nongrantor trust must file Form 8854 annually.

Who Must File Form 8854?

Form 8854 is required to be filed by individuals who have expatriated from the United States. This includes those who relinquished their U.S. citizenship in 2023, long-term residents who terminated their residency in 2023, and individuals who expatriated before 2023 but deferred the payment of tax, have an item of eligible deferred compensation, or are a beneficiary of a nongrantor trust.

Form 8854 Tax Filing Deadlines and Due Dates

• Form 8854 should be attached to the individual's income tax return for the year that includes their expatriation date and filed by the due date of the tax return (including extensions).
• If the individual is not required to file an income tax return, Form 8854 should be sent to the specified IRS address by the date the Form 1040-NR (or Form 1040 or 1040-SR) would have been due (including extensions) if they had been required to file.

Form 8854 Late Payment Penalty

Individuals who fail to file Form 8854 on time may face a late payment penalty of $10,000 for each year the form is not filed. However, this penalty can be waived if it is demonstrated that the failure to file was due to reasonable cause and not willful neglect.

Step-by-Step Instructions for Form 8854

Here are the step-by-step instructions for filling out Form 8854:

1. Begin with Part I—General Information. Provide your name, social security number, address, date of birth, and other required personal information.
2. For Part II—Initial Expatriation Statement for Persons Who Expatriated in 2023, complete this section if you relinquished your U.S. citizenship or terminated your long-term residency in 2023. Provide the date of your expatriation, the reason for expatriation, and information about your tax compliance for the five years prior to expatriation.
3. In Part II, Section A—Balance Sheet, list the fair market value and U.S. adjusted basis of your assets and liabilities as of the expatriation date.
4. In Part II, Section B—Income Statement, report the gain or loss of each property as if it had been sold for its fair market value on the day before the expatriation date.
5. In Part II, Section C—Deferred Compensation Items, provide information about any eligible deferred compensation items, including the payer's name, address, and taxpayer identification number, as well as the total amount of deferred compensation.
6. In Part II, Section D—Specified Tax Deferred Accounts, list any specified tax-deferred accounts, such as individual retirement accounts (IRAs), and provide the account balance as of the expatriation date.
7. In Part II, Section E—Nongrantor Trusts, provide information about any nongrantor trusts of which you are a beneficiary, including the name, address, and taxpayer identification number of the trust, as well as the value of your beneficial interest in the trust.
8. If you expatriated before 2023, complete Part III—Annual Expatriation Statement for Persons Who Expatriated Before 2023. Provide information about any deferred tax payments, eligible deferred compensation items, specified tax-deferred accounts, and nongrantor trusts.
9. Sign the form at the end of Part III. If a paid preparer completed the form on your behalf, they must also sign and provide their information in the designated section.
10. Retain a copy of the completed Form 8854 for your records, as its contents may become material in the administration of any Internal Revenue law.

How to Submit Form 8854

To submit Form 8854, attach the initial form to your income tax return for the year that includes your expatriation date and file it by the due date of the tax return, including extensions. Additionally, send a copy of Form 8854, marked "Copy," to the specified IRS address. If you're not required to file an income tax return, send Form 8854 to the specified IRS address by the date the Form 1040-NR (or Form 1040 or 1040-SR) would have been due, including extensions, if you were required to file.

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