Form 8854 Exit Tax Calculations and Reporting and IRS Relief Procedures for Certain Former Citizens

Determining Covered Expatriates, Navigating the Mark-to-Market Tax on Unrealized Gains, Reporting Elections

Note: CLE credit is not offered on this program

A live 110-minute CPE webinar with interactive Q&A

Thursday, February 20, 2020 (in 3 days)

1:00pm-2:50pm EST, 10:00am-11:50am PST

or call 1-800-926-7926
Program Materials

This webinar will provide tax advisers and compliance professionals with a practical guide to the calculations and reporting requirements needed for U.S. taxpayers and exiting green card holders. The panel will discuss the rules of Section 877A, the relief procedures issued in 2019, and strategies for minimizing the impact of expatriation taxes. The panel will also address the complexities of Form 8854.


The number of U.S. citizens expatriating from the United States has increased by an annual rate of 20% over the past several years. As part of Treasury's effort to eliminate tax avoidance through expatriation, Congress passed Section 877A, which imposes various taxes on U.S. taxpayers who renounce their citizenship or a long-held green card.

Section 877A creates an exit tax regime for individual U.S. taxpayers who renounce their citizenship, relinquished their U.S. citizenship when they become naturalized citizens of another country, or surrendered a green card held for more than seven years and whose income or net worth exceeds certain thresholds. The exit tax rules also apply to expatriates who fail to certify U.S. income tax compliance for the five years preceding the year of expatriation.

In 2019 the IRS issued Relief Procedures for Certain Former Citizens. Individuals with net assets of less than $2 million and tax liability of $25,000 or less for the year of expatriation and five prior years may be eligible for relief from taxes, penalties, and interest for these and previous tax years.

Taxpayers subject to the exit tax must file IRS Form 8854 Initial and Annual Expatriation Statement. This detailed and complex form requires taxpayers to declare a balance sheet reflecting U.S. property owned at the time of exit. The exit tax reporting form is a multi-year filing obligation. Late or incorrect filing of Form 8854 carries a steep $10,000 penalty. Tax advisers need to know the form requirements to avoid expensive tax consequences.

Listen as our experienced panel provides a comprehensive and practical guide to navigating the exit tax regime, completing Form 8854 for U.S. citizens planning expatriation, and the relief offered by the IRS to certain former citizens in September 2019.



  1. Exit tax provisions of Section 877A
  2. Who is a covered expatriate?
    1. The three tests
    2. The exceptions
    3. Determining net worth when trust assets are involved
  3. Components of Form 8854
    1. Reporting expatriating acts
    2. Part III Prior year mark-to-market calculations, prior-year deferrals
    3. Part IV Current year expatriation
      1. Net worth and tax liability
      2. Property owned on the date of expatriation
      3. Eligible and ineligible deferred compensation items
      4. Tax-deferred accounts
      5. Trust interests and elections
      6. Mark-to-market calculations
    4. Part V Balance sheet and income statement
  4. The inheritance tax under Section 2801
  5. IRS' Relief Procedures for Certain Former Citizens
  6. Pre-exit planning strategies


The panel will review these and other key issues:

  • Which taxpayers are subject to Section 877A and must file Form 8854
  • How to calculate the mark-to-market tax on capital gains
  • The types of deferred compensation subject to the exit tax
  • Which former citizens qualify for relief from prior taxes under IRS' recently released procedures
  • Strategies for avoiding or minimizing the taxes imposed under Section 877A


Hodgen, Philip
Philip D. W. Hodgen

Hodgen Law

Mr. Hodgen specializes in the international tax arena. He counsels clients on international tax issues arising when...  |  Read More

Rudd, Debra
Debra Rudd, CPA

Senior CPA
Hodgen Law

Ms. Rudd enjoys working with clients with a wide range of tax problems. Some of her favorite tax projects include...  |  Read More

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