{"id":137,"date":"2022-10-25T18:32:53","date_gmt":"2022-10-25T18:32:53","guid":{"rendered":"https:\/\/www.hrblock.com\/expat-tax-preparation\/resource-center\/?p=137"},"modified":"2025-03-13T14:56:51","modified_gmt":"2025-03-13T18:56:51","slug":"covered-vs-non-covered-expatriates","status":"publish","type":"post","link":"https:\/\/www.hrblock.com\/expat-tax-preparation\/resource-center\/filing\/status\/covered-vs-non-covered-expatriates\/","title":{"rendered":"Covered vs. Non-Covered Expatriates"},"content":{"rendered":"\n

As an expat, you\u2019ve probably heard the terms \u201ccovered expatriate\u201d and \u201cnon-covered expatriate\u201d throughout your travels. They affect the tax you pay upon leaving the U.S. for good, so it\u2019s important to know the difference and what it means for you.<\/p>\n\n\n\n

Need to expatriate from the U.S.? Get started on your expat taxes now<\/a> and we\u2019ll help you get it sorted out.<\/strong><\/p>\n\n\n\n

File on my own<\/a><\/div>
File with an advisor<\/a><\/div><\/div>\n\n\n\n

What is a covered expatriate?<\/h2>\n\n\n\n

To break it down for you, an expatriate is someone who has given up their U.S. citizenship or green card through official U.S. government procedures. A covered expatriate is an expatriate who must pay an exit tax<\/a> on all their assets in their final year.<\/p>\n\n\n\n

Who qualifies as a covered expatriate?<\/h2>\n\n\n\n

You qualify as a covered expatriate if you are a U.S. citizen or long-term resident and meet one of the three requirements below:<\/p>\n\n\n\n

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  1. The expatriate\u2019s average annual net income tax for the period of 5 tax years ending on the date before relinquishing citizenship or residency is greater than $201,000 for those expatriating in 2024 (up from $190,000 in 2023 and $178,000 for 2022).<\/li>\n\n\n\n
  2. The taxpayer\u2019s net worth is at least $2 million on the date of expatriation.<\/li>\n\n\n\n
  3. The taxpayer fails to certify that he or she has met the requirements of U.S. tax law for the 5 preceding tax years or fails to submit evidence of his compliance that the IRS requires (Form 8854<\/a>\u00a0is used for such certification).<\/li>\n<\/ol>\n\n\n\n

    You\u2019d qualify as a long-term resident if you spent 8 of the last 15 tax years as a legal permanent U.S. resident.<\/strong> You are not liable to pay the exit tax if you do not meet any of the three requirements above, but you\u2019d still have to file form 8854.<\/p>\n\n\n\n

    If you don\u2019t qualify for any of the above, you\u2019d be considered a non-covered expatriate.<\/p>\n\n\n\n

    Covered expatriate exceptions<\/h2>\n\n\n\n

    There are a few exceptions to the covered expatriate rules. For example, certain minors and certain dual citizens<\/a> may not be considered covered expatriates even if they qualify under the rules above.<\/p>\n\n\n\n

    For example, dual citizens who gained U.S. citizenship and citizenship of another country at birth won\u2019t be considered covered expatriates so long as they:<\/p>\n\n\n\n