This key issue has 1 in 3 expats 'seriously considering' or planning to renounce U.S. citizenship (2024)

FAQs

This key issue has 1 in 3 expats 'seriously considering' or planning to renounce U.S. citizenship? ›

Nearly 1 in 3 American expatriates plan to renounce their citizenship or are “seriously considering it,” according to a survey from Greenback Expat Tax Services. The burden of managing and filing U.S. taxes is the top reason why American expats are considering renouncing their citizenship, the survey found.

Some Americans have renounced their citizenship because of new laws that require taxpayers to report foreign-held assets to the IRS, and to pay "double" taxes, both in the U.S. and abroad.

Pros of Renouncing US Citizenship

You are no longer subject to U.S. tax on your worldwide income, so elimination of double taxation. Your U.S. tax liability may significantly reduce if you limit the amount of U.S.-sourced income that would be taxable. You are insulated from U.S. tax changes on expats moving forward.

The expatriation tax provisions (prior to the AJCA amendments) apply to U.S. citizens who have renounced their citizenship and long-term residents who have ended their U.S. residency for tax purposes, if one of the principal purposes of the action is the avoidance of U.S. taxes.

If you renounce your U.S. citizenship and do not already possess a foreign nationality, you may be rendered stateless and, thus, lack the protection of any government. You may also have difficulty traveling as you may not be entitled to a passport from any country.

Unlike the situation for lawful permanent residents (green card holders), a U.S. citizen can't lose citizenship solely by living outside of the United States for a long time.

After renouncing US citizenship, your ability to enter the US will be like any other foreign national. You will need the appropriate visa for travel and staying in the US.

Downsides of multiple citizenships

While dual citizens might reduce taxes, they also face double taxation on foreign income or property, depending on national laws. Career restrictions. Some nations prevent dual citizens from government roles or positions like judges, ministers, or deputies. Military service.

The loss of U.S. nationality, including instances in which the loss was caused by voluntary renunciation, can be challenged in an administrative proceeding with the Department of State or by filing a lawsuit seeking to regain U.S. citizenship in a United States District Court.

What happens to my 401k if I renounce my citizenship? ›

You can also still receive your 401(k) and pension, albeit both are subject to US taxes and possibly taxes in your new country. You may have to file a 1040NR return unless there is an automatic withholding.

As of May 15, 2023, a total of 5,315 US citizens have renounced their US citizenship in 2023. This is a significant increase from the 2,390 US citizens who renounced their citizenship in 2022.

After renouncing U.S. citizenship, you can apply for a Permanent Residency (Green Card). However, you will be subject to the same immigration rules as foreign nationals. This process involves meeting eligibility criteria.

Yes, U.S. citizens have to pay taxes on foreign income if they meet the filing thresholds, which are generally equivalent to the standard deduction for your filing status. You may wonder why U.S. citizens pay taxes on income earned abroad. U.S. taxes are based on citizenship, not country of residence.

The US is one of the few countries that taxes its citizens on their worldwide income, regardless of where they live or earn their income. This means that American expats are potentially subject to double taxation – once by the country where they earn their income, and again by the United States.

U.S. citizens living abroad, often referred to as expatriates or expats, are generally required to file U.S. income tax returns, just like individuals living in the United States.

Whether it's due to disagreements with policy directions such as on immigration, climate change, abortion, or LGBTQ+ rights, or concerns about increasing tax obligations, or a desire for a more worldly and nomadic lifestyle, still, a decision to renounce one's U.S. citizenship should not be made lightly.

This is a significant increase from the 2,390 US citizens who renounced their citizenship in 2022.

In just the first half of this year, 5,315 Americans gave up their citizenship. That puts the country on track to see a record-breaking 10,000 people renounce U.S. citizenship in 2020. Until a decade ago, fewer than 1,000 Americans per year, on average, chose to renounce their citizenship.

The largest effect of renouncing US citizenship is that you would no longer be able to remain in the US for as long as you want to. As a US citizen, you're allowed to come and go as you please, but someone who is not a US citizen or green card holder must first obtain permission to cross the border legally.