Annual Expatriation Statement

An expat is a person who has officially renounced their US citizenship or US permanent/long-term residency. If you are an expat who has officially renounced your US citizenship you may have to file an Annual Expatriation Statement to the IRS after you complete your renunciation process.

For information purposes, you should know that this matter is regulated by the adoption of section 877A, which was passed in the US on June 17, 2008, and changed the taxation rules that apply to some expatriates.

Section 877A establishes that if you renounced your citizenship after June 16, 2008 you may have to file Form 8854 as a “covered expatriate” under section 877A.  If you expatriated before June 17, 2008 and after June 3, 2004 you may have to file Form 8854 under the rules of section 877. 

There are two main reasons why you have to file an Expatriation Statement:  

1. On your initial year of expatriation: To establish your expatriation for tax purposes
2. Every year following your expatriation: To make an annual expatriation statement in you expatriated after June 3, 2004 and are under Internal Revenue Code section 877 or section 877A

But before following specific US expatriate tax rules, it is important to determine which rules apply to you according to the law.

If you are an expat who renounced citizenship after June 16, 2008, you are considered a “covered expatriate” under section 877A if you meet one of the following criteria:

• On your initial Expatriation Statement, you failed to certify that you complied with all your federal tax obligations for the 5 years preceding your expatriation date.
• On the date of your expatriation, your net worth was $2 million or more
• Your average annual net income tax liability for the 5 tax years before your expatriation date is more than a threshold amount for your expatriation year. This amount is adjusted each year for inflation, thus, Attorney Sabalier will be able to give you clarification on this aspect after discussing with you what your particular circumstances are, during the Initial Legal Consultation.
  

If you are an expat who renounced citizenship after June 3, 2004 and before June 17, 2008 you are subject to section 877 if any of the following applies to you:

• On your initial Expatriation Statement, you failed to certify that you complied with all your federal tax obligations for the 5 years preceding your expatriation date.
• On the date of your expatriation your net worth was $2 million or more
• Your average annual net income tax liability for the previous 5 tax years before your expatriation date is more than a set threshold amount for your expatriation year. This amount is adjusted each year for inflation, thus, Attorney Sabalier will be able to give you clarification on this aspect after discussing with you what your particular circumstances are, during the Initial Legal Consultation.

What does it mean to be subject to section 877:

If you are subject to section 877, it means that you are taxed by the US as a non-resident and you must file an Expatriation Statement and a U.S. Nonresident Alien Income Tax Return every year.

Other circumstances that subject you to file an Expatriate Statement every year:

• If you are the US for more than 30 days in any year during the ten year period that section 877 applies to you, you may have to file as a US resident and could be subject to US tax on your worldwide income depending on whether you qualify for certain exceptions that could be consulted once we discuss your case.
• If you are a covered expat you may have elected on your initial Expatriation Statement to defer payment of tax on the gain from any of your deemed property sales until the year you actually sell the property, then you have to file Form 8854 annually each year up to and including the year of the sale of the property.
• If when you expatriated as a covered expat you had eligible deferred compensation or an interest in a non-grantor trust, then you have to file an Expatriation Statement each year and report whether or not you received any distributions from the deferred compensation plan or trust that year. 

Expatriate Tax issues are oftentimes complex and difficult to break down or understand on your own. Make sure that you count on the expertise of a licensed professional who specializes in expat tax and international tax law to help you navigate and explore your options responsibly. At Sabalier Law, Attorney Alexandra Sabalier is a U.S. licensed attorney, well-versed in the procedural and substantive tax rules and laws necessary to successfully represent clients worldwide involved in expatriation and U.S. citizenship renunciation, IRS tax filing procedures, IRS audits, collection matters, and international tax issues. As only a licensed attorney can do, Attorney Alexandra Sabalier will protect your conversations and documentation under Confidentiality, because they are protected under the Attorney-Client Privilege. No other licensed professional or expert can guarantee you this confidentiality, and they can be asked at any time by the US government or any of its agencies to disclose your details, documents, information, and communications. This is something that is highly advised that you don't risk.

Don't wait any longer and start your process today with an Initial Legal Consultation to discuss your case with Attorney Sabalier, study your options to become Lawfully Compliant with your expatriation process.