Renouncing US Citizenship
Published on September 18, 2019
Updated on March 19, 2025
Written by: Clark Stott
Reviewed by: Rose-ann De Villa, EA, CPA
What you need to know about renouncing US citizenship
In the last decade, a growing number of US citizens have been voluntarily renouncing their citizenship, especially “Accidental Americans” who hold US nationality despite having minimal ties to the country.
Many dual nationals are carefully considering giving up their US citizenship due to complex tax obligations, financial costs, the challenges of maintaining dual citizenship, and simply because they don’t plan to return to the US.
Before officially becoming a non-citizen, you need to ensure preparation for your duties with the IRS and the financial costs involved in the process. Seeking professional assistance can help you navigate the complexities of expatriation, from tax compliance to the loss of nationality rights.
Renouncing US citizenship involves two main steps:
Tax Compliance:
You must meet your tax obligations with the IRS. The US government has rules to ensure citizens don’t simply walk away from their tax responsibilities when renouncing, including the potential “Exit Tax” for those considered a “Covered Expatriate.”
Official Renunciation:
When completing a formal renunciation process through the US State Department, you must schedule an appointment and interview at a US consulate or embassy, usually in your country of residence.
These require careful determination to ensure compliance with legal and financial conditions set by the United States government.
What is the process for renouncing US citizenship?
- Make an Appointment: Contact the US embassy or consulate to schedule a meeting.
- Complete Necessary Forms: Fill out Form DS-4079 and possibly other forms, depending on your situation.
- Pay the Fee: The current renunciation fee is US$2,350. (Year 2025)
- Attend the Meeting: At the appointment, you’ll sign certificates, including the oath of renunciation before a consular officer. Don’t sign Form DS-4079 until you are with the officer.
WHY ARE SO MANY GIVING UP THEIR U.S. CITIZENSHIP?
DOUBLE TAXATION
US citizens living abroad are taxed by the US and their country of residence on the same income. Although tax treaties can reduce this burden, they don’t eliminate it entirely.
EXPENSIVE FEES
The administrative fee to renounce US citizenship has surged from US$400 to US$2,350 and may continue to rise.
This substantial cost can be a major consideration for those who are contemplating renouncing their US citizenship, particularly for individuals of modest circumstances or those residing in countries with weaker currencies.
FINANCIAL FREEDOM
US citizens living abroad face restrictions and high compliance costs when trying to invest in foreign markets, making it difficult to manage finances and plan for the future.
For Americans earning and investing abroad, renouncing can mean keeping more of their money, avoiding IRS scrutiny, and gaining full financial control—leading to true financial freedom.
ACCIDENTAL AMERICAN
Accidental Americans are individuals who were either born in the US but left when they were young or were born abroad to US parents and became citizens without ever living in the United States through naturalization.
Despite their limited connection, they face the same tax obligations as any other US citizen, which can be hard enough to drive them to renounce US citizenship.
Frequently Answered Questions
Are there tax consequences when renouncing US citizenship?
It depends. If your net worth exceeds US$2 million or your average tax liability over the past five years exceeds US$190,000, you may be classified as a “covered expatriate” and could face an exit tax.
What is a Covered Expatriate and Exit Tax?
A covered expatriate is a US citizen or long-term resident who triggers a tax liability called “exit tax” when they renounce their US citizenship. This happens when they meet any one of these criteria:
- If your worldwide net worth is US$2 million or more at the time of expatriation.
- If your average annual US income tax liability over the last 5 years exceeds US$190,000.
- If you fail to certify that you’ve fully complied with US tax laws for the past 5 years (Form 8854).
An exit tax treats your worldwide assets as if they were sold at their fair market value on the day before you renounce US citizenship, leading to potential hefty tax liabilities, including capital gains tax.
What is the cost involved in renouncing US citizenship?
Renouncing US citizenship entails a fee of US$2,350, which covers the administrative costs set by the US Department of State.
Beyond this, there might be additional costs, such as paying a tax professional to handle the exit tax and ensure all your tax obligations are met.
What is the difference between relinquishing and renouncing US citizenship?
When giving up your US citizenship, you will often encounter the terms relinquishing and renouncing, both of which lead to the loss of US nationality but differ in their process and implications.
Surrendered Citizenship:
This is an informal term that is not recognized in the Internal Revenue Code (IRC) or the Immigration and Nationality Act (INA). It is commonly used to refer to anyone who has given up US citizenship, regardless of the legal process followed.
Relinquished Citizenship:
This applies to individuals who voluntarily perform an “expatriating act” with the intention of giving up US citizenship.
Renounced Citizenship:
This is a direct and formal method of giving up US citizenship. It involves:
- Scheduling an appointment at a US consulate or embassy.
- Declaring the intent to renounce US citizenship in person.
- Getting a Certificate of Loss of Nationality.
Unlike relinquishment, renunciation occurs immediately at the consulate when the individual makes the formal declaration. There is no need to prove a prior expatriating act, as renouncing itself is considered the act of expatriation.
However, similar to relinquishment, individuals must still file Form 8854 to finalize their tax status. Both actions result in the loss of citizenship, but renouncing is a more formal and deliberate process than relinquishing.
What are expatriating acts?
In the case of relinquishment, expatriating acts are specific legal actions that can automatically result in the loss of US citizenship. Here are some scenarios:
- Becoming a citizen of another country
- Taking an oath of allegiance to a foreign country
- Serving in a foreign government
- Serving in a foreign military
- Committing treason or acts against the US
The US government carefully evaluates these expatriating acts to see whether the individual intended to relinquish their nationality and did so voluntarily.
Understanding these requirements is crucial for those seeking to successfully renounce US citizenship and ensure compliance with immigration and tax regulations.
Will I still receive my Social Security benefits after renouncing?
Yes, in most cases, you can still receive Social Security benefits after renouncing your US citizenship, but restrictions apply based on where you live and how long you contributed to Social Security.
The US has agreements with certain countries that allow continued payments, but benefits might be reduced or suspended in others. That’s why it’s important to understand the impact of renouncing US citizenship to ensure you can continue receiving your benefits and other government entitlements.
Are there legal considerations involved in renouncing US citizenship?
Yes, renouncing US citizenship is a serious legal decision with long-term consequences. It involves immigration, tax, and financial laws that affect your rights, obligations, and future travel to the US.
Consulting a US tax expert is strongly recommended before renouncing to also help you build an effective game plan and maximize your resources, like tax planning, which is essential to avoid exit tax and penalties.
Renunciation Packages
Relief Procedures For Certain Citizens
If you meet all the criteria, you can use this program.
- You’re a US citizenship holder who has never filed a US tax return except for a 1040NR.
- You have US citizenship but not necessarily a Social Security Number.
- You have US citizenship and a net worth below US$2 million.
Standard Renunciation Program
If you don’t qualify for the Relief Procedure for Certain Citizens, then use this program.
- You must have citizenship of another country.
- You’ll need a Social Security Number; if you don’t have one, we can help.
- Tell us if your net worth is above US$2 million.
What if I’m way behind on my US tax returns?
There is a special IRS program to help you catch up on your US taxes safely, without fines and penalties.
STREAMLINED AMNESTY
It’s for American citizens who didn’t know they had to file US tax returns each year and have, therefore, fallen behind—some by more than 30 years!
What’s it really like to renounce US citizenship?
Meet Stephen, A born-and-bred American who walked away from his US passport
What’s the process like when you renounce US citizenship?
“The main pros were these financial freedom…”
Read more about Stephen’s story
Does renouncing my US citizenship end my tax obligations?
No, renouncing your US citizenship doesn’t immediately cancel your tax obligations.
You are still required to file a final tax return covering income up to the date of renunciation, and depending on your financial status, you may also owe an exit tax.
All previous tax responsibilities must be settled before the IRS considers your renunciation complete.
How does renouncing citizenship affect my final tax return?
When you renounce US citizenship, you must file a final tax return covering the portion of the year up to your renunciation date. This return, known as the “dual-status return,” includes income earned as a US citizen and a potential exit tax.
Even after renunciation, former US citizens may still be subject to the expatriation tax, also known as the exit tax. Additionally, it’s crucial to file Form 8854, the Initial and Annual Expatriation Statement, to ensure compliance and formally announce the renunciation to the IRS.
Without completing these crucial steps, you may remain at risk of being deemed a “covered expatriate” and continue to incur tax liabilities despite no longer holding U.S. citizenship. Seeking assistance is a great preparation for the potential challenges and considerations individuals may face during and after renouncing their US citizenship, such as implications abroad and the impact on personal and financial status.
What are the potential challenges post-renunciation?
Giving up US citizenship is a big, permanent decision that results in the permanent loss of all your rights and privileges. You’ll lose the right to live and work there, access protection from US consular services, and even pass citizenship to your children.
It’s not just about personal or political reasons, either. This decision can affect your business, investments, and professional ties in the US. Before taking the leap, it’s important to make sure you are well-prepared for what’s ahead.
How does renouncing US citizenship impact my life abroad?
Renouncing US citizenship is an irreversible decision that results in the permanent loss of all rights and privileges associated with being a US citizen, such as the ability to access certain US services and even claim US Social Security benefits.
This is why you will need to ensure that your new country recognizes your status. It can better your tax situation and financial landscape, allowing growth post-renunciation.
What is the IRS relief procedure for accidental Americans?
The IRS offers a relief procedure to help “Accidental Americans” who didn’t realize they had US tax obligations.
This procedure allows eligible individuals to resolve their tax issues and renounce US citizenship without facing penalties. It involves filing tax returns for the past five years and certifying any unintentional non-compliance.
“You don’t need a lawyer, just fill in the forms, and there shouldn’t be a problem…”
Hear it from Jenny, a bona fide American who gave up her citizenship.
Read more about Jenny’s story.
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