U.S. Individual Income Tax Return Forms

2025

Instructions for Form 8854
Initial and Annual Expatriation Statement
Section references are to the Internal Revenue Code
unless otherwise noted.

Future Developments
For the latest information about developments related to
Form 8854 and its instructions, such as legislation
enacted after they were published, go to IRS.gov/
Form8854.

What’s New
New guidance regarding the section 2801 tax.
Section 2801 imposes a tax on U.S. citizens and residents
who receive gifts or bequests from covered expatriates.
For more information, see Covered expatriate, later; and
What’s new — Estate and gift tax, available at IRS.gov/
Businesses/Small-Businesses-Self-Employed/WhatsNew-Estate-and-Gift-Tax.
Increase in average annual net income tax liability.
The average annual net income tax liability for the 5 tax
years ending before your expatriation date, which is used
to determine whether an individual is a covered expatriate,
has increased to $206,000. For more information, see
Covered expatriate, later.
Increase in threshold for net unrealized gain on property. For 2025, if you are a covered expatriate, the net
gain that you must otherwise include in your income is
reduced by $890,000. For more information, see Taxation
Under Section 877A, later.

be treated as U.S. citizens or U.S. lawful permanent
residents for U.S. income tax purposes until they file a
Form 8854. See section 7701(n), as in effect before June
17, 2008.
Individuals in this category are subject to section 877
once they file the Form 8854. These individuals should
use the 2018 Form 8854 and the Instructions for Form
8854 (but modify the year on the form by crossing out
2018 and entering the year of actual filing) for purposes of
filing their initial and/or annual expatriation statements
pursuant to section 877 going forward.
Individuals who expatriated before June 17, 2008, who
have previously filed a Form 8854, but who still have an
annual reporting requirement in 2025 under section 877,
should also use the 2018 Form 8854 but modify the year
on the form by crossing out 2018 and entering 2025.

Who Must File

You must file your initial Form 8854 (Parts I and II) if you
relinquished your U.S. citizenship in 2025 or you are a
long-term resident (LTR), defined below, and terminated
your residency in 2025.
You must file your annual Form 8854 (Parts I and III) if
you expatriated before 2025 and you:
1. Deferred the payment of tax,
2. Have an item of eligible deferred compensation, or
3. Are a beneficiary of a nongrantor trust.

Form 8854 is used by expatriates to certify compliance
with tax obligations in the 5 tax years before expatriation
and to comply with their initial and annual information
reporting obligations under section 6039G.

Expatriation. Expatriation includes the acts of
relinquishing U.S. citizenship and terminating long-term
residency.
Date of relinquishment of U.S. citizenship. You are
considered to have relinquished your U.S. citizenship (and
consequently, have an expatriation date) on the earliest of
the following dates.
• The date you renounced your U.S. citizenship before a
diplomatic or consular officer of the United States
(provided that the voluntary renouncement was later
confirmed by the issuance of a certificate of loss of
nationality).
• The date you furnished to the State Department a
signed statement of your voluntary relinquishment of a
U.S. nationality confirming the performance of an
expatriating act (provided that the voluntary
relinquishment was later confirmed by the issuance of a
certificate of loss of nationality).
• The date the State Department issued a certificate of
loss of nationality.
• The date a U.S. court canceled your certificate of
naturalization.

Note: Individuals who expatriated for immigration
purposes after June 3, 2004, and before June 17, 2008,
but who have not previously filed a Form 8854, continue to

Long-term resident (LTR) defined. You are an LTR if
you were a lawful permanent resident of the United States
in at least 8 of the last 15 tax years ending with the year

Reminders
Procedure for requesting a deferral of the payment of
tax. You are no longer required to contact the IRS to
make appropriate arrangements for providing security.
However, to satisfy your tax liability, you must contact the
IRS.

General Instructions
Purpose of Form

Section 877A applies to U.S. citizens who have
relinquished their citizenship and long-term residents who
have ended their residency (expatriated) on or after June
17, 2008.

Sep 15, 2025

Instructions for Form 8854 (2025) Catalog Number 24874E
Department of the Treasury Internal Revenue Service www.irs.gov

you are no longer treated as a lawful permanent resident.
In determining if you meet the 8-year requirement, don't
count any year if in that year you were treated as a
resident of a foreign country under a tax treaty and did not
waive treaty benefits applicable to residents of that
country.
Lawful permanent resident. You are a lawful
permanent resident of the United States if you have been
given the privilege, according to U.S. immigration laws, of
residing permanently in the United States as an
immigrant. You generally have this status if you have been
issued an alien registration card, also known as a green
card, and your green card hasn't been revoked or judicially
or administratively determined to have been abandoned.
However, you are also no longer treated as a lawful
permanent resident if you (1) commenced to be treated as
a resident of a foreign country under the provisions of a
tax treaty, (2) did not waive the benefits of such treaty, and
(3) notified the IRS of the commencement of such
treatment. See Regulations section 301.7701(b)-7 for
information on related filing requirements.
Date of termination of long-term residency. If you
were an LTR, you terminated your lawful permanent
residency (and consequently, have an expatriation date)
on the earliest of the following dates.
• The date you voluntarily abandoned your lawful
permanent resident status by filing Department of
Homeland Security Form I-407 with a U.S. consular or
immigration officer.
• The date you became subject to a final administrative
order that you abandoned your lawful permanent resident
status (or, if such order has been appealed, the date of a
final judicial order issued in connection with such
administrative order).
• The date you became subject to a final administrative or
judicial order for your removal from the United States
under the Immigration and Nationality Act.
• If you were a dual resident of the United States and a
country with which the United States has an income tax
treaty, the date on which you commenced to be treated as
a resident of that country under the treaty, did not waive
the benefits of the treaty, and gave notice to the IRS of the
commencement of such treatment. See Regulations
section 301.7701(b)-7 for information on related filing
requirements.
Covered expatriate. You are a covered expatriate if you
expatriated after June 16, 2008, and any of the following
statements apply.
• Your average annual net income tax liability for the 5 tax
years ending before the date of expatriation is more than
$206,000.
• Your net worth was $2 million or more on the date of
your expatriation.
• You fail to certify on Form 8854 that you have complied
with all federal tax obligations for the 5 tax years
preceding the date of your expatriation.
Note: If you are a covered expatriate and give a gift or
bequest to a U.S. citizen or resident, they may be subject
to the section 2801 tax. If you give a gift to a U.S. citizen or
resident, you are presumed to be a covered expatriate for
purposes of the section 2801 tax unless you authorize the
disclosure of your relevant income tax return or income tax
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return information to the recipient of your gift. See section
2801 and What’s new — Estate and gift tax.
Exception for dual-citizens and certain minors.
Dual-citizens and certain minors (defined next) won't be
treated as covered expatriates (and therefore won't be
subject to the expatriation tax) solely because one or both
of the first two bullets under Covered expatriate, earlier,
apply. However, these individuals will still be treated as
covered expatriates unless they file Form 8854 and certify
that they have complied with all federal tax obligations for
the 5 tax years preceding the date of expatriation as
required in the third bullet under Covered expatriate,
earlier.
Certain dual-citizens. You can qualify for the
exception described above if you meet both of the
following requirements.
• You became at birth a U.S. citizen and a citizen of
another country and, as of your expatriation date, you
continue to be a citizen of, and are taxed as a resident of,
that other country.
• You were a resident of the United States for not more
than 10 years during the 15-tax-year period ending with
the tax year during which you expatriated. For the purpose
of determining U.S. residency, use the substantial
presence test described in chapter 1 of Pub. 519.
Certain minors. You can qualify for the exception
described above if you meet both of the following
requirements.
• You expatriated before you were age 181/2.
• You were a resident of the United States for not more
than 10 tax years before you expatriated. For the purpose
of determining U.S. residency, use the substantial
presence test described in chapter 1 of Pub. 519.
Note: If you have relinquished or intend to relinquish your
U.S. citizenship, and you wish to come into compliance
with your U.S. income tax and reporting requirements in
order to avoid being treated as a covered expatriate under
section 877A, you may qualify for certain relief
procedures. See IRS.gov/Individuals/InternationalTaxpayers/Relief-Procedures-for-Certain-Former-Citizens.
Penalties. If you are subject to section 877A and required
to file Form 8854 for any tax year, and you fail to file or do
not include all the information required by the form, or the
form includes incorrect information, you will owe a penalty
of $10,000 for that year, unless it is shown that such failure
is due to reasonable cause and not willful neglect.

Taxation Under Section 877A

If you are a covered expatriate in the year you expatriate,
you are subject to income tax on the net unrealized gain
on your property as if the property had been sold for its fair
market value (FMV) on the day before your expatriation
date (“mark-to-market tax”). This applies to most types of
property interests you held on the date of your
expatriation. But see Exceptions, later.
Gains from deemed sales are taken into account
without regard to other rules under the Code. Losses from
deemed sales are taken into account to the extent
otherwise allowed under the Code. However, section 1091
(relating to the disallowance of losses on wash sales of
stock and securities) doesn't apply. For 2025, the net gain
Instructions for Form 8854 (2025)

that you must otherwise include in your income is reduced
(but not below zero) by $890,000.
Exceptions. The mark-to-market tax does not apply to
the following.
1. Eligible deferred compensation items.
2. Ineligible deferred compensation items.
3. Specified tax deferred accounts.
4. Interests in nongrantor trusts.
Instead, item (1) is subject to withholding, provided that
you:
• Properly make an irrevocable waiver on your initial filing
of this form of any right to claim any reduction in
withholding under an applicable treaty between the United
States and your country of residence (see Line 1a under
Part II, Section C, later); and
• Timely notify the payor on Form W-8CE.
To timely notify the payor on Form W-8CE, you must file
the Form W-8CE with the payor on the earlier of:
• The day before the first distribution on or after your
expatriation date, or
• 30 days after your expatriation date.
In the case of item (2), you are treated as receiving the
present value of your accrued benefit as of the day before
your expatriation date and you should include this amount
on your Form 1040 or 1040-SR for the year that includes
your expatriation date.
In the case of item (3), you are treated as receiving a
distribution of your entire interest in the account on the day
before your expatriation date and you should include this
amount on your Form 1040 or 1040-SR for the year that
includes your expatriation date. See paragraphs (d), (e),
and (f) of section 877A.
Item (4) is subject to withholding, and you are treated
as having waived any right to claim any reduction in
withholding under an applicable treaty between the United
States and your country of residence, unless you elect to
be treated as having received the value of your entire
interest in the trust by obtaining a ruling from the IRS to
that effect. See Section C under Part II, later.
Deferral of the payment of mark-to-market tax. You
can make an irrevocable election to defer the payment of
the mark-to-market tax imposed on the deemed sale of
property. If you make this election, the following rules
apply.
1. You make the election on a property-by-property
basis.
2. The deferred tax on a particular property is due on
the return for the tax year in which you dispose of the
property.
3. Interest is charged for the period the tax is deferred.
4. The due date for the payment of the deferred tax
cannot be extended beyond the earlier of the following
dates.
a. The due date of the return required for the year of
death.
b. The time that the security provided for the property
fails to be adequate. See item (6) below.
5. You make the election in Part II, Section D.
Instructions for Form 8854 (2025)

6. You must provide adequate security (such as a
bond).
7. You must make an irrevocable waiver of any right
under any treaty of the United States that would preclude
assessment or collection of any tax imposed by section
877A.

When To File

Attach your initial Form 8854 to your income tax return
(Form 1040, 1040-SR, or 1040-NR) for the year that
includes your expatriation date, and file your return by the
due date of your tax return in accordance with filing
instructions. If you are not required to file an income tax
return, send your Form 8854 to the address under Where
To File, later, by the date your Form 1040-NR (or Form
1040 or 1040-SR) would have been due (including
extensions) if you had been required to file. (See Resident
Alien or Nonresident Alien in the Instructions for Form
1040-NR.)
File your annual Form 8854 if you expatriated before
2025 and you:
1. Deferred the payment of tax on any property on a
Form 8854 filed in a previous year,
2. Reported an eligible deferred compensation item on
a Form 8854 filed in a previous year, or
3. Reported an interest in a nongrantor trust on a Form
8854 filed in a previous year.
See Part III, later.
For each year that you are required to file a Form
1040-NR (or Form 1040 or 1040-SR), attach your annual
Form 8854 to your Form 1040-NR (or Form 1040 or
1040-SR) and send a copy, marked “Copy,” to the address
under Where To File, later. For each year that you are not
required to file Form 1040-NR (or Form 1040 or 1040-SR),
send your Form 8854 to the address under Where To File,
later, by the date your Form 1040-NR (or Form 1040 or
1040-SR) would have been due (including extensions) if
you had been required to file a Form 1040-NR (or Form
1040 or 1040-SR).

Where To File

Send your original initial or annual Form 8854 to the
address listed below.

If you elected to defer the payment of any tax due, see
the instructions under Part II, Section D, Line 5, later, and
send your tax deferral agreement request to the address
listed below.
Internal Revenue Service
3651 S IH35
MS 4301 AUSC
Austin, TX 78741
Note: If you were a U.S. person for any portion of 2025,
you may be required to file Financial Crimes Enforcement
Network (FinCEN) Form 114, Report of Foreign Bank and
Financial Accounts (FBAR). In addition, you may be
required to file Form 8938, Statement of Specified Foreign
Financial Assets. For more information, go to IRS.gov/
FBAR.
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Specific Instructions
Identifying number. Generally, this number is your U.S.
social security number (SSN). If you were never issued an
SSN, attach a statement explaining the reason.

Line 8c

Enter the date you voluntarily abandoned your lawful
permanent resident status by filing Department of
Homeland Security Form I-407 with a U.S. consular or
immigration officer.

Part I—General Information

This section is to be completed by all filers.

Part II—Initial Expatriation Statement
for Persons Who Expatriated in 2025

Line 1

Section A—Expatriation Information

If you have a P.O. box, enter your box number instead of
your street address only if your post office does not deliver
mail to the street address.

Line 2

Enter the information in the following order: street
address, city, province or state, and country. Follow the
country's practice for entering the postal code. Don't
abbreviate the country name.

Line 3

Enter the country of which you are considered a resident
for tax purposes if it is different from the country in which
your principal foreign residence is located.

Line 4

Check the appropriate box to indicate whether you
expatriated in 2025 and are filing your initial expatriation
statement, or if you expatriated before 2025 (but after
June 16, 2008) and are filing an annual statement.

Line 5

Your expatriation date is the date you relinquish
citizenship (in the case of a former citizen) or terminate
your long-term residency (in the case of a former U.S.
resident). See Date of relinquishment of U.S. citizenship
or Date of termination of long-term residency, earlier.

Line 6

List all countries (including the United States) of which you
are a citizen and the date, including by birth, on which you
became a citizen.

Line 7

If you are a former U.S. citizen, check the appropriate box
to indicate how you became a U.S. citizen.

Line 8a

If you are or were a U.S. lawful permanent resident, enter
the date on which you became a U.S. lawful permanent
resident. This is the date you were issued your green card.

Line 8b

Enter the date you either:
1. Became subject to a final administrative order that
you abandoned your lawful permanent resident status (or,
if such order has been appealed, the date of a final judicial
order issued in connection with such administrative order);
or
2. Became subject to a final administrative or judicial
order for your removal from the United States under the
Immigration and Nationality Act.

4

This section must be completed by all individuals who
expatriated in 2025.

Line 1
For each of the 5 tax years ending before the date of your
expatriation, determine your total tax less any foreign tax
credit. For 2024, use the amount shown on the 2024 Form
1040, line 24, less any amount reported on the 2024
Schedule 3 (Form 1040), line 1.

Line 2
You can use the Part II, Section B, balance sheet to
determine your net worth.

Line 3
Check the “Yes” box if there have been significant
changes in your assets and liabilities during the 5 years
preceding your expatriation date. If your net worth was $2
million or more at any point during the 5 years preceding
your expatriation date but was less than $2 million on your
expatriation date, there have been significant changes in
your assets and liabilities. You must attach a statement to
Form 8854 that explains the changes.
Example. During the 5 years preceding her
expatriation date, Maria’s net worth exceeded $2 million.
However, after Maria made a gift of real property to her
child on October 31, 2025, Maria’s net worth decreased
such that it was less than $2 million on her expatriation
date. Maria reported the gift on a federal gift tax return.
Maria must check the “Yes” box. Maria must also attach a
statement that explains that her net worth decreased
because she made a gift of real property to her child on
October 31, 2025, and that she reported the gift on a
federal gift tax return.

Line 4
Check the “Yes” box if you became at birth a U.S. citizen
and a citizen of another country and, as of your
expatriation date, you continue to be a citizen of, and are
taxed as a resident of, that other country.

Line 6
Check the “Yes” box if:
• You expatriated before you were age 181/2, and
• You have been a resident of the United States for not
more than 10 tax years before you expatriated. For the
Instructions for Form 8854 (2025)

purpose of determining U.S. residency, use the substantial
presence test described in chapter 1 of Pub. 519.

Line 7
Check the “Yes” box if you have complied with your tax
obligations for the 5 tax years ending before the date on
which you expatriated, including but not limited to, your
obligations to file income tax, employment tax, gift tax,
and information returns, if applicable, and your obligation
to pay all relevant tax liabilities, interest, and penalties.
Caution: You will be subject to tax under section 877A if
you have not certified your compliance with these
obligations, regardless of whether your average annual
income tax liability or net worth exceeds the applicable
threshold amounts.

Section B—Balance Sheet

The financial information in this balance sheet is required
under section 6039G. The balance sheet can be used to
arrive at your net worth.
For purposes of determining your net worth, you are
considered to own any interest in property that would be
taxable as a gift under chapter 12 of subtitle B of the Code
had you transferred it immediately prior to expatriation, but
without regard to sections 2503(b) through (g), 2513,
2522, 2523, and 2524. To determine the value of your
interests in property, use the valuation principles of
section 2512 and the regulations thereunder.

Columns (a) and (b)
List in U.S. dollars the FMV (column (a)) and the U.S.
adjusted basis (column (b)) of your assets and liabilities
as of your expatriation date.
You can use good-faith estimates of FMV and basis.
Formal appraisals are not required.

Line 5a
List the appropriate amount in each column for all
nonmarketable stock and securities issued by foreign
corporations that would be controlled foreign corporations
if you were still a U.S. citizen or resident. Note that these
amounts are already included on line 5. Don't include
amounts on this line in the total on line 20.

Line 6
List in U.S. dollars the present value of your U.S. and
foreign pensions or similar retirement arrangements as of
your expatriation date.

Line 7
List in U.S. dollars the present value of your deferred
compensation, including any stock options, as of your
expatriation date. The present value should include all
deferred compensation, regardless of where you
performed services.
Instructions for Form 8854 (2025)

Line 8
List the total value of all your partnership interests. If you
hold an interest in one or more partnerships, you must
attach a statement to Form 8854 that lists each
partnership separately. Include the employer identification
number (EIN), if any, for each partnership. Describe the
assets and liabilities (using the categories on this balance
sheet) from your interest in each partnership.

Line 9
For purposes of determining your net worth, you are
considered to own assets held in trusts that would be
subject to U.S. gift tax if you had transferred your interests
in the trusts by gift immediately before your expatriation
date, but without regard to sections 2503(b) through (g),
2513, 2522, 2523, and 2524. List the total FMV and basis
of such property on line 9. Attach a statement to Form
8854 describing each asset. Include the EIN (if any) for
the trust in which the asset is held.

Line 10
List the total value of all of your beneficial interests in
trusts to the extent not included on line 9. You must attach
a statement to Form 8854 that lists each trust separately.
Include the EIN (if any) for each trust. Describe the assets
and liabilities (using the categories on this balance sheet)
from your interest in each trust of which you have a
beneficial interest.
Note: To determine the value of your beneficial interest,
use the two-step process described in section III of Notice
97-19 which is on page 40 of Internal Revenue Bulletin
1997-10 at IRS.gov/pub/irs-irbs/irb97-10.pdf.

Lines 11 and 12
Intangible property includes any of the following items that
have substantial value independent of the services of any
individual.
• Patent, invention, formula, process, design, pattern, or
know-how.
• Copyright, literary, musical, or artistic composition.
• Trademark, trade name, or brand name.
• Franchise, license, or contract.
• Method, program, system, procedure, campaign,
survey, study, forecast, estimate, customer list, or
technical data.
• Any similar item.

Line 19
Attach a statement describing and listing the total value of
any other assets you have that aren't included on lines 1
through 18.

Line 20
Combine lines 1 through 5 and 6 through 19, not including
any amounts on line 5a. The amounts on line 5a are
included in determining the amounts on line 5.
5

Line 23
Attach a statement describing and listing the total value of
any other liabilities you have that aren't included on lines
21 and 22.

Section C—Property Owned on Date of
Expatriation

Complete Section C only if you are a covered expatriate
(see Covered expatriate, earlier). If you need additional
space for the description of property, or if you need
additional entry lines, attach a statement.

Line 1
None of the amounts checked on line 1 are subject to the
mark-to-market tax. Don't include them on line 2. Instead,
you must attach a statement to the form that separately
identifies each amount checked on line 1 as of the day
before your expatriation date.
Tip: Some of these amounts may otherwise be taxable or
subject to income tax withholding at source. You must
provide Form W-8CE to the payor of the relevant items.
See paragraphs (d), (e), and (f) of section 877A for more
information.
Line 1a. Generally, a deferred compensation item is one
of the following.
1. Any interest in a plan or arrangement described in
section 219(g)(5). This includes a qualified pension,
profit-sharing (including 401(k)), annuity, SEP, and
SIMPLE plan.
2. Any interest in a foreign pension plan or similar
retirement arrangement or program.
3. Any item of deferred compensation, whether or not
substantially vested. This is any amount of compensation
if, under the terms of the plan, contract, or other
arrangement providing for such compensation, the
following conditions were met.
a. You had a legally binding right on your expatriation
date to such compensation.
b. The compensation has not been actually or
constructively received on or before your expatriation
date.
c. The compensation is payable on or after your
expatriation date.
Examples of items of deferred compensation include a
cash-settled stock appreciation right, a phantom stock
arrangement, a cash-settled restricted stock unit, an
unfunded and unsecured promise to pay money or other
compensation in the future (other than such a promise to
transfer property in the future), and an interest in a trust
described in section 402(b)(1) or (4) (commonly referred
to as a “secular trust”).
4. Any property, or right to property, that you are
entitled to receive in connection with the performance of
services (whether or not such property or right to property
is substantially vested) to the extent not previously taken
into account under section 83 or in accordance with
section 83. Examples of these items include, but are not
limited to, restricted stock, stock-settled stock
6

appreciation rights, and stock-settled restricted stock
units.
Note: A deferred compensation item does not include the
portion of an item that is attributable to services performed
outside the United States while you were not a citizen or
resident of the United States. For more information, see
section 5 of Notice 2009-85, 2009-45 I.R.B. 598, available
at IRS.gov/irb/2009-45_IRB#NOT-2009-85.
Form 8854 is used by expatriates to certify compliance
with tax obligations in the 5 years before expatriation and
to comply with their initial and annual information reporting
obligations under section 6039G.
“Eligible deferred compensation item” means any
deferred compensation item with respect to which:
• The payor is either a U.S. person or a non-U.S. person
who elects to be treated as a U.S. person for purposes of
section 877A(d)(1),
• The covered expatriate notifies the payor of their status
as a covered expatriate on Form W-8CE, and
• The covered expatriate irrevocably waives any right to
claim any withholding reduction on such item under any
treaty with the United States on Form 8854.
The Secretary may provide separate guidance
providing a procedure for a payor who is a non-U.S.
person and wishes to elect to be treated as a U.S. person
for purposes of section 877A(d)(1).
Caution: You must file Form 8854 annually to certify that
no distributions have been received from your eligible
deferred compensation item(s) or to report the
distributions you received.
Note: If you have one or more eligible deferred
compensation items, you must attach a statement to the
form that separately identifies each eligible deferred
compensation item and includes the following language
for each item: “I irrevocably waive any right to claim any
reduction in withholding for this eligible deferred
compensation item under any treaty with the United
States.”
Line 1b. “Ineligible deferred compensation item” means
any deferred compensation item that is not an eligible
deferred compensation item. The amount of this deferred
compensation item (the present value of the accrued
benefit) must be included on your Form 1040 or 1040-SR,
or other schedule, for the portion of your tax year that
includes your expatriation date. For more information, see
section 5D of Notice 2009-85.
Note: If you have one or more ineligible deferred
compensation items, you must attach a statement to the
form that separately identifies each ineligible deferred
compensation item and provides the present value of such
ineligible deferred compensation item as of the day before
your expatriation date.
Line 1c. A specified tax deferred account includes the
following.
• An individual retirement plan (except those described in
section 408(k) or 408(p)).
• A qualified tuition program.
• A qualified ABLE program.
• A Coverdell education savings account.
• A health savings account.
Instructions for Form 8854 (2025)

• An Archer medical savings account.

The amount of your entire interest in your specified tax
deferred account on the day before your expatriation date
must be included on your Form 1040 or 1040-SR, or other
schedule, for the portion of your tax year that includes
your expatriation date. For more information, see section 6
of Notice 2009-85.
Note: If you have one or more specified tax deferred
accounts, you must attach a statement to the form that
separately identifies each specified tax deferred account
and provides the entire account balance of each specified
tax deferred account on the day before your expatriation
date.
Line 1d. A nongrantor trust is the part of any trust,
whether domestic or foreign, of which you were not
considered the owner under sections 671 through 679 on
the day before your expatriation date. You are considered
a beneficiary of such trust if:
1. You are entitled or permitted, under the terms of the
trust instrument or applicable local law, to receive a direct
or indirect distribution of trust income or corpus (including,
for example, a distribution in discharge of an obligation);
2. You have the power to apply trust income or corpus
for your own benefit; or
3. You could be paid from the trust income or corpus if
the trust or the current interests in the trust were
terminated.
Unless you elect to be treated as having received the
value of your interest in the trust, as determined for
purposes of section 877A, as of the day before your
expatriation date, you cannot claim a reduction in
withholding on any distribution from the trust under any
treaty with the United States. Before you can make the
election, you must get a letter ruling from the IRS as to the
value, if ascertainable, of your interest in the trust as of the
day before your expatriation date by following the
procedures set forth in Rev. Proc. 2025-1, 2025-1 I.R.B. 1,
available at IRS.gov/irb/2025-01_IRB#REVPROC-2025-1. You must make this election by checking
the box under line 1d of this form and attaching a copy of
the letter ruling both to this form and to your timely filed tax
return (including extensions) for the 2025 tax year. Until
you obtain the valuation letter ruling and provide a copy of
such letter ruling to the trustee of the nongrantor trust
together with certification, under penalties of perjury, that
you have paid all tax due as a result of your election, any
taxable distributions that you receive from the trust will be
subject to 30% withholding.
Caution: If you are a beneficiary of a nongrantor trust,
you must file Form 8854 annually to certify that no
distributions have been received or to report the
distributions you received.
Note: If you are a beneficiary of one or more nongrantor
trusts, you must attach a statement to the form that
separately identifies each trust and includes one of the
following statements for each trust.
• “I waive any right to claim any reduction in withholding
on any distribution from such trust under any treaty with
the United States.”
Instructions for Form 8854 (2025)

• “I elect under section 877A(f)(4)(B) to be treated as
having received the value of my entire interest in the trust
(as determined for purposes of section 877A) as of the
day before my expatriation date. I attach a copy of my
valuation letter ruling issued by the IRS.”
Line 2
Column (a). An interest in property includes money or
other property, regardless of whether it produces any
income or gain. In addition, an interest in the right to use
property will be treated as an interest in such property.
However, do not list the following.
• Deferred compensation items.
• Specified tax deferred accounts.
• Interests in nongrantor trusts.
You are considered to own any interest in property that
would be included in your gross estate for federal estate
tax purposes under chapter 11 of subtitle B of the Code if
you died on the day before your expatriation date as a
citizen or resident of the United States. For more
information on gross estate, see section 2103. Whether
property would be included in your gross estate will be
determined without regard to sections 2010 through 2016.
For this purpose, you are considered to own your
beneficial interest(s) in each trust (or part of a trust), other
than a nongrantor trust subject to section 877A(f), that
would not be included in your gross estate as described in
the preceding sentences. Your beneficial interest(s) in
such a trust shall be determined under the special rules
set forth in section III of Notice 97-19, which is on page 40
of Internal Revenue Bulletin 1997-10.
Column (b). Use the FMV on the day before your
expatriation date. FMV is the price at which the property
would change hands between a buyer and a seller when
both have reasonable knowledge of all the necessary
facts and neither has to buy or sell. If parties with adverse
interests place a value on property in an arm's-length
transaction, that is strong evidence of the FMV.
Column (c). Generally, the cost or other basis in this
column cannot be less than the FMV of the property on
the date you first became a U.S. resident. However, if you
are a naturalized citizen or an LTR at the time you
expatriated, you can make an irrevocable election under
section 877A(h)(2) to determine basis without regard to
this restriction. Print “(h)(2)” after any entry for which you
make this election.
Column (e). Before you complete column (e), you must
allocate the exclusion amount to the gain properties on a
separate schedule. Attach a copy of the separate
schedule to this form. To allocate the exclusion amount,
determine the gain of each gain property listed in column
(a) and enter that gain in column (d). If the total gain of all
the gain properties exceeds the exclusion amount
($890,000 for 2025), then allocate the entire exclusion
amount to the gain properties by multiplying the exclusion
amount by the ratio of the gain determined for each gain
property in column (d) over the total gain of all gain
properties listed in column (d). After you have allocated
the exclusion amount to the gain properties, subtract the
exclusion amount allocated to each gain property from the
gain reported for that property in column (d), and enter the
7

resulting amount of gain in column (e). If the total gain of
the gain properties in column (d) is less than the exclusion
amount (but greater than -0-), then you must use the total
gain amount as the exclusion amount, and you must
allocate the exclusion amount, as adjusted, to the gain
properties under the method described above. The
exclusion amount allocated to each gain property can’t
exceed the amount of that gain property's built-in gain.
See Notice 2009-85, section 3B, for more information.
Example. Xavier, a covered expatriate, renounced his
citizenship on Date 2. On Date 1, the day before Xavier's
renunciation of his citizenship, he owned three assets,
which he had owned for more than 1 year. Asset A is
business property and Assets B and C are personal
property. As of Date 1, Asset A had an FMV of $2,000,000
and an adjusted basis of $200,000; Asset B had an FMV
of $1,000,000 and an adjusted basis of $800,000; and
Asset C had an FMV of $500,000 and an adjusted basis
of $800,000. Xavier must allocate the exclusion amount as
follows.
Step 1: Determine the built-in gain or loss of each asset
by subtracting the adjusted basis from the FMV of the
asset on Date 1.
Basis
Asset A
Asset B
Asset C

FMV

200,000
800,000
800,000

2,000,000
1,000,000
500,000

Built-in Gain/Loss
1,800,000
200,000
(300,000)

Step 2: Allocate the exclusion amount to each of the
gain properties by multiplying the exclusion amount
($890,000) by a ratio of the deemed gain attributable to
each gain property over the total gain of all the gain
properties deemed sold.
Asset A
1,800,000
2,000,000

× 890,000 = 801,000

Asset B
200,000
2,000,000

× 890,000 = 89,000

Step 3: Figure the final amount of deemed gain on each
asset by subtracting the exclusion amount allocated to
each asset.
Asset A:
Asset B:

1,800,000 − 801,000 = 999,000
200,000 − 89,000 = 111,000

Xavier will recognize in Section C, line 2, column (e), the
resulted gain from Asset A and Asset B in the amounts of
$999,000 and $111,000, respectively. In addition, Xavier
must report the loss with respect to Asset C on Form 1040
for the portion of Xavier's tax year that includes the day
before the expatriation date, as provided in Regulations
section 1.6012-1(b)(2)(ii)(b).
8

Column (f). Complete this column in order to list the
schedule or form on which you reported the deemed sale
of each property listed in column (a) (for example, Form
4797 or Form 8949).
Column (g). Complete this column only for those
properties for which you are electing to defer the payment
of tax. First, complete Section D to line 4. On a separate
attachment, allocate the amount of tax eligible for deferral
among all gain properties listed on Section C, line 2. The
tax attributable to a particular property is determined by
multiplying the amount on Section D, line 4, by the ratio of
the gain for that property entered in Section C, line 2,
column (e), over the total amount of gain of all gain
properties on Section C, line 2. This is the total amount of
gain of all properties listed individually in Section C, line 2,
column (e), combined as an aggregate figure. In
Section C, line 2, column (g), enter the tax attributable to
each property for which you are electing to defer tax.
Then, enter the total deferred tax for those properties from
Section C, line 4, column (g), on Section D, line 5.
Example. Section C, line 2, lists four assets, each
resulting in a deemed gain in column (d). The amount of
tax eligible for deferral on Section D, line 4, is $575,000.
You must go back to line 2, column (g), to allocate the
deferred tax among the individual properties.
Caution: You must attach a computation to show how
you figured the tax attributable to each property.
See Section D, later, and Notice 2009-85, section 3E,
for more information on deferring the payment of tax.
Note: The address listed in section 3E of Notice 2009-85
for mailing your tax deferral agreement is no longer valid.
See Procedure for requesting a deferral of the payment of
tax, later, for the correct address.
Reporting gain or loss. You must report and recognize
the gain (or loss) of each property reported in Section C,
line 2, column (a), on the relevant form or schedule of your
Form 1040 or 1040-SR for the part of the year that
includes the day before your expatriation date. The return
to which you attach your form or schedule will depend on
your status at the end of the year. See chapter 1 of Pub.
519 to determine which form you should file. The gain
from column (e) or loss from column (d) attributable to
each property is reported in the same manner as if the
property had actually been sold. For example, gain
recognized from the deemed sale of a rental property that
has been depreciated is reported on Form 4797 as if it
had been sold. Gain recognized from the deemed sale of
personal property (such as stock or a personal residence)
is reported on Form 8949 as if it had been sold. Capital
gain retains its character as capital gain; ordinary gain
retains its character as ordinary income.

Section D—Deferral of Tax

If you expatriated in 2025, and you chose to enter into a
tax deferral agreement with the IRS with respect to assets
subject to the mark-to-market rules of section 877A, use
lines 2 through 5 of Section D to figure the amount of tax
you can defer. Before completing lines 2 through 5 of
Section D, you must fill out two hypothetical individual
income tax returns using Form 1040 or 1040-SR. The first
return includes all income, including the section 877A(a)
Instructions for Form 8854 (2025)

gain and loss. The second return includes all income
except the section 877A(a) gain and loss. Attach both
hypothetical returns to this Form 8854.

Line 1
If you aren't electing to defer the payment of tax on the
gain reported in Section C, line 2, column (e), report on
the appropriate income tax return schedule or form the
gain amount attributable to each particular property as
listed in Section C, line 2, column (e), and report the loss
amount attributable to each particular property as listed in
Section C, line 2, column (d).
If you are electing to defer tax, go to line 2.

Line 2
Enter on line 2 the amount of tax on line 24 of the first
hypothetical return, which includes all income, including
the section 877A(a) gain and loss.

Line 3
Enter on line 3 the amount of tax on line 24 of the second
hypothetical return, which includes all income except the
section 877A(a) gain and loss.

Line 5
This is the amount of tax you elect to defer. If you are
deferring tax on all properties, enter the amount from
Section D, line 4. If you are electing deferral on only
certain properties, go to Section C, line 2, column (g), to
show how much deferred tax is allocated to each property.
Attach a computation.
Procedure for requesting a deferral of the payment of
tax. In order to defer any part of the mark-to-market tax,
you must enter into a tax deferral agreement with the IRS
and provide adequate security. Notice 2009-85 contains a
sample agreement (Appendix A). Adequate security can
be either:
1. A bond that is furnished to, and accepted by, the
IRS, that is conditioned on the payment of tax (and
interest thereon), and that meets the requirements of
section 6325; or
2. Another form of security (including letters of credit)
that is acceptable to the IRS.
In order to make a deferral election, a covered
expatriate must appoint a U.S. person to act as the
covered expatriate's limited agent for accepting
communication related to the tax deferral agreement from
the IRS on behalf of the covered expatriate.
You must send your original tax deferral agreement
request, marked “Original,” with your Form 8854 for the
year that includes your expatriation date to the following
address.
Internal Revenue Service
3651 S IH35
MS 4301 AUSC
Austin, TX 78741
Instructions for Form 8854 (2025)

If you are required to file a Form 1040, 1040-SR, or
1040-NR for the year that includes your expatriation date,
also attach a copy of the tax deferral agreement request,
marked “Copy,” to the Form 8854 that you include with
your tax return.
Note: The address listed in section 3E of Notice 2009-85
is no longer valid.
If the IRS deems your collateral sufficient, and agrees
to enter into a tax deferral agreement, you can pay any tax
deferred, together with interest, at any time. However, the
time for the payment of tax attributable to a particular
deferral asset can be extended only until (a) the year the
asset is ultimately disposed of, or (b) the year of death.
Caution: You must file Form 8854 annually for years up to
and including the year in which the full amount of deferred
tax and interest is paid.
Waitver of treaty benefits. As a further condition to
making the election to defer the payment of tax on a
particular asset, you must waive any right under any U.S.
tax treaty that would preclude the assessment or
collection of the tax.
Satisfying your deferred tax liability. If you entered
into an agreement for the deferral of tax with the IRS and
dispose of one or more assets for which you elected to
defer tax, you must contact the IRS to make arrangements
to satisfy your tax liability. The address is shown above.

Part III—Annual Expatriation
Statement for Persons Who
Expatriated Before 2025

You must file Part III if any of the following apply to you.
• You deferred the payment of tax on any property on a
Form 8854 filed in a previous year.
• You reported an eligible deferred compensation item on
a Form 8854 filed in a previous year.
• You reported an interest in a nongrantor trust on a Form
8854 filed in a previous year.

Line 1

If you deferred the payment of tax in an earlier year, refer
to the Form 8854 you filed for that earlier year to complete
columns (a), (b), and (c). If you expatriated in 2019 or
later, use the information from Part II, Section C, line 2. If
you expatriated in 2018 or earlier, use the information from
Part III, line 1, of the earlier year's Form 8854.

If you disposed of any property in 2025 on which you
deferred the payment of tax on a previous return, also
complete column (d). You must report the gain or loss
from the property disposed of on the appropriate line (or
schedule) of your income tax return.
Caution: You must pay the deferred tax, plus interest, on
any property you disposed of, no later than the due date
(without extensions) of your 2025 income tax return. See
Satisfying your deferred tax liability, earlier, for information
on arranging payment.
See Section D under Part II, earlier, and section 3E of
Notice 2009-85 for more information on deferring the tax.
Note: The address listed in section 3E of Notice 2009-85
for mailing your tax deferral agreement is no longer valid.
9

See Procedure for requesting a deferral of the payment of
tax under Section D, earlier, for the correct address.

Line 2

Check the “Yes” box if you received any distributions of
eligible deferred compensation items in 2025. Enter the
part of the distribution that you would include in gross
income if you continued to be subject to tax as a U.S.
citizen or resident. Also enter the total amount of tax
withheld by the payor(s) of any eligible deferred
compensation items.
Caution: Don't enter the part of any payment that is
attributable to services performed outside the United
States before or after your expatriation date while you
weren't a citizen or resident of the United States.

Line 3

Unless the exception at the end of this section applies,
check the “Yes” box if you received any direct or indirect
distributions of property (including money) from a
nongrantor trust in 2025. Enter the part of the distribution
that you would include in gross income if you continued to
be subject to tax as a U.S. citizen or resident. Also enter
the total amount of tax withheld by the payor(s) of any
distribution.
Caution: Don't include any distribution from a trust if your
interest in the trust was treated in an earlier year as a
deferred compensation item or part of a specified tax
deferred account.
Exception. Don't check the “Yes” box if you elected on a
previously filed Form 8854 to be treated as having
received the value of your entire interest in the trust as of
the day before your expatriation date.

10

Signature

Form 8854 is not considered valid unless you sign it. If you
have someone else prepare Form 8854, you are still
responsible for its correctness.

Paid preparers. Generally, anyone you pay to prepare
Form 8854 must sign it and include their preparer tax
identification number (PTIN) in the space provided. The
preparer must give you a copy for your records. Someone
who prepares Form 8854 but does not charge you a fee
should not sign it.
Paperwork Reduction Act Notice. We ask for the
information on this form to carry out the Internal Revenue
laws of the United States. You are required to give us the
information. We need it to ensure that you are complying
with these laws and to allow us to figure and collect the
right amount of tax.
You are not required to provide the information
requested on a form that is subject to the Paperwork
Reduction Act unless the form displays a valid OMB
control number. Books or records relating to a form or its
instructions must be retained as long as their contents
may become material in the administration of any Internal
Revenue law. Generally, tax returns and return information
are confidential, as required by section 6103.
The average time and expenses required to complete
and file this form will vary depending on individual
circumstances. For the estimated averages, see the
instructions for your income tax return.

Instructions for Form 8854 (2025)