How to Renounce U.S. Citizenship

Posted by Frank Gogol

Having U.S. citizenship is great, especially for people looking for a future in the U.S.  – a future that involves working, as well as other benefits. But not everyone wants to keep this status forever, and some end up renouncing their citizenship instead. This may be confusing to outsiders, or people who wish they could obtain citizenship but they are unable to do this. So, how to renounce U.S. citizenship, and why are people doing it in the first place? Let’s find out!

Why Some People Renounce U.S. Citizenship

About 2,071 Americans decided to renounce their U.S. citizenship back in 2019. The next year, there were even more individuals deciding to terminate their citizenship. 5,313 Americans gave up on their citizenship in 2020.

What’s more, there are a lot of Americans who live abroad and intend to renounce their U.S. citizenship, according to a deVere Group survey. 73% of Americans want to do so. When you think of the fact that about 7.6 million U.S. Americans have settled abroad, this is a huge number. It means that 5.5 million Americans out of 7.6 million want to renounce their citizenship, as they do not see it of value anymore for different reasons.

Renouncing your citizenship means that you are giving up your rights as a citizen voluntarily. But why are some people suddenly looking at their U.S. citizenship and thinking “I don’t need this anymore?”

Well, there could be many reasons. Even though the U.S. government does not disclose any information on why individual people of the U.S. decide to give up on their citizenship, it isn’t that difficult to see why. Some believe that it happens to avoid taxes and penalties, which are too much to deal with.

CTA

For example, there were newer tax laws added, such as the Foreign Account Tax Compliance Act (FATCA) of 2010. Under FATCA, U.S. people with accounts and different other financial assets abroad will not be able to avoid taxes. FATCA received reports from foreign entities where American taxpayers have a certain ownership interest, overseas financial institutions dealing with accounts owned by American taxpayers, and American taxpayers who have offshore assets and foreign financial accounts.

With FATCA, several U.S. taxpayers who own any financial asset outside of the country must send reports to the IRS. This is done using Form 8938, aka the Statement of Specified Foreign Financial Assets.

FATCA coming into effect is a crucial reason for more people to renounce their citizenship. The number of renunciations boosted by 39% not long after FATCA came into effect. A lot of American tax law critics think that these income tax laws for U.S. citizens who live abroad are oppressive. After all, they would have to pay taxes in the country where they live, as well as a U.S. income tax. It makes sense that some decide to renounce their citizenship instead.

Therefore, a lot of people end up giving up their U.S. citizenship due to the tax bureaucracy which is way too pricey.

Cost to Renounce U.S. Citizenship

Until July 2010, renouncing your U.S. citizenship was free of charge. But in July, a fee was added, and people had to pay $450 to stop being citizens. Then, the price was raised in September 2015 by the U.S. State Department. It increased by more than 400%, so it went from $450 to $2,350. This was done to prevent U.S. citizens who live abroad from renouncing their citizenship. However, the State Department mentioned that the new price reflects the real processing cost. Some don’t believe it, and it makes sense. There may be a slight truth to this statement, though.

Renouncing citizenship is a very challenging process in a consulate, and requires a lot of labor. To be able to complete the procedure, the U.S. government will send applicants to submit various papers. This way, some applicants can understand that renouncing their citizenship is permanent.

Even if the tax is higher, it doesn’t seem to prevent people from applying for a citizenship renunciation nonetheless, especially considering taxes may be pricier than the fee anyways.

How to Renounce U.S. Citizenship

Have you decided to renounce your U.S. citizenship? In that case, you must know the right steps to follow. Reading the 349(a)(5) of the Immigration and Nationality Act (INA) (8 U.S.C. 1481(a)(5)) can help you understand the process a little bit. You will have to show up in court before a U.S. diplomatic officer or consular officer, go to a U.S. consulate or embassy in their foreign country, and sign an oath of renunciation. You will have to perform five different steps to make the renunciation complete:

  1. Talk to an Attorney

The first thing you should do is talk to a U.S. immigration attorney. Even though it is your right to give up on citizenship, it is still important to understand how this process will affect you and your family. It is best to ensure that renunciation is the best thing for your situation and that you are not only motivated by things like philosophical differences or taxes. After all, renunciation is a permanent thing, and in some cases, it may even be irreversible. You must be sure you want it before applying for it.

  1. Have Legal Status In Your New Home

You must determine your new home, and this involves renouncing the citizenship at a consulate or embassy outside of the U.S. Also, you should obtain a passport and legal status in your new home country. Some consulates might make the process harder to go through if you do not own a passport.

  1. Get Your Renunciation Forms Ready

In order to apply for U.S. citizenship renunciation, you will have to download Form DS-4079, aka the Request for Determination of Possible Loss of the United States Citizenship. Then, you have to get it ready. The State Department will use other forms in order to process your renunciation, such as:

  • DS-4082: Witnesses’ Attestation Renunciation/Relinquishment of Citizenship
  • DS-4081: Statement of Understanding Concerning the Consequences and Ramifications of Relinquishment or Renunciation of U.S. Citizenship
  • DS-4083: Certificate of Loss of Nationality of the United States
  • DS-4080: Oath of Renunciation of the Nationality of the United States
  1. Schedule Your Renunciation Appointment and Attend It

Schedule an appointment at a consular office, preferably in your home country. Bring your DS-4079 and the other necessary documents, like your birth certificate, your new passport, and other identification.

You will be given a DS-4083 Certificate of Loss of Nationality. This serves as proof that you completed the entire process. You will still need official approval from the U.S. Department of State.

  1. Have the Last U.S. Tax Return Ready

Settling your taxes in the U.S. is necessary before renouncing your citizenship. Your last tax return will apply from January 1 through your expatriation day. Filing an IRS Form 8854 with it may also be necessary. Make sure to contact a certified public accountant if you want the best results.

Conclusion

Knowing how to renounce U.S. citizenship will make the process much easier. Make sure to follow these steps and prepare your budget and papers, and it will all go smoothly.

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