Renouncing U.S. Citizenship: Exit Tax, Form 8854, and CLN

Renouncing U.S. citizenship is a formal legal act you carry out in person at a U.S. embassy or consulate abroad: you swear an oath before a consular officer, surrender your passport, sign a set of State Department forms, and pay a $450 fee. The decision is permanent, and it can trigger significant tax consequences, including an exit tax on your worldwide assets if your net worth or recent tax bills cross certain thresholds. Your name will appear in a public quarterly list published by the IRS. What follows is what the process looks like from start to finish and the financial exposure to plan around before you take the oath.

Where and How You Renounce

Federal law requires the formal act to take place outside the United States, before a diplomatic or consular officer at a U.S. embassy or consulate.¹ You must appear in person. No one can renounce on your behalf, and you cannot handle it by mail or online. A parent or legal guardian cannot renounce for a child under any circumstances.

Renunciation is irrevocable. Once the State Department issues a Certificate of Loss of Nationality, you lose the right to a U.S. passport, the right to vote, and the right to enter the country without a visa. The State Department has confirmed that the oath “cannot be taken back” and nationality is “not merely suspended but irrevocably relinquished.”²

One practical prerequisite the consulate will ask about: another nationality. If you renounce without holding citizenship somewhere else, you can become stateless, which creates serious problems with travel, banking, and residency wherever you live.

Documents and Forms

You’ll need to prove your U.S. nationality with one of the following: a U.S. passport, passport card, Consular Report of Birth Abroad, Certificate of Naturalization, Certificate of Citizenship, or U.S. birth certificate. Any single document works.³ The consulate may also ask for evidence of your other citizenship, though this is not universally required.

The State Department requires four forms, all available through travel.state.gov:⁴

DS-4079, a questionnaire covering your residency history, foreign military service, employment with foreign governments, and other background the consular officer uses to evaluate your case.
DS-4080, the formal Oath of Renunciation, which is the legal instrument that ends your citizenship.
DS-4081, a statement acknowledging you understand the consequences, including loss of voting rights, government protection, and unrestricted entry to the United States.
DS-4083, the Certificate of Loss of Nationality form, which records the date, location, and circumstances for permanent government records.

Review your residency and travel history closely before you go in. Discrepancies between your answers and official records can hold up processing. Dates and locations need to be precise.

The Appointment and the Fee

Most embassies and consulates use a two-appointment structure. The first is an informational meeting where the consular officer reviews your documents, walks through the consequences, and confirms you are acting voluntarily. It functions as a cooling-off step built into the process.⁴

The second appointment is the renunciation itself. You surrender your U.S. passport, recite the Oath of Renunciation aloud, and sign the legal documents in front of the consular officer, who witnesses, signs, and applies the consulate’s seal. The packet then travels to the Department of State in Washington, D.C., for review. Consulates do not have authority to finalize loss of nationality on their own.

As of April 13, 2026, the non-refundable fee is $450, paid immediately after taking the oath.⁵ The fee had been $2,350 since 2015. The State Department has said it will not refund anyone who paid the higher amount previously. The fee is not waivable and is not refunded if your request is denied.

The Certificate of Loss of Nationality

Washington reviews the entire packet to confirm that every requirement under the Immigration and Nationality Act was satisfied. If it was, the government issues a Certificate of Loss of Nationality (CLN). That certificate is the definitive legal proof you are no longer a U.S. citizen, and you’ll need it for practical tasks abroad, from opening bank accounts to establishing tax residency in your new country. The wait can run several months.

Once the CLN is issued, the IRS publishes your name in the Federal Register. By statute, this happens within 30 days after the close of the calendar quarter in which the IRS receives notification from the State Department.⁶ The list is public. There is no opt-out.

Are You a Covered Expatriate?

The tax side of renunciation turns on whether the IRS classifies you as a “covered expatriate.” You become one by tripping any single one of three tests:⁷

Net worth: your worldwide assets are worth $2 million or more on your expatriation date. Everything counts, from real estate and retirement accounts to business interests and personal property.
Tax liability: your average annual federal income tax for the five years before expatriation exceeds $211,000, the inflation-adjusted threshold for 2026. This is based on your actual tax after credits and deductions.⁸
Tax compliance: you fail to certify under penalty of perjury that you have met all federal tax obligations for the five preceding tax years, including income tax returns, gift tax returns, and foreign bank account reports.

The compliance test is the one that catches people off guard. You might have modest assets and moderate income and still land in covered expatriate status because you missed an FBAR or forgot a gift tax return. Once the label attaches for the tax year, everything else follows.

There is a carve-out for certain dual citizens from birth. If you have held citizenship in another country continuously since birth, are still taxed as a resident there on your expatriation date, and have not been a U.S. resident for tax purposes for more than 10 of the 15 tax years ending with the expatriation year, the net worth and tax liability tests do not apply to you.⁹ You still have to pass the compliance test.

The Exit Tax

If you are a covered expatriate, the IRS treats all of your worldwide assets as if you sold them at fair market value on the day before your expatriation date. This is the mark-to-market rule, and any net gain is taxable.⁹ For 2026, the first $910,000 of gain is excluded.⁸ Gain above that is taxed at whatever capital gains rate applies given the asset’s character and holding period.

The math is straightforward for publicly traded securities. It gets expensive for anything that requires professional appraisal, including real estate, private business interests, and art. The IRS can challenge your valuations, and if it finds you understated fair market value, you’ll owe additional tax plus interest.

Deferred compensation and tax-deferred accounts like IRAs and employer pensions are handled separately. They do not go through the mark-to-market regime. Distributions from these accounts may instead be subject to 30% withholding when you eventually take them. The mechanics vary by account type, and most people in this situation work with a tax specialist.

Form 8854: The $10,000 Trap

Every person who renounces must file IRS Form 8854, the Initial and Annual Expatriation Statement, whether or not they owe any exit tax. Attach it to your income tax return for the year that includes your expatriation date and file by the normal due date, extensions included.¹⁰ If you would not otherwise owe a return, you still send Form 8854 by the date the return would have been due.

Filing Form 8854 late, incomplete, or incorrectly triggers a $10,000 penalty. The penalty applies even if your exit tax is zero, and it’s only waived on a showing of reasonable cause and no willful neglect.⁶ This is the most common penalty in the expatriation process, and it hits people who assume the form is optional because their assets are below the covered expatriate thresholds.

Your tax return for the year you renounce is a dual-status return. You report income as a U.S. citizen through your expatriation date, and as a nonresident alien for the rest of the year. The Form 8854 instructions explain how to split the year and how to report the deemed sale if you’re a covered expatriate.

Gifts and Inheritances to U.S. Family Afterward

Covered expatriates carry one more consequence that many people miss until it’s too late. Under Section 2801, any U.S. citizen or resident who receives a gift or inheritance from a covered expatriate owes a special transfer tax equal to the top estate tax rate, currently 40%.¹¹¹² The U.S. recipient pays the tax, not you.

The tax applies to the extent that total covered gifts and bequests received by one person in a calendar year exceed $19,000 (the annual gift tax exclusion amount for 2026). Transfers that would qualify for the charitable or marital deduction are exempt, as are transfers already subject to regular estate or gift tax. Recipients report and pay on IRS Form 708.¹³ Foreign estate or gift tax already paid on the same transfer reduces the U.S. tax owed.

If you plan to leave assets to children or grandchildren who live in the United States, this provision reshapes the picture. Every significant transfer to a U.S. recipient later triggers a 40% bill for them. Planning around it usually starts well before the renunciation date.

Social Security and Medicare Afterward

Renouncing does not erase your Social Security earnings record. If you worked long enough to qualify, you may still collect. Residency is where it gets complicated. As a noncitizen living outside the United States, the Social Security Administration generally stops payments after your sixth consecutive calendar month abroad unless an exception applies.¹⁴

Exceptions turn on your country of citizenship, your country of residence, and whether a totalization agreement is in place. Citizens of some countries can continue receiving payments abroad indefinitely; residents of others cannot. The SSA publishes a country-by-country payment guide. If no exception applies, payments stop until you return to the U.S. and remain physically and lawfully present for a full calendar month.¹⁵ Payments to anyone residing in Cuba or North Korea are prohibited entirely for noncitizens.

Medicare is a separate matter. Eligibility generally requires lawful U.S. residence, so former citizens living abroad typically cannot enroll or maintain coverage. Renunciation ends Medicare access unless you later return with lawful immigration status and meet residency requirements.

Coming Back to Visit

After renunciation you need a visa to visit the United States, or you must qualify for the Visa Waiver Program on the strength of your new citizenship.⁴ If you cannot qualify for either, entry may be effectively barred.

There is also a specific inadmissibility ground aimed at tax-motivated renunciation. Under federal immigration law, a former citizen whom the Attorney General determines renounced for the purpose of avoiding U.S. taxation is inadmissible.¹⁶ This provision, often called the Reed Amendment, has historically been hard to enforce because it requires a subjective determination about motivation. It remains on the books, and the State Department warns applicants about it directly. If you expect to visit the U.S. often after renouncing, and especially if you’ll be a covered expatriate, run the scenario past an immigration attorney before you take the oath.

1
Office of the Law Revision Counsel. 8 USC 1481 – Loss of Nationality by Native-Born or Naturalized Citizen; Voluntary Action; Burden of Proof; Presumptions
2
U.S. Department of State. Oath of Renunciation of US Citizenship – INA 349(a)(5)
3
U.S. Department of State. DS-4079 – Questionnaire – Loss of United States Nationality; Attestations
4
U.S. Department of State. Relinquishing US Nationality Abroad
5
Federal Register. Schedule of Fees for Consular Services – Fee for Administrative Processing of Request for Certificate of Loss of Nationality of the United States
6
Office of the Law Revision Counsel. 26 USC 6039G – Information on Individuals Losing United States Citizenship
7
Office of the Law Revision Counsel. 26 USC 877 – Expatriation to Avoid Tax
8
Internal Revenue Service. Revenue Procedure 2025-32
9
Office of the Law Revision Counsel. 26 USC 877A – Tax Responsibilities of Expatriation
10
Internal Revenue Service. Instructions for Form 8854 (2025)
11
Office of the Law Revision Counsel. 26 USC 2801 – Imposition of Tax
12
Office of the Law Revision Counsel. 26 USC 2001 – Imposition and Rate of Tax
13
Internal Revenue Service. About Form 708, United States Return of Tax for Gifts and Bequests Received From Covered Expatriates
14
Social Security Administration. Your Payments While You Are Outside the United States
15
Social Security Administration. SSA Payments Outside US
16
Office of the Law Revision Counsel. 8 USC 1182 – Inadmissible Aliens