Tax side only. The consular process is separate
Renouncing US Citizenship: The Tax Side
Renouncing ends your citizenship, but the US tax questions come with it: the final filings, whether you are a covered expatriate, and whether exit tax applies. We handle the tax side only. The renunciation itself is done with the US State Department, and we do not handle it. Work is led by Gurleen Kaur, CPA licensed in British Columbia and Washington State.
Quick answer
What taxes apply when you renounce US citizenship?
You file an initial Form 8854 with your income tax return for the year of expatriation (IRS instructions). If you are a covered expatriate, you are generally taxed on net unrealized gain on your property as if it were sold the day before you expatriated. You are covered if your average annual net income tax for the prior 5 years is above the limit (US$206,000 for 2025), if your net worth is US$2 million or more, or if you cannot certify 5 years of compliance. The penalty for not filing Form 8854 when you are subject to section 877A is US$10,000.
At a glance
- The form
- Initial Form 8854, attached to your return for the year of expatriation
- Tax test (2025)
- Average annual net income tax for 5 years above US$206,000
- Net worth test
- US$2 million or more on the date of expatriation
- Compliance test
- Failing to certify 5 years of compliance makes you covered
- Source
- Form 8854 instructions, checked November 1, 2026
The covered expatriate tests
From the Form 8854 instructions. Meeting any one of them makes you a covered expatriate, unless an exception applies.
| Test | What it asks | Note |
|---|---|---|
| Tax | Was your average annual net income tax for the 5 tax years before expatriation above the limit? | US$206,000 for 2025. The amount changes yearly |
| Net worth | Was your net worth US$2 million or more on the date of expatriation? | A valuation question, so records matter |
| Certification | Can you certify on Form 8854 that you complied with all federal tax obligations for the 5 prior tax years? | If you cannot, you are covered, whatever your wealth |
Exceptions. Certain people who were dual citizens from birth and certain minors can avoid the tax and net worth tests if they meet the conditions, including limits on years of US residence. They still have to certify compliance (IRS).
If you are a covered expatriate
- Exit tax. Income tax on net unrealized gain, as if your property were sold at fair market value the day before expatriation. For 2025, the gain is reduced by US$890,000 (IRS).
- Some items differ. The instructions set separate rules for some deferred compensation and trusts.
- Gifts afterward. US citizens and residents who receive gifts or bequests from you may be subject to section 2801 tax.
If you are behind on US filings
The certification looks back 5 years, so people who never filed need to deal with that first. The IRS publishes relief procedures for certain former citizens for people who relinquished citizenship after March 18, 2010, with net worth under US$2 million and limited tax due, whose failures were not willful. See also IRS Streamlined filing.
Green card holders have a similar process. See Form 8854 and giving up a green card.
What we can take on
Before you renounce
A review of the covered expatriate tests, your filings for the prior 5 years and what can be done before the date.
The year you expatriate
The final income tax return and the initial Form 8854.
Catching up
Missing US filings, so that you can certify compliance. See behind on US filings.
We do not handle the renunciation appointment or give legal or immigration advice. Each engagement starts with a written scope and fixed quote, after we review your records.
How it works
- Send your request. Tell us your situation, including when you plan to renounce, using the form below.
- Review and fixed quote. We review your filings and a summary of what you own, and give you a written scope and fee.
- Preparation and review. We prepare the forms and go through them with you.
- Filing. The forms go in with your return for the year of expatriation.
What we need from you
- Your US returns for the last 5 years, if filed
- A list of assets and liabilities with values
- Retirement plans, trusts and deferred compensation
- Your renunciation date or planned date
- Any IRS letters
Please do not send tax IDs or statements through the website form. If we work together, documents come in through our secure client portal.
Common questions
Do you handle the renunciation itself?
No. We handle the tax side only. The renunciation is done with a US diplomatic or consular officer.
Does everyone who renounces pay exit tax?
No. Exit tax applies to covered expatriates, and for 2025 the net gain is reduced by US$890,000. Whether you are covered depends on the tests.
What if I was a dual citizen from birth?
Certain people who were citizens of both countries at birth can avoid the tax and net worth tests if they remain a citizen of and are taxed as a resident of the other country, and were a US resident for no more than 10 of the last 15 tax years. They still have to certify 5 years of compliance.
When does my expatriation date start?
For a renunciation before a US diplomatic or consular officer, it is the date you renounced, provided it is later confirmed by a certificate of loss of nationality. The instructions list other possible dates.
I have not filed US returns. Can I still renounce?
That is a consular matter, but for tax purposes failing to certify 5 years of compliance makes you a covered expatriate. Deal with the filings first.
How much does this cost?
We give a written scope and fixed quote after reviewing your records.
Sources
Every rule and figure on this page links to the IRS, CRA or other official source it comes from. Amounts change; we re-check them before each engagement.
- IRS: Instructions for Form 8854
- IRS: Expatriation tax (reviewed October 4, 2026)
- IRS: Relief procedures for certain former citizens (reviewed September 1, 2026)
Gurleen Kaur, CPA licensed in British Columbia and Washington State. Last updated November 1, 2026. This page is general information, not tax or legal advice for your situation.
Related guides: Form 8854 and green cards, IRS amnesty and Streamlined, Behind on US filings, US estate tax for Canadians.
Thinking of renouncing? Request a quote
Tell us your situation in a few lines. We confirm whether we can help, what records matter and the next step. Substantive advice begins under a paid diagnostic or signed engagement.
Prepared and signed by a licensed US CPA who can represent you before the IRS. Verify Gurleen Kaur's Washington licence (#41150) on CPAverify