Renouncing US citizenship is fundamentally different from losing your identity involuntarily, even though both scenarios may ultimately result in a similar outcome. Choosing to renounce US citizenship represents the clearest desire to sever all ties with the United States and counts as a serious and irrevocable act.
This article will explain the procedures for formally renouncing US citizenship, shedding light on the renunciation process and why Americans choose to renounce their United States citizenship.
Reasons Why Americans Renounce Their Citizenship
Citizenship-based taxation: The Citizenship-based taxation (CBT) tax burden has been a significant factor driving some Americans to renounce their US citizenship. The burden of navigating complex tax regulations and reporting requirements, especially for Americans living abroad, can be burdensome and lead to financial and administrative challenges.
FACTA: Requests for the loss of nationality in the United States have been instigated by the Foreign Account Tax Compliance Act (FATCA). FATCA, enacted to combat offshore tax evasion, requires US citizens to report their financial accounts held in foreign countries, imposing rigorous disclosure requirements on foreign financial institutions. This increased scrutiny and reporting complexity have made it challenging for Americans living abroad to manage their financial affairs. Furthermore, many foreign banks avoid the compliance burden by refusing services to US citizens.
Politics or ideology: Many Americans have renounced their US citizenship due to political or ideological differences. Americans have cited their disillusionment with the political landscape, governance, or specific policies of the United States. Dissatisfaction with government actions, changes in political climate, or a perceived misalignment with personal values and beliefs can motivate individuals to seek a more harmonious political environment elsewhere.
Cultural identity: Cultural identity can be a nuanced factor contributing to some Americans’ decision to take an oath of renunciation. Individuals with dual citizenship or strong ties to a foreign country may feel a profound connection to their cultural roots, and the allegiance to their adopted or ancestral homeland may become a central aspect of their identity. In such cases, the clash between their cultural identity and the obligations and complexities of maintaining US citizenship may lead to re-evaluating priorities.
How to Renounce Your US Citizenship: A Step-by-Step Guide
Step one: Obtain a second passport
The first step of the US citizenship renunciation process is gaining a foreign nationality and a second passport. Americans must present citizenship documents to the Department of State informing of foreign citizenships they hold when applying to renounce citizenship in the United States.
The Department of State may reject a pronouncement request if not presented with proof of a second citizenship and a second passport. Renunciation of citizenship to obtain non-citizen status further complicates an already complex procedure.
Step two: Prepare the required renunciation of US citizenship documents
Upon obtaining a second citizenship and foreign passport, you must prepare the necessary documentation for renunciation required by the Department of State, which includes the following documents:
- Form DS-4079: Request for Determination of Possible Loss of US Citizenship
- Form DS-4080: Oath of Renunciation of the Nationality of the United States
- Form DS-4081: Formal Declaration of Understanding Concerning the Consequences and Ramifications of Renunciation or Relinquishment of US Citizenship
- Other applicable evidence a consular or diplomatic officer may determine necessary to support a renunciation application, such as official documents for name changes, divorce certificates, and a completed Loss of Citizenship Questionnaire.
Step three: Schedule a renunciation appointment
Once you’ve completed Form DS-4079 and the other formal declaration documents, you can begin the process of formally renouncing US citizenship by booking an attending an in-person interview with a diplomatic or consular officer at a US Consulate or Embassy in a foreign country.
At the interview, a diplomatic or consular officer will ensure that your loss of nationality request is voluntary by evaluating your completed and signed oath of renunciation (Form DS-4080), proof of holding a foreign nationality, and second passport with all applicable bio pages intact, in addition to other documents required by the Department of State to fully renounce your US citizenship.
The renunciation interview is also the phase where you will pay the US citizenship renunciation fee of $2,350.
Note that applications to renounce your US citizenship must be formalized in a foreign state and cannot be completed in US territory, according to section 349(a) (5) of the US Immigration and Nationality Act. However, the Department of Homeland Security (DHS) can approve renunciation requests within the United States under specific circumstances.
Step four: File your tax return
Although the Department of State may grant a request for renunciation of US citizenship, the process of renunciation is not complete until a final tax return has been filed by submitting Form 8854 to the Internal Revenue Service (IRS). Until Form 8854 has been filed, former US citizens will remain in the US tax system and maintain federal tax obligations.
Form 8854 plays a crucial role in the final return you must submit in the forthcoming year. This form encompasses a Dual-Status Statement covering the duration when you were still a US citizen and a Dual-Status Return for the subsequent part of the year, all to be included along with Form 8854.
What documents are required to renounce a US Citizenship?
Due to the serious and irrevocable nature of renunciation of US citizenship, US citizens undertaking this process must provide several forms of documentation to reaffirm their understanding of the request for the loss of nationality. These include official forms:
- Form DS-4079: Request for Determination of Possible Loss of US Citizenship
- Form DS-4080: Oath of Renunciation of the Nationality of the United States
- Form DS-4081: Formal Declaration of Understanding Concerning the Consequences and Ramifications of Renunciation or Relinquishment of US Citizenship
Additional applicable certificates and supporting documentation include:
- Proof of US citizenship, such as a US birth certificate or passport
- US consular report of birth abroad for naturalized citizens
- Full bio-pages of any current foreign passports held
- Certificates of naturalization for the United States and any foreign countries (if applicable)
- Foreign citizenship certificate (if applicable)
- Proof of any name changes (if applicable)
- Court orders (if applicable)
- Deed polls (if applicable)
Unlock global opportunities with our citizenship by investment programs
What costs are involved when renouncing US citizenship?
A direct consular fee of $2,350 applies when you submit a signed oath of renunciation to a consular or diplomatic officer at a US Embassy or Consulate overseas.
An exit or expatriation tax may be applicable on the net unrealized gain of your property, calculated as if you had sold it the day before your loss of nationality. This exit tax is contingent on meeting specific income or net worth thresholds.
As part of your final tax return as a US citizen before renunciation, it is crucial to incorporate Form 8854. The purpose is to become tax compliant and avoid penalties after renunciation by notifying the Internal Revenue Service (IRS) of any financial accounts held in foreign banks and financial assets liable for taxation.
There may be supplementary expenses associated with commencing the renunciation process, including fees for obtaining foreign passports from a foreign government and acquiring essential legal documentation such as birth, citizenship, and divorce certificates.
Renunciation for Minor Children
The status of US citizenship is personal to individual US citizens, and a parent or legal guardian does not have the authority to renounce the US citizenship of their minor children. According to Section 349(a) (5) of the Immigration and Nationality Act, US citizens under 18 must convince a US consular or diplomatic officer that they fully understand the nature and consequences of the renunciation oath, are not under duress or undue influence, and are voluntarily choosing to renounce their US citizenship.
Despite the irrevocable nature of renouncing US citizenship, provisions in the Immigration and Nationality Act enable individuals who renounced their US citizenship before 18 to have their citizenship reinstated, provided they inform the Department of State within six months.
The Difference Between Renouncing and Relinquishing US Citizenship
Renounce | Renunciation occurs when a US citizen schedules an appointment at a US Embassy or Consulate and applies for a Certificate of Loss of Nationality. Unlike relinquishment, the loss of citizenship occurs immediately when the US citizen submits the necessary renunciation documents to a consular officer. |
Relinquish | Relinquishment encompasses the broader framework of losing nationality in the United States, occurring when a US citizen performs one of several potentially 'expatriating acts' to lose US citizenship, including voluntary renunciation. Other actions include:
|
Dual Nationality and Statelessness
Most US citizens applying for loss of nationality in the United States are dual nationals, indicating they possess a second nationality when initiating the renunciation process. In the case of having only US citizenship, the approval of loss of nationality results in becoming stateless.
Statelessness poses numerous challenges, such as lacking government protection and facing travel difficulties due to being ineligible for a passport from any country. Suppose you’re a natural-born or naturalized citizen of a foreign country. In that case, you may need to acquire a visa to travel to the United States or demonstrate eligibility for admission pursuant to the provisions of the Visa Waiver Program (VWP).
You may be denied entry into the United States if deemed ineligible for a US visa or the Visa Waiver Program (VWP); however, statelessness does not prevent foreign countries from deporting former US citizens back to the United States.
Renouncing US Citizenship and Legal Obligations
Tax compliance
An essential step in renouncing US citizenship is submitting a final tax return with Form 8854, a comprehensive document that provides crucial information about your financial accounts and potential tax liability to prevent tax evasion. An exit tax can include paying taxes on capital gains.
The United States operates on a citizenship-based taxation system; thus, renouncing US citizenship for tax purposes can reduce tax liability. Nevertheless, retaining financial connections with the United States, such as rental properties and other investments, will sustain ongoing financial obligations to the country. Furthermore, tax-deferred accounts will be liable for taxation when accessed, adding another layer of consideration for those contemplating the decision to renounce citizenship from a tax perspective.
Military service obligations
While conscription is not practiced in the US, specific individuals may be subject to military service obligations. US citizen men aged 18 to 25 who register with the US Selective Service System to obtain eligibility for specific jobs, state-based student aid, and federally funded job training, must fulfill their military service obligations even if they renounce their US citizenship.
Additionally, all foreign males between 18 and 25 seeking US citizenship must register with the US Selective Service System and fulfill military service obligations, regardless of whether they give up their new citizenship.
Prosecution for crimes
The loss of nationality in the United States does not prevent individuals from potential prosecution. If those with US citizenship commit criminal activities while still citizens, terminating US citizenship will not grant immunity or amnesty. Individuals who renounce their US citizenship may still be held accountable for offenses committed within the jurisdiction of the United States, and legal proceedings can continue irrespective of their citizenship status.
The Pros and Cons of Renouncing US Citizenship
Citizenship rights and responsibilities
Pro: You’re no longer bound to US citizenship-based taxation and avoid worldwide income tax.
Con: You lose the protection of the United States’ vast consular network in foreign countries.
Citizenship state
Pro: You can enjoy the benefits of a foreign country’s citizenship, including the right to vote, visa free travel, and social benefits.
Con: Stateless status comes with severe challenges, including the lack of protection and recognition by any government, limited access to essential services, and restrictions on employment opportunities.
Visa requirements
Pro: You can still travel to the US for tourism, business, or family reasons by acquiring a valid visa or fulfilling the criteria of the Visa Waiver Program.
Con: You might encounter difficulties securing a visa or face denial of entry to the US for past criminal offenses or violations of immigration laws.
Social security benefits
Pro: Renunciation works for legal tax avoidance purposes as you avoid certain US tax obligations, such as citizenship-based taxation.
Con: It may affect eligibility and payment rules may be affected, and you have reduced rights to resolve any issues as a non-U.S citizen.
Reacquiring US Citizenship
While you don’t have the option as an adult to have US citizenship reinstated without a successful administrative or judicial appeal, you can apply for US citizenship by completing the naturalization process. This involves maintaining five years of residency in the United States, demonstrating good moral character, and taking the Oath of Allegiance.
Explore our Golden Visa programs: a path to residency and citizenship
Frequently Asked Questions about Renouncing US Citizenship
Can you live in the US after renouncing citizenship?
Securing the necessary residence visa allows individuals to live in the US even after citizenship renouncing. While you can obtain a Green Card to live in the US permanently, it does not carry the rights of US citizenship.
How many US citizens give up their citizenship each year?
According to data from the Internal Revenue Service and Department of Treasury, from 1 January to 15 May 2023, a notable uptick in US citizens renouncing their citizenship was observed, totaling 5,315 individuals. This marks a considerable increase compared to the 2,390 US citizens who renounced their citizenship in 2022.
What countries make you renounce your US citizenship?
Most countries allow dual citizenship; however, the foreign governments of several countries require Americans to renounce their US citizenship before granting citizenship. These include:
- Austria
- China
- India
- Japan
- Russia
- Singapore
- United Arab Emirates
Why is it so expensive to give up US citizenship?
The irrevocable act of renouncing US citizenship can be relatively expensive due to a combination of administrative fees, legal costs, and potential tax implications. The US imposes a government fee for processing requests to renounce citizenship, which has increased over the years. Additionally, individuals seeking to renounce their citizenship often consult legal or immigration services to navigate the complex legal requirements and ensure compliance with tax regulations. Furthermore, the potential tax consequences, including an exit tax on certain assets, may contribute to the overall expense.
What happens if you renounce U.S. citizenship?
If you relinquish citizenship from the US without holding citizenship in another country, you could become stateless, leaving you without the protection of any government. This situation could make it challenging to travel since you might not qualify for a passport from any nation.
Is it worth renouncing U.S. citizenship?
Deciding whether it’s worth renouncing U.S. citizenship is a highly personal matter that depends on individual circumstances and priorities. For some, renunciation may be necessary to align with their personal or professional goals, such as obtaining citizenship in another country or reducing tax obligations. Please note that renouncing citizenship is not an easy process.
Can you still visit the US if you renounce your citizenship?
A person who has renounced U.S. nationality will be required to apply for a visa to travel to the United States, just as other foreigners do.
How much does it cost to give up American citizenship?
The government fee to renounce U.S. citizenship is $2,350.
