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Covered expatriate

Glossary term

Short answer

A covered expatriate is a former US citizen or long-term resident who meets at least one of three IRS tests on the expatriation date and is therefore subject to the section 877A mark-to-market exit tax.

The IRS says a person who expatriated after June 16, 2008 is a covered expatriate if any one of these applies: average annual net income tax for the five years before expatriation exceeds an inflation-adjusted amount ($206,000 for 2025 and $211,000 for 2026 under Rev. Proc. 2025-32); net worth is $2 million or more on the expatriation date; or the person fails to certify on Form 8854 that they met all federal tax obligations for the five preceding years.

A covered expatriate is treated as having sold all property at fair market value on the day before the expatriation date, with gain reduced by an exclusion amount ($890,000 for 2025 and $910,000 for 2026). The Form 8854 instructions describe exceptions to the tax liability and net worth tests for certain dual citizens from birth and for people who expatriate before age 18½, but those people must still certify compliance.

Being a covered expatriate also matters after departure. Publication 519 says US citizens and residents who receive gifts or bequests from a covered expatriate may owe the section 2801 tax. See renouncing US citizenship and the exit tax.

Not to be confused with

  • Exit tax. Exit tax is the general idea of a charge on leaving a tax system; covered expatriate is the US status that triggers it.
  • Long-term resident. A long-term resident is a green card holder who can become a covered expatriate on ending status, but ending status does not by itself make someone covered.

Sources

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Citizenship and passportsTax residencyAssetsAll terms
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Review
Not professionally reviewed
Sources checked November 9, 2026