The rules for leaving United States
The United States taxes its citizens and green-card holders on worldwide income wherever they live. Moving abroad changes nothing by itself. For a citizen, 'exit' means formally renouncing before a consular officer; for a green-card holder it means abandoning the card; for everyone else it means failing the substantial presence test. Each route has its own forms, its own deadlines and — for some — an exit tax.
Citizenship, green card, or substantial presence.
You are a US taxpayer on worldwide income if you are a US citizen, if you hold a green card at any time in the year (you stay resident until you abandon it in writing to USCIS or it is terminated administratively or by a federal court — living abroad or letting the card expire does not end it), or if you meet the substantial presence test: at least 31 days in the current year and 183 days counting all days this year, one-third of last year's and one-sixth of the year before.
Only the third group can 'leave' by simply leaving. A non-citizen, non-green-card holder who was present fewer than 183 days, kept a tax home abroad and had a closer connection to that country files Form 8840 to claim the closer-connection exception.
IRS: substantial presence test ↗For citizens and long-term residents, the exit is IRC §877A and Form 8854.
A citizen who renounces, or a long-term resident — a green-card holder in at least 8 of the last 15 tax years — who gives up the card, is an expatriate. Every expatriate files Form 8854. You are a covered expatriate, and the exit tax applies, if any one of three tests is met: net worth of $2 million or more on the expatriation date; average annual net income tax over the prior five years above $206,000 (2025) or $211,000 (2026); or failure to certify five years of full US tax compliance.
The third test catches people with modest wealth who simply have not filed. Getting five clean years on the record before the consular appointment is usually the most important step in the whole exit.
IRS: expatriation tax ↗The IRS does not issue residency opinions. The State Department issues the document that matters.
There is no IRS form that confirms you have stopped being a US taxpayer. For a citizen, the operative document is the Certificate of Loss of Nationality approved by the Department of State after you take the oath of renunciation in person at a US embassy or consulate abroad (forms DS-4079, DS-4080 and DS-4081). The fee for processing the request was cut from $2,350 to $450 by a final rule effective 13 April 2026. For a green-card holder, it is Form I-407, filed with USCIS at no fee — and DHS reports every I-407 to the IRS.
Former citizens who never filed can use the IRS Relief Procedures for Certain Former Citizens if they relinquished after 18 March 2010, have net worth under $2,000,000, owe $25,000 or less in total tax across the six years at issue, and were non-willful. It is not available to green-card holders.
State Department: relinquishing US nationality abroad ↗A dual-status return, with Form 8854 attached.
The year your US status ends is a dual-status year: resident (or citizen) up to the expatriation date, nonresident after. If you are a nonresident on 31 December you file Form 1040-NR marked 'Dual-Status Return' with a Form 1040 statement for the resident period — no standard deduction, and generally no joint return. Expatriates attach the initial Form 8854 to that return and send a copy to the IRS in Austin, by the return's due date including extensions.
Citizens and resident aliens abroad get an automatic two-month extension to 15 June, but interest runs from 15 April. Non-citizens without a green card may also need a departing-alien clearance (Form 1040-C or Form 2063) before they leave, applied for no earlier than 30 days and at least two weeks before departure.
IRS: taxation of dual-status individuals ↗The §877A exit tax,
without the guesswork.
If you are a covered expatriate, all your property is treated as sold at fair market value on the day before your expatriation date. The net gain is reduced by an exclusion of $890,000 for 2025 and $910,000 for 2026, and the rest is taxed in your dual-status return. You can irrevocably elect to defer the tax property-by-property until you actually sell, with interest, a bond or other security, and a waiver of treaty rights. IRAs, 529 plans, HSAs and similar accounts are not marked to market — their entire balance is treated as distributed the day before you expatriate. Pensions and 401(k)s are either withheld at 30% as you draw them (if you give the payor Form W-8CE and waive treaty benefits) or their present value is taxed up front. And a covered expatriate leaves a tail: US-citizen or resident recipients of gifts or bequests from you pay a 40% tax under §2801 on Form 708, above a $19,000 annual threshold. Each of these is a decision, and each needs a number behind it.
IRS: Form 8854 instructions ↗Why the facts matter more than the flight
US federal tax turns on status, not on where you live. Citizens and green-card holders report worldwide income until they formally expatriate; nonresident aliens report US-source income only. But the facts of your life still decide a great deal: whether you qualify for the foreign earned income exclusion, whether a non-citizen has a closer connection abroad, whether your state lets go of you, and — for a covered expatriate — what your net worth is on the day before you leave.
Where is your home?
Your tax home must be in a foreign country to claim the foreign earned income exclusion, and a retained US home is the first thing a state residency audit looks at.
Where is your family?
A spouse or dependants still in the US shape the closer-connection analysis for non-citizens, joint-filing choices in the dual-status year, and your state domicile.
What does daily life look like?
Days in each country, employer, bank and brokerage accounts, retirement plans, driver's license and voter registration all feed the substantial presence test, Form 8840, the FEIE tests and your net-worth statement.
Read the IRS guidance for citizens and residents abroad ↗
Official sources checked 8 September 2026. Rules and thresholds change; confirm before you rely on them.
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