Renouncing your U.S. citizenship is an important and difficult decision, so it’s essential to weigh the pros and cons before deciding if this route is right for you.
Before taking that step, be aware of just how involved renouncing your U.S. citizenship can get. The entire process requires four key steps.
- Obtaining a Non-U.S. passport
- Filling out several forms related to renunciation paperwork
- Attending an appointment with the consulate or embassy in order to finalize your status change before they officially release it in their records books
- Filing a last tax return
Depending on financial details such as income level or foreign assets owned by ex-citizenship holders like yourself may mean having to pay exit tax too.
Steps to Renounce your U.S. Citizenship
Obtain a Non-U.S. Passport
If you’re looking to renounce your U.S. citizenship, obtaining a passport from another country is the first step. Without this vital document, it will be impossible for you to receive access to essential services like travel, setting up property, and employment opportunities.
Not having a new place of residence would make daily life extremely difficult. Secure yourself with all necessary necessities before officially saying goodbye.
Prepare All the Relevant Forms
It’s time to prepare the documents necessary for your renunciation appointment. This includes five forms:
- DS – 4083
All of these must be signed in front of an official conducting a formal interview prior to submission. It is important that you fill out these forms properly before attending the meeting, as it could affect your status within U.S. citizenship law.
Scheduling An In-Person Appointment
To go through with renouncing, you’ll need to schedule an in-person appointment at a U.S. embassy or consulate abroad.
Most expats opt for one near their chosen new home country, but any foreign location entered legally will do. Make sure when booking this important date that all your forms are prepped and packed. There are more things required, like bringing along a valid passport and birth certificate if relevant. Check what documents are needed before confirming your appointment so no surprises prevent complete success on Renunciation Day.
Attending the Official Appointment
Your fourth step should be attending the official appointment. Once you arrive, an official will review your paperwork and interview you to make sure you understand what’s at stake and have decided voluntarily. Then it’s time for action.
You’ll pay any necessary fees before taking one last oath declaring your decision final: a symbolic gesture finalizing your decision to Renounce U.S. citizenship.
Final Tax Return
Even after officially saying goodbye to the U.S., you must still take one additional step before moving on: filing a final tax return. To do so, submit IRS Form 8854 and rest assured that your ties with America are truly severed.
Taxation Implications to Renounce U.S. Citizenship
Renouncing U.S. citizenship can open many exciting doors, but it’s important to consider the taxation implications first. Unresolved tax debts must be cleared before renunciation, and additional exit tax may also apply.
All in all, understanding these considerations ahead of time is essential for taking full advantage of what lies beyond.
For those looking to renounce their U.S. citizenship, it is important to factor the exit tax into financial plans before making any major decisions. The exit tax centers around treating assets as if they had been sold at current market value and taxing unrealized capital gains accordingly.
But not all assets receive this treatment, which can make calculating one’s liability incredibly complex. To ensure accuracy with your final bill when deporting from the United States, it is recommended to consult a qualified expert on international taxes for guidance who will understand potential exceptions or penalties, so you don’t get stuck paying more than necessary down the line.
Outstanding Income Tax
If you want to renounce your U.S. citizenship, the IRS requires that all tax debts must be paid and returns filed for at least five years. Even if you were unaware of this obligation while living abroad, there is an amnesty program called Streamlined Filing Compliance Procedures which allows expats to come into compliance without facing any penalties.
To get your financial situation squared away with the IRS and meet the requirements for renouncing U.S. citizenship, you must demonstrate compliance.
This means self-certifying that any delinquent tax returns or foreign bank and financial account reports were not filed out of the willful refusal, followed by filing those three most recent missing income taxes and FBARs from each of the past six years.
Depending on how many delinquent documents remain after completing these steps, an additional two or more may need to be submitted in order to successfully fulfill all five-year qualifications required for renunciation.
Can you get your U.S. Citizenship back after Renouncing it?
If you’re looking to reclaim your U.S. citizenship, it’s not as easy as simply asking. Unless you renounced before the age of 18 and contacted the State Department within six months after turning 18, or there is no way back in.