What are the implications of renouncing US citizenship?

What are the implications of renouncing US citizenship?


What are the implications of renouncing
US citizenship? And what is the process for doing so? This is Vincenzo Villamena with Online Taxman. When people think about renouncing they think it’s just something that you give up. People don’t understand that
renouncing really means you are giving up your right to live in the
United States for the rest of your life, unless you are able to come back on
other sort of immigrant visa or green card through a spouse etc, and also any
other sort of right to a potential US support, militarily or whatnot, which obviously is quite a far question area. But the point being is that you
know when you renounce your renounce. You’re giving up your right to being an
American and and that’s fine. I know it’s a very difficult decision for a lot of
people and hence a lot of people end up really struggling with it. But if you do
feel that you want to renounce you’d have to book an appointment with the US
Embassy to go over a questionnaire, which essentially goes into why do you want to
renounce and of course you need to have a valid reason, you can’t just say you
want to renounce for tax purposes. So you want to say something like I have
a closer connection to another country. I don’t live in the United States and
I don’t feel I’m not gonna go back to the US, maybe there was some sort of
injustice that you experienced as American that you don’t want to deal
with, and that’s fine. So once you go through the questionnaire you take a
note of renunciation. Then you get a certificate of lost nationality and then
you’re no longer a US citizen. Now on the tax side, you have to file your final US tax
return. It’s actually a dual status return that year, meaning that for
the part of the year you’re a US citizen you have to file a 1040, and the other part
if you do still have any sort of US income sources, be it a pension, be it a
rental property, anything of that nature, then you would have to file a 1040NR
for non-residents. So you might not even get out of all your filing
obligations upon renunciation. Again you’d have to file half year resident or
partially year resident and the rest 1040NR if that applies. And finally,
you might be deemed a covered expatriate. A covered expat is somebody that has
over two million dollars in net worth. If that does apply to you then that
means that you might have to pay an exit tax. An exit tax is a hypothetical sale
of all your assets as of the day of renunciation. You have to go
get valuations, value all the assets as of the day of renunciation and potentially
pay an exit tax on the sale of all those assets. Now there is a little bit of a
tax credit, a few hundred thousand dollar tax credit, so if your capital gain is
over that amount then yes you do have to pay an exit tax. If anyone has any
questions about potentially renouncing, what are the implications, what are the
forms, one form being the 854eighty five four, which is the renunciation form,
please feel free to reach out to us at onlinetaxman.com and we’re happy to
walk you through the process of renouncing. We’ve helped many people,
you could be one of them if you so choose to do so. Please any sort of
questions at all related to international taxes, we’re expats, we help expats and we are your expat tax experts. Onlinetaxman.com for a free
consultation. Thank you!

Leave a Reply

Your email address will not be published. Required fields are marked *