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The short answer
The US expatriation tax rules apply to a green card holder only if they are a long-term resident, generally someone who held the card in at least 8 of the last 15 tax years. A long-term resident who gives it up is a covered expatriate if their net worth is US$2 million or more, their average annual net income tax for the past five years exceeds a set figure (US$206,000 for 2025), or they cannot certify five years of tax compliance on Form 8854.
Who the rules can apply to
The IRS expatriation tax page (reviewed October 2026) says sections 877 and 877A of the tax code apply to US citizens who renounce and to long-term residents who end their US residence for tax purposes. A Nigerian green card holder moving back to Lagos or Abuja is in the second group only if they count as a long-term resident.
Step one: are you a long-term resident?
Generally, you are a long-term resident if you were a lawful permanent resident in at least 8 of the 15 tax years ending with the year your residency ends, and a part year counts as a year (Taxes for Expats, September 2026, summarising IRC 877(e)).
| Example holder | Green card from | Ends residency in | Years counted | Long-term resident? |
|---|---|---|---|---|
| Ada | January 2019 | 2026 | 2019 to 2026: 8 | Yes |
| Musa | October 2020 | 2026 | 2020 to 2026: 7 | No |
| Efe | March 2012 | 2026 | 2012 to 2026: 15 | Yes |
Examples only. Note how close Ada and Musa are. Because a part year counts in full, ending residency in 2026 rather than 2027 kept Musa out; one more year would have brought him in.
Step two: the three covered expatriate tests
A long-term resident who ends residency is a covered expatriate if any one of these applies:
- Tax liability test
- Average annual net income tax for the five years before expatriation exceeds an inflation-adjusted amount: US$201,000 for 2024 and US$206,000 for 2025 (IRS). Taxes for Expats gives US$211,000 for 2026.
- Net worth test
- Worldwide net worth of US$2 million or more on the expatriation date. Taxes for Expats notes this figure is fixed by statute and not indexed.
- Certification test
- You fail to certify on Form 8854 that you complied with all US federal tax obligations for the five preceding years.
Net worth is worldwide. A family house in Ikoyi, land in Lekki and shares in Nigerian companies all count, valued in dollars. The certification test is the one most likely to catch ordinary families: unfiled FBARs on Nigerian accounts, unreported Nigerian rent or a missed Form 3520 can make you a covered expatriate even with modest wealth. If that applies, fix past years first; see streamlined filing for unreported Nigerian income and catching up on missed FBARs.
What happens to a covered expatriate
Under section 877A, most property is treated as sold at fair market value on the day before expatriation, and the net gain above an exclusion amount is taxed. The IRS gives the exclusion as US$890,000 for 2025; Taxes for Expats gives US$910,000 for 2026. Deferred compensation, specified tax-deferred accounts such as retirement plans, and certain trusts follow separate rules.
A worked example
Example only. Values and the exchange rate are invented. Efe, a long-term resident, plans to give up her card in 2026. Her assets: a Lagos house worth ₦900,000,000 (US$600,000 at an example ₦1,500 to US$1), US brokerage shares worth US$500,000, and a US home with US$350,000 equity. Net worth: 600,000 + 500,000 + 350,000 = US$1,350,000, below US$2 million. Her income tax has averaged far below the liability threshold. So she is not a covered expatriate, provided she can certify five years of compliance, including FBARs for her Nigerian accounts. If she could not certify, she would be covered despite her wealth being below the line.
How residency ends for tax purposes
The IRS says a long-term resident stops being a lawful permanent resident for these rules when the status is revoked or is administratively or judicially determined to have been abandoned, or when they are treated as resident of a treaty country and notify the IRS on Forms 8833 and 8854. With no US-Nigeria tax treaty, the treaty route does not help a move to Nigeria. Taxes for Expats points to USCIS Form I-407, which records voluntary abandonment of permanent resident status. Until residency ends, you remain a US tax resident, taxed on worldwide income (green card holders and Nigerian income).
Form 8854
- Anyone who expatriates or ends long-term residency must file Form 8854 (IRS).
- It is generally attached to the income tax return for the expatriation year (Taxes for Expats).
- The IRS says a US$10,000 penalty may apply for failure to file when required.
What to check first
- Count your green card years, including part years.
- Estimate worldwide net worth in dollars, Nigerian assets included.
- Confirm the last five years of returns, FBARs, Form 8938 and Form 3520 are complete.
- Speak to a tax professional before filing Form I-407, because the timing can change the result.
Questions people ask
Do I pay exit tax if I give up my green card?
Only if you are a long-term resident (generally a green card in 8 of the last 15 tax years) and meet one of the covered expatriate tests.
What are the covered expatriate tests?
Net worth of US$2 million or more, average annual net income tax above the inflation-adjusted figure (US$206,000 for 2025), or failure to certify five years of compliance on Form 8854.
Does my property in Nigeria count toward the US$2 million?
Yes. The net worth test is worldwide, so Nigerian property and accounts are included, valued in dollars.
Is Form 8854 required even if I owe no exit tax?
Yes. The IRS says anyone who expatriates or ends long-term residency must file it, and a US$10,000 penalty may apply if they do not.
Sources
- IRS: Expatriation tax (reviewed 4 Oct 2026) · accessed Oct 2026
- Taxes for Expats: Covered expatriate, definition and rules in 2026 (updated 23 Sep 2026) · accessed Oct 2026
- IRS: United States income tax treaties A to Z (reviewed 3 Jan 2026) · accessed Oct 2026
- IRS: Residency starting and ending dates (updated 14 Mar 2026) · accessed Oct 2026
This article is general information, not financial, legal or tax advice. Products described are provided under the terms on this site and are subject to regulation and eligibility.