Want to quit the U.S.A? A guide for renouncing citizenship
Here are some key things to know about splitting up with the United States.
Ending your U.S. citizens isn’t quick, easy or cheap. The decision is permanent and, of course, some other country has to take you. Still, thousands of Americans living abroad do it every year. Among notable ex-Americans are writer T.S. Eliot, Terry Gilliam of Monty Python fame, director John Huston and former British Prime Minister Boris Johnson.
Many bolt to avoid paying taxes in two countries (as the United States is one of only two countries that tax based on citizenship rather than residency). Others quit because they moved to countries that made them choose. And others, increasingly, sever ties because they don’t like what’s happening back at home.
Here are some key things to know about splitting up with the United States, compiled with expert guidance from Nita Upadhye, managing partner of NNU Immigration, a law firm with offices in New York and London.
Do I need citizenship somewhere else?
Yes. To keep from creating a lot of “stateless individuals,” the State Department will not let you give up your U.S. citizenship before you have a legal right to live somewhere else. You must go through the process outside of U.S. borders so that you won’t walk out of the appointment as an instant undocumented alien.
Can I renounce my citizenship online?
No. The government requires that you make an appointment at a U.S. Embassy or consulate and come look an official in the eye when you take the oath of renunciation. That is not to challenge or embarrass renouncers but to ensure that no one is taking the step under duress and they understand the process is irrevocable.
“It’s a solemn occasion to give up citizenship,” Upadhye said. “This isn’t just a form filling exercise.”
What will I need?
A lot of documents. Among them, your U.S. birth certificate or certificate of naturalization, your U.S. passports (which you will surrender) and all foreign ones, various forms and the oath that you will sign in front of a consular officer. And, especially crucial: the $2,350 fee.
That’s a lot!
It is not cheap to give up your citizenship (but hey, you’ll be done paying U.S. taxes). The fee was $450 until 2014 when the State Department raised it to cover the cost of processing a “dramatic increase” in the number of renouncers.
Can I escape paying my overdue tax bill?
No. The government won’t recognize you as formally expatriated unless you have filed tax returns for the past five years and are up-to-date on any taxes owed. If you are not, or if you have too much net worth, you could be hit with the dreaded “exit tax.”
Yikes. What is the exit tax?
It’s a goodbye tax applied to anyone with more than $2 million in assets, or who had an average tax liability over the previous five years of more than $190,000, or is not in tax compliance (see above). The IRS calculates the tax on capital gains as if you sold all your assets on your renunciation date.
Can I ever come back to the United States?
Yes, but you won’t be able to come and go like U.S. passport holders. You will be subject to the same limitations and visa requirements as every other citizen of your adopted country who wants to visit family or Disney World.
One exception: tax dodgers. U.S. law allows you to be permanently barred from reentry if the government determines that you renounced citizenship “for the purpose of avoiding taxation by the United States.” Tax avoidance is difficult to prove, and the provision is rarely applied, Upadhye said.
Will I be able to collect Social Security?
Yes. Renouncing does not preclude you from being paid any Social Security benefits that you accrued when working in the U.S. You get to keep your social security number, and if you get a future work visa, you will contribute more.
Will my children lose their citizenship?
No. Only individuals who are 18 or older can renounce, and only for themselves. Your kids who are citizens will remain citizens unless they renounce on their own. But any children you have after you renounce will not be American citizens (unless they are born on U.S. soil or have some other claim to citizenship).
Can I change my mind?
Nope. Renunciation is permanent. If you want to be an American again, you’ll have to hope you get a green card and then go through the years-long process of naturalization like millions of other would-be U.S. citizens. A small exception: Those who renounce at the age of 18 have a six-month window to change their mind.