A permanent resident who renounces their Green Card or Citizenship must file Form 8854 if they meet these conditions:

1. They have been a “Long-Term Resident”

That is, they have held a Green Card or citizenship for at least 8 of the 15 tax years prior to the year of renunciation.

If they have NOT been a long-term resident, the exit tax does not apply, but they may still be required to file Form 8854 to notify the termination of their status.

2. They must file Form 8854 whenever they terminate their residency

The law requires both citizens who renounce their status and long-term permanent residents who terminate their status to file Form 8854. The form:

• Notifies the tax authorities of the expatriation or termination of residency.

• Certifies that the tax obligations for the previous 5 years were met.

• Determines if the person is a “covered expatriate.”

Requirements that qualify a person as a “Covered Expatriate”

This determines whether or not the Exit Tax applies.

You only need to meet ONE of the following:

1. Proof of wealth

Have a net worth of $2 million or more on the date of expatriation.

2. Proof of tax compliance

The average net income tax paid in the five years prior to resignation must exceed the inflation-adjusted annual threshold.

Threshold for the most recent available years:

• 2023 → $190,000

• 2024 → $201,000

• 2025 → $206,000

• 2026 → $211,000

3. Inability to certify five years of tax compliance

If the individual cannot certify on Form 8854 that they have complied with all their U.S. tax obligations for the five years prior to resignation, they are automatically considered a “covered expatriate.”

Conclusion

A former Green Card holder must file Form 8854 if they:

✔ Have been a long-term resident (8 out of 15 years)

✔ Have filed Form I-407 (Renunciation)

✔ And meet any of the 3 covered expatriate criteria:

• Net worth ≥ $2 million

• 5-year average tax exceeds the threshold

• Cannot certify full tax compliance for 5 years

If they are a covered expatriate, they will be subject to Exit Tax.

If you have any questions, please contact us:

Antonio Rodriguez

US tax Consultants

Tel +34 915194392