Renouncing US citizenship

And I was also curious about the motivation for expats to go this far.

From reading the article it looks like you still have to pay taxes to the US government as a USA citizen even though you live/work in a foreign country. Which is unique compared to most other countries that tax you based on where you live and earn your income, not based on your citizenship as the USA.

So I assume that a USA citizen living in Portugal will need to pay taxes of both countries, but if they renounce their USA citizenship and become a Portuguese citizen then they only need to pay the Portuguese taxes. I guess some shrewd business people at the US foreign office came up with this "Citizenship Renouncement Fee" scheme to squeeze out even more money from American citizens even on their way out...to which they sue them for... which is the most American thing I can think about haha 😂

Are you prepared to stand proudly for the French Tricolor and all that it stands for good and bad.

I feel that perhaps Americans view their citizenship more as a matter of personal patriotic identity than most other countries who I think see citizenship more in practical terms. I doubt many French citizens "stand proudly for the French Tricolor" at all times lol!

Yeah, I was going to say that. The flag stuff and patriotism in general is much more ingrained in American culture than it is most other countries. I don't know anything past the first line or so of the British national anthem and have never sung it.

There would not be much motivation for expats in many countries, if the US has a reciprocal tax agreement with them. But yeah, if there is no agreement, or an unfavorable one, then you can be stuck paying full taxes in the US, and your adopted country. Even if the new country has very low income tax, paying US tax may be too much.

The other factor would be if gaining citizenship in a new country means renouncing all other citizen affiliations, dual citizenship is a relatively new concept (In the US, only 1967, much of Europe in the 90's).

Americans abroad don't necessarily have to pay taxes in the US but DO have to file in both countries. Most places have a double taxation treaty with the US, which effectively means you pay the higher of the two tax bills and apply that as a credit against the lower one. (The higher tax bill will be in the country of residence for most ex-pats) Reporting requirements are a challenge, but not as dramatic as that story makes out.

I'm surprised to see the 30,000 number cited in the article. My understanding is that it's pretty rare to renounce—not for the fee itself but because it limits future options for where to live, children's citizenship, and asset management. It can also trigger a reportedly brutal exit audit from the IRS.

I know from American friends that it's really difficult to open a UK bank account if you're an American citizen. Most banks won't want to know because of FATCA.

This has gone on for a while and has several aspects.
First, the only countries that require their citizens to pay taxes to their country no matter where they are living in the world are the US and Eritrea. Every other country practices residence-based taxation.
Second, some people are accidental Americans, born in the US while the mother was working, accompanying a spouse, or studying in the US. They then returned to the parents original country and are citizens of that country, too.
In the old days, these duals had to choose one citizenship or the other. Not anymore, you get both. If you want to get rid of the US citizenship, you have to pay.
Third, these people, as US citizens now have to pay taxes to both their country of residence and to the US. Most of them have no intention of ever living in the US. Boris Johnson is one of them.
Fourth, for several years, the US jacked up the price of renouncing citizenship to several thousands of dollars. It used to be a couple of hundred.
Fifth, the price has now been re-lowered to a couple of hundred.
Finally, these people want a refund on the formerly jacked-up price and you would, too.

I'm not getting into this schmaltzy saluting the flag stuff, but it did give me a laugh.

The US has tax treaties with a hundred-some countries. In some countries, US citizens have exemptions, in others they pay double, There's no one-size fits all. I'm a dual, live overseas, and agree to what Scudder, Paul, and Gerry have written, and yes, FATCA reporting does make some US citizens throw in the towel. And I don't know more than the first line of La Marseillaise or the second line of the Star-Spangled Banner. Yes, to Calvados, citizenship does carry responsibility, indeed.

Second, some people are accidental Americans, born in the US while the mother was working, accompanying a spouse, or studying in the US. They then returned to the parents original country and are citizens of that country, too.
In the old days, these duals had to choose one citizenship or the other. Not anymore, you get both. If you want to get rid of the US citizenship, you have to pay.

Wow that sounds quite like a mafia racket, I guess the moral of the story is don't work/study in the US if you're pregnant? Or at least have your baby in Canada or Mexico lol!

I could move to France, or for that matter most any country in the world, I could renounce my US citenship, become a French citizen, learn the language, sing the anthem, stand beside the French flag and still 90% of the French people would continue to view me as an Ametican living in France.

The French man could come to the US, become a US citizen, learn the language, sing the anthem, stand beside the US flag and 90% of the US people would view him as an American.

Taxes can be dealt with. I am a US citizen resident in Europe and I would never consider renouncing my Texas citizenship.

Carlos, thousands every year don't see it as a mafia racket. They come here for the sole purpose of giving birth so their children will be US citizens and have the opportunity of a better life.

The fee to renounce is $2350.00

"I guess the moral of the story is don't work/study in the US if you're pregnant? Or at least have your baby in Canada or Mexico lol!"

Au contraire, mon cher. There's a whole traffic for wealthy pregnant women to get into the US and stay in lovely accommodations until after they give birth so their offspring can be US citizens. Once in a while, you'll read about luxury houses where these women live until they and their babies go home with their new birth certificates. This is for wealthy families from certain less stable parts of the world. I remember one case in Orange County, CA being in the news. There are more.

Wow I didn't know that, I guess that's one way to abuse the US citizenship, since it seems to be based solely on birth no so much on the nationality of the parents. In Spain I think at least one parent has to be the Spanish citizen.

Carlos, thousands every year don't see it as a mafia racket. They come here for the sole purpose of giving birth so their children will be US citizens and have the opportunity of a better life.

James, I agree. Of course, there are many people out there who would love to amend the 14th Amendment in order to walk back that privilege. But I doubt anything will ever come of that.

It seems to me after reading the article that most of the people who do renounce their US citizenship do so because of the financial aspect. I think it would be hard to give up, though and I don't believe I could do it.

Bets is correct. It is called "birth tourism", and is very common in 3 groups:

• central American/Mexicans who come to Texas
• Russians who come to New York and Florida (probably not many at this time)
• Chinese who come to California

They have to lie on the visa application, since birth tourism is illegal. Not only do they go home with USA citizenship for the child, but they often stiff the hospital on the bill for the birth. Why is this done? Chain migration. 30 years from now, the child can claim the US citizenship and then bring the parent to the USA.

Our immigration system is not good for the US resident.

Carlos, thousands every year don't see it as a mafia racket. They come here for the sole purpose of giving birth so their children will be US citizens and have the opportunity of a better life.

In that case that doesn't seem like such a bad thing especially since they're going to be all those new taxpayers for the US government!

I have been very thankful to have the privileges associated with being an American citizen. I can’t imagine anyone, if educated in the United States, doesn’t really know the words to the National Anthem. It is such a strange song that the schools work hard to teach it.

I don’t always like aspects of decisions made by the government or some of the general cultural trends. I get frightened sometimes by living in a democracy where an evidently uneducated public can get swayed by “charismatic” leaders that seem less than qualified.

However, it is my home. I can’t imagine renouncing citizenship.

But mom and dad made the decision to get the little baby US citizenship, not the baby nor the adult this baby becomes, whether in a swank birth center or coming over a border to the closest hospital while in
labor. This baby thirty years later, as a grown adult has a successful career in the country of his/her culture, which could also be experiencing better standards of living. Subsequently, this US-born person has no interest in being a US citizen, filing FATCA, and perhaps paying two sets of taxes.

Both Americans that I'm close enough to to be up in their business enough to know, became British citizens through marrying British people. I don't recall them ever talking about having a dilemma over renouncing. It seemed to be the practical sensible thing to do. Both had full time salaried jobs and now run their own small businesses in their specialist fields in London. Both also, quite coincidentally as they don't know each other, used their British citizenship to live and work in Berlin for a time when there was free movement from the UK to EU countries.

As another aside, when I was recruiting for mid-level jobs in the arts, anyone requesting a sponsorship for a visa would immediately go in the rejected pile. The company didn't have the spare budget needed to see the visa process through, no matter how good the candidate. Policy was maybe more flexible as it applied up the scale to senior management.

I know from American friends that it's really difficult to open a UK bank account if you're an American citizen. Most banks won't want to know because of FATCA.

I know loads of Americans in Spain, and this is never a problem for a legal resident there.

Having an American bank account as an American abroad... that can be a problem. Many institutions have opted out of dealing with those reporting requirements. (investment/brokerage accounts are especially vulnerable to this)

I know loads of Americans in Spain, and this is never a problem for a legal resident there.

HSBC is one I know in the UK that is more flexible. I'd guess because they have such an international reach. From what I've heard from Americans in London, they have been flat out rejected or only offered an account with the most basic of banking facilities at UK domestic banks.

I know plenty of Americans who have difficulty opening French bank accounts here, precisely because the French banks are sick of dealing with the USG requirements that FATCA imposes on them for Americans. I am glad I got here and got my account opened before FATCA !

I have been very thankful to have the privileges associated with being an American citizen. I can’t imagine anyone, if educated in the United States, doesn’t really know the words to the National Anthem. It is such a strange song that the schools work hard to teach it.

Besides the 7 year old grandson who learned the Star Spangled Banner on his own and has now performed at three events, and his siblings who learned it from hearing it over and over again during practice, I don't know if any of the other grandchildren learned it. I'm curious now.

I know nothing about renouncing US citizenship, but would a person have to pay off any IRA and 401 taxes that were deferred before they can do this?

Boris Johnson renounced his US citizenship in 2016, probably due to taxes -
https://www.theguardian.com/politics/2017/feb/08/boris-johnson-renounces-us-citizenship-record-2016-uk-foreign-secretary

When I opened my bank account in Hungary 15 years ago, no problem at all. Now you need to be a resident to open one. But why would you if you were not a resident? So still no problem.

would a person have to pay off any IRA and 401 taxes that were deferred before they can do this?

Probably not, as non-citizens can hold those types accounts of accounts (if created and funded while US residents). How withdrawals from them are taxed would be determined by tax treaties (or lack thereof) between the US and wherever the former citizen is now a tax resident.

Maybe because complying with Maybe because US tax law with regard to your earnings and assets is more complicated when you live and earn overseas ? So you need a little more guidance than someone sitting in the U.S. who can Google just about any question they might have?

I am not sure if anyone ever considers that someone else's experience might be a little different than theirs since the other person is living in literally a different reality with different factors coming in to play.

Nah, it's probably just that they (we).are stupid lazy idiots -- silly them wanting to ensure they are complying with the tax laws of their home country along with the one where they live.

I lived in Saudi Arabia and Germany working as a US Government employee.

I paid US taxes and was not subject to German taxes due to the Status of Forces Agreement. Saudi Arabia had no income tax, but did have a payroll tax (for Social Security). I didn't pay that due to the international agreement between the two countries. However, my ex-wife as a school teacher had to pay the Saudi Social Security tax.

If I had taken a job with a private company, I would have been subject to any local taxes. Also, as a US citizen, subject to US taxes. However, the foreign taxes that I paid would have allowed me to get a Foreign Tax credit when I filed my US taxes.

The USA is one of the few countries that taxes its citizens that live outside the USA.
Still, having worked with many German citizens, at least our US income taxes were WAY LESS than what the Germans paid. Their taxes, including income, retirement taxes, health care tax would usually amount to 60% or more of their income (at a minimum). I met an American that was married to a French citizen. He said he made a very good income, but after French taxes, he and his wife had left only about 1/3 of their gross income.

If I wanted to live overseas, I would NEVER renounce my American citizenship. Some things are priceless.

geovagriffith, but healthcare is free.

If you live and work overseas, you do need an accountant to handle both of those tax forms. It isn't some easy-peasy thing to do. Yes, that costs money and you need an accountant that knows the rules for both countries. Nice if you can do it yourself, but most people can't. The FB expat forums are filled every year with people asking for an accountant that can do this. If it was so easy, they wouldn't be asking.

The FATCA problem and the double taxation/filing are the major reasons why people renounce. Imagine not being able to have a bank account? Imagine if US banks had to file reports to the home countries of all of their customers. They would rebel like this too and just deny them an account.

The rules change every few years, but do think about this. There are something like 11 million Americans that live overseas and we have zero representation in the government. No one sticks up for us and the problems we have. Isn't that why the American Revolution was fought? Taxation without Representation?

I brought my son over here when he was 3. Should he have to file US taxes? I got my daughter, who was born here, an American passport as one does. She is a dual citizen. Should she have to file US taxes? Why should they? That said, she cannot pass her American citizenship on to her children because she has never lived in the US.

Having lived here for 37 years, it would be nice to be a dual citizen so I could vote for the mayor, or possibly move to Portugal or Spain to retire. Renouncing is not going to happen though, as we never know if we would need to return, once old age, or dementia sets in. With a military pension, and ability to reside in a VA retirement home on the table, this is important. Plus, I don't want to be forced into doing that. It isn't right.

it is great if you have no problems and none of these rules/laws affect you, but let those of us who DO have problems state them without being shot down like it is nothing at all. This makes me really angry to have this whole subject pooh-poohed like that.

To give the people who aren’t aware of the FATCA issue some perspective of how difficult these rules are on how severe the consequences, both for non-US banks and US citizens let me explain what Dutch courts have ruled with regards to this matter.
The very first article of our constitution says that everyone in the Netherlands should be treated the same and that discrimination based on nationality amongst other things isn’t allowed. Despite that, Dutch courts have ruled that banks in the Netherlands are allowed to refuse to open a bank account for someone with US nationality. They are even allowed to close the bank account of people who became a US national by accident, even though these people have lived and banked in the Netherlands for the vast majority of their lives. Banks are allowed to refuse service because there could be severe consequences for them if they fail to comply with one of the very different and sometimes unclear regulations. Banks could face fines of millions of dollars or even lose their license to do business in the US.

Every now and then a news story pops up of someone who was born in the US because one of their parents worked there for a few years. These people have lived their entire lives, minus the first years, in the Netherlands but they’re still considered to be a US citizen. They now face all kinds of problems and risk losing their bank account etc etc. There are cases where people weren’t even aware they had a dual citizenship.

So yes, to me it’s perfectly understandable why some people wish to renounce their US citizenship.

Maybe because complying with Maybe because US tax law with regard to your earnings and assets is more complicated when you live and earn overseas ? So you need a little more guidance than someone sitting in the U.S. who can Google just about any question they might have?

This. I agree with Kim. Turbotax (or any other tax software) can’t handle the complexities of U.S. taxes when you live in a foreign country. When I was living overseas, I absolutely needed an accountant to prepare all of my various tax forms. Some states (e.g., Virginia) still require you to file even if you reside abroad; you are considered as domiciled in the state until you establish yourself in a different U.S. state. I use tax software now that I live in the U.S.; however, for a number of years after I returned, I kept my European bank accounts open and had to do manual corrections in turbotax to report.

I think most people who renounce their citizenship do this to avoid the administrative burden and cost. They have likely decided that they don’t plan to live in the U.S. in the future and have made their home elsewhere.

You can exclude a certain amount of earned income from U.S. taxation if you reside outside the U.S. for 330 days out of 365 (foreign earned income tax exclusion). Many people who renounce their citizenship probably have income above the threshold which is still be subject to taxes. Even if your income is below the threshold, you still have to file and keep detailed records. When I was an expat, I had to keep a calendar which showed what country I was in every day of the year. There are many other complications for expats (e.g., social security and other social taxes). When FATCA was passed, they certainly made it harder for American expats. While they were trying to prevent tax cheats from hiding income abroad, it introduced burdensome requirements on foreign banks to report assets held by U.S. citizens. Some banks just decided not to deal with it and won’t take U.S. citizens as customers.

I certainly understand why Americans who have made their lives abroad would renounce their citizenship.

Opposite experience as that above ^^^^. Expat in two different Asian countries. Used Turbo Tax to complete and file US taxes. I did not find this difficult.

Different situations, perhaps, for different filers. And/or different levels of familiarity with US taxes in general. I know many in the US who use a tax service to file a simple 1040 EZ.

I'm not criticizing, just pointing out individual differences. Some tax situations are truly complex. Taxes intimidate some more than others. Some have no desire to understand even the basics of the (complicated) US tax system. Lots of reasons for DIY or for getting an accountant. Individual choice.

Interesting twist on the Virginia domicile rules. I didn't encounter anything similar - no intention to return to previous state. No on-going connection with previous location.

We are looking into permanently moving to a European location. We wouldn't renounce our U.S. citizenships just because of the tax situation.

In order to report the annual interest to the IRS, the Dutch bank has to know the TIN (Tax Identification Number) of the customer in question. The issue is that the persons who became an American citizen “by accident” and who only lived in the US for a very short period don’t have a US Tax Identification Number. In order to get one, they would have to jump thru all kinds of difficult and expensive hoops.
Without the TIN, the Dutch banks can’t comply with US regulations and because the consequences of breaking US regulations can be very severe, they choose to be safe than sorry.

@ Dutch Traveler. Actually, getting a social security number (taxpayer identification number) is not that difficult. Provide your birth certificate, fill out a form, done.

If one wants take that step renouncing one's US citizenship, I am not going to question his/her convictions, be they deep or superficial, or the motivation. Thirty years ago I knew 2 women who had become US naturalized citizens and wanted to undo this process, ie, renounce the US citizenship. Obviously, this is different from an US expat.

My advice was to look seriously into the cost, weigh the financial expense, forget the emotional or sociological considerations, when undertaking this step. In the early 1990s I assumed (rightly or wrongly) the ball park cost was $1600 min. One of the women was not exactly rolling in dough, that served as a deterrent.

It really isn’t all that simple as some of you here seem to think. There are lots of stories about issues involved.

https://www.dutchnews.nl/2022/04/accidental-or-otherwise-americans-and-the-fight-against-fatca/

And not just in the Netherlands https://www.nbcnews.com/nightly-news/accidental-americans-living-abroad-fight-tax-bill-uncle-sam-n867711

https://www.theportugalnews.com/news/2023-08-10/the-restaurant-check-and-accidental-americans/80322

https://www.irishnews.com/business/2023/08/07/news/personal_finance_as_an_accidental_american_do_i_need_to_pay_us_income_tax_-3501707/

I believe the cost of tax preparation services are deductible, so hopefully that expense shouldn't be a great barrier for expats (I've been deducting my tax guy's fees for years...if that's really not deductible, please don't correct me, I don't want to have to go back and re-do mine or have to fire my accountant...). Maybe there's some extra charge for non-resident tax returns that's not deductible? Beats me, what do I know, I'm just a US citizen without any financial ties elsewhere (other than paying the bills for the baguettes and gelato). 🤷‍♂️

Besides, I'll already happily stand for the French Tricolor 🇫🇷, the nation, it's people and history (warts and all), mostly for the ideals for which they stand (and yes, sometimes fall short of). And yeah, for the Union Jack, too, and in fact for most other nations with varying degrees of enthusiasm, if only as a sign of respect for my hosts/friends (can't manage to sing God Save the Queen, though).

Opinions will vary, but I don't regard patriotism or national allegiance(s) as quaint or outmoded concepts - to me they're as pertinent now as they've ever been (maybe more so). Other than brief hangovers following a particularly disappointing Election Day, it's hard for me to imagine renouncing my American citizenship, despite being keenly aware of my own country's long list of flaws. Heck, I still tear-up every time I hear La Marseillaise and I'll even mumble some of the lyrics if in a crowd. No country is perfect, certainly not mine (and nobody likes paying taxes, either...but nations and taxes are necessary, though they're rarely quite the way we would like them to be...still, we all need them sometimes).

"Your winnings, sir",  indeed!

I know it wasn’t exactly about travel when I started it, but there have been posts throughout the forum over the years discussing expats and residency visas and citizenship and working abroad, So I don’t think it was entirely off-topic.

I see two major obstacles if one were to carry this out:

1. the legal aspect, ie needing an immigration attorney, dealing with taxes, bank accounts, property , if applicable, Soc. Sec. if that applies, one's pension, if applicable, all those " red tape" issues one is legally responsible for and must deal with. In the final analysis is the financial cost justifying one's decision to renounce? Omit the other subjective issues/considerations.

2. the sociological, emotional, psychological issues, ie. leaving family, friends, (if that's important enough to be a deterrent), the relevant crucial decisions apart from the legal ones that one must make (if he chooses not to evade them),

I know couples who became ex-pats (going on 15-20 years) in Europe though none took the ultimate step in renouncing his/her US citizenship, one was never a US citizen anyway even though he was literally a "Vietnam War Era " US Army veteran, have discussed over the years the "red tape" issues they had to deal with. They cannot escape these legal obligations.

They do have the advantage of speaking the local language (German) fluently, married European nationals whose linguistic repertoire includes English. True, that doesn't solve the entire problem if such exists.

Their subjective issues (emotional, sociological ,etc ) and consequences eg, pulling up roots and skipping out, etc I avoided, wasn't interested.

Additional point of fact - Tina Turner renounced her American Citizenship too. https://nypost.com/2023/05/25/why-tina-turner-renounced-us-citizenship-for-switzerland/

Hi. Several folks have asked for review of this thread. I think that as long as we can remain civil, avoid politics, and make sure that the string of conversation could potentially help a traveler in Europe -- which includes expats and their needs -- then I don't see the need to be heavy handed with this thread.

However, the subject of US birth tourism doesn't seem to fit, and it is more politically charged as we saw with a few posts earlier in this thread. I advise that this subject be avoided if you want to ensure that replies remain in bounds.

Thanks everyone.

And I've had a few reports about false information in this thread. I'm not going to represent that I know better than any of you on this subject, so I'm not going to wade into that unless something here can potentially cause serious harm.

So, everyone reading along should understand that information presented in this discussion may need to be verified elsewhere as it relates to any information about govt regulations, taxes, TINs, etc. This is already covered by the fine print of our guidelines, but it seems to bear repeating here. Corrective statements are always allowed in this forum as long as they maintain politeness. I think you all know that we don't tolerate "my facts are better than your facts" arguments. Provide your best information without negatively referring to that of others and let it go. We trust that everyone here is intending to provide their best advice based on their own experience and knowledge.

In a seemingly unrelated story on the NY Times, the comments section is full of people with major banking issues if they are living abroad as US citizens

https://www.nytimes.com/2023/11/05/business/banks-accounts-close-suddenly.html

I would love to read it. Paywall

Bank of America and Merrill Lynch both accepted my US private post office box address. The credit card accounts at Merrill Lynch and Bank of America would not. So for the credit cards and Social Security, I am using a US street address.

Ah, guess I was logged in or something. Try

https://www.nytimes.com/2023/11/05/business/banks-accounts-close-suddenly.html?unlocked_article_code=1.-Ew.bvTU.C_axZiaHgJeR&smid=url-share

Social Security accepts your overseas address, Mister E. If you ever moved full time with the intention of remaining permanently in Hungry, you could even have Social security retirement directly deposited into an overseas bank. There should be someone at the embassy/consulate who handles social security enrollment, address changes, etc.

Bets I know. But this was convenient for correspondence and for establishing me in Texas for other reasons.

I'm too young to collect social security checks I will worry about that in a few years. Not sure why I would need them deposited in my Hungarian account. I pretty much live out of my US account. The only bills I have are Medicare and my European policy that is billed in Euros so gets converted at my US bank, but would also be converted if I paid from my Hungarian bank. Oh, and a very cheap Hungarian phone bill. The insurance and thr phone are all auto payments out of my US bank. And my US bank reimburses me for all foreign transaction fees.

100% of my housing costs are paid for in cash out of local earnings. Daily living is about 2/3 my ATM card and 1/3 cash withdrawal at sn ATM.

I moved permanently to Europe 30 years ago.
Please everyone stop branding people who renounce as tax cheats or saying they do it for "tax reasons".
For most people, it's not about paying a bit of extra tax.
You will find that you cannot get a mortgage, life insurance, invest in mutual funds, have a retirement plan, or open a bank account. You will be denied banking services like online banking or phone banking.
You will live under an additional confiscatory threat if you don't report all of your assets - everything - each with a different form - every year, it's complicated and so you'll need to pay thousands to an international tax accountant to do it for you.
When you are a young person, say setting up a small company as a yoga teacher or hairdresser, living like this is not possible and so renouncing is the only solution if they want to stay in the country they were born in and live in, outside of the USA.

Each situation is different. If you just earn salary from a large company, usually it's no problem you can do your own foreign filing with turbotax.

As soon as you have any savings, retirement, or assets, any dividends, interest, royalty income, if you set up a company, are self employed, it becomes impossible.

And you will not have access to banking services, and banks can and will regularly freeze your accounts for any reason to get you disgusted because they want you out of their client base. It's just too much work for them to have US person clients.

That is why people renounce. Sadly.

They put the fee up to 2350$ to renounce, so anyone with a small company already struggling to pay the accountant they need to pay each year to comply, might not be able to pay this. It's horrible and against any basic human rights.

A lawsuit has been entered to reduce the fee back down to 450$ but it is still pending. From what I can see it's still 2350. As soon as it goes down you'll see thousands of renunciations.

Also don't think that if you live in a country with a double-taxation treaty, that will ensure you won't pay double tax. It's complicated, the tax credits are calculated per category of income, don't apply to gift tax, inheritance tax, etc... So you will never be able to benefit from a tax break in one or the other country, the other country will swoop in and tax whatever non-taxed or low-taxed income category you have.

I do know someone who announced their citizenship . they needed to get Japanese citizenship. Japan is rather strict and to get that Japanese citizenship they had to get had to formally renounce the United States citizenship

The fee to renounce Australian citizenship is $AUD290 (about $USD200).

Someone said you had to pay taxes in both countries. This is not true, and all the countries I’ve looked at which include France and Italy. If you had to pay 35% tax in the US and 40% tax in France what would happen is you pay 35% to the US government first and then you would pay the extra 5% to the French government

Depends on the country rail rider. US tax treaties are different in different countries. For example friends in the Netherlands do get double taxed. In France we have exemptions, but France will get paid with a big chunk of our estate when we die. One needs to read and prepare both income tax and inheritance tax treaties to get the full picture.

Yes, the taxes are more complicated than what railrider implies. At the very least, if you are resident (183 days or more) in France, they are going to want their "40%" (the numbers given, have no idea what actual is), when you file your US taxes, you likely would owe nothing at "35%" by using your taxes paid in France as an offset, unless some minimum tax applies. Basically the "resident" country gets paid first, then the nonresident country. More likely is that your French taxes would be "20%", which you pay, the US is "35%", so you owe the US "~15%". Of course all that is oversimplification, there are credits, deductions, income that may be exempt, taxes may be calculated based on length of time in each country, all meaning that you likely need to use a tax professional.

If only Australia made it as easy to acquire citizenship as they make it to renounce, I’d leave tonight!

In Hungary the tax treaty will mean I pay little or nothing additional for 2023. But the treaty expired so 2024 is up in the air. But I am living in a country that costs me half as much compared to a cheap state like Texas and the Hungarian tax is 16%. So I am still ahead because I have no income other than that which I need for the cost of living. When social security kicks in, that is exempt under Hungarian law so I am back to even at that point.

Yes it's messy and the Hungarian tax filing will cost me about $1200 in accountant fees in Hungary this year. A lot less next year because of other reasons.

And yes I needed a Hungarian Will as they will have jurisdiction. But no inheritance tax here. I have a US Will too, but that's just CYA and it says to do what the Hungarian Will says. I've had the Hungarian will since before Residency because I own property here. Another consideration even if you are not Resident.

The tax situation was never a big show stopper, a bit of inconvenience in filing returns and have to pay a couple of hundred bucks every now and then.

But the killer for many people is FATCA because it goes way beyond just opening a bank account. It impacts things like:
- Trying to getting a mortgage
- Savings for retirement
- Company pensions
- Discretionary investing
And it also applies to close family members of an American citizen and green card holders.

Of the Americans I know here in Switzerland, not one of them gave up citizenship because of taxes, it was because FATCA was making it impossible to life the life they wanted to live.

There are TWO options for foreign income, so most expats don't actually pay much in US taxes.

The first option is the tax credit. You get credit for what we have paid locally, and you only pay the difference to the US. If you pay 42% like we do in Germany, that is higher than what we would pay in the US, so you end up owing nothing on your income. This is typically used for those in countries with a HIGHER tax rate.

The other piece is the foreign income exemption; basically the first 105K (I think, but the number changes) that you earn abroad are tax exempt. If you live in a country where the tax is LOWER than in the US (and aren't rich), this is the best option.

Now, things get stickier when you start talking about owning property, capital gains, etc.

As to the original point of citizenship, there are a few factors beyond US taxes and also a fair bit of confusion on this thread.

Most countries outside of the Americas do not have Jus Soli (citizenship based on soil, or being born in a location), but the US does. Being born in the US gives one US citizenship (with a few exceptions, mostly pertaining to diplomats). Most countries, the US included, have some form of Jus Sanguinis (citizenship based on parentage--if at least one parent is American at the time of birth, the child is a US citizen; there are exceptions for those who have not lived in the US, etc., but in general, American parent=American child). In fact, instead of a birth certificate issued by a state, these children receive a "Certification of Birth Abroad" which is the same thing, but not issued by one of the states. US law does not mention dual citizenship, so as far as the US is concerned, you can gain US citizenship without renouncing, be born dual and keep it forever, or keep US citizenship when obtaining another citizenship.

What is a deciding factor for many expats is the rule of the country in which they reside. Some have strict rules on dual nationalities. Germany, for example, requires renunciation of other citizenships to become naturalised. There are a few exceptions, including those reclaiming citizenship stripped from their ancestors during the Nazi regime, those for whom it would pose a considerable hardship to lose their citizenship, and some other very technical loopholes. It is the second--the considerable hardship rule--that has allowed some expats to claim financial hardship based on the renunciation fee and thus retain their US citizenship while obtaining German. But for most people with a job abroad, the choice is to be German or to be a foreigner residing in Germany. The rules vary by country. Note that Germany is about to make naturalisation possible without renunciation, so this information will be out of date soon

So for countries that require renunciation of US citizenship, the choice for the expat becomes "become fully vested in the country I call home" or "remain unable to do things like vote." If one has few ties in the US and has fully settled abroad, probably raising one's kids in the country of choice, then it makes more sense to look ahead rather than back in terms of identity. One never stops being American (or whatever one is), but one commits fully to the future. Most naturalised citizens who left voluntarily probably will still root for their country of origin in a soccer match, but they become more and more host country in every meaningful way over time. This means language, investments, retirement plans, friendships, hobbies, and especially KIDS. Being able to access local rights like a local is worth a heck of a lot.

Some people feel strongly about identity and passport matching up. Others don't. And identity is complicated. Ask any TCK (third culture kid). Sometimes cutting ties is important. Sometimes it's a necessary cost of moving ahead. And how people feel about the choice is highly variable and very personal.

Paul, Good try, but that's not how French and US taxes work...not at all.

I found a way to deal with FATCA, just be poor folk. I have one account with 30.000 forints to report.

Tom_MN “I read the reporting requirements, and it isn't much. Property valued over $600,000, foreign held stocks, things like that. I'm not seeing anything about pensions or retirement funds needing reporting.”

This is not accurate. The FBAR form requires you to list every financial account you own abroad, or that a related trust/corporation owns. The name of the financial institution, name of account holder, account number, maximum balance for the year. (Assuming the total of all accounts >$10,000). It is onerous. Do you as a U.S. citizen living in the U.S. have to report this to the government? No.

Renouncing citizenship is a big deal emotionally but financially it is a shockingly good deal. If, over a lifetime of diligent work and careful savings, you have total assets over $2 million, which includes home equity, you owe the government an outrageous extra “exit tax” not based on income. You no longer have to file all the extra complicated IRS and Treasury forms. You can set up bank accounts at will.

Anyway, long story short, I did take the plunge to renounce a few years back after living in Canada for 30 years and then moving to Italy. I barely avoided exit tax (thanks only to joint ownership of our house with my non-American husband). Financially it has been very advantageous and emotionally,…well after 30 years away, I finally got over it. No regrets.

I’d say most of the information in this thread is accurate-adjacent. Lots of little nuances here and there but generally if you live outside the U.S., it is uniquely difficult to be a U.S. citizen, with burdens no other country imposes on its citizens or on financial institutions around the world. Plus the lack of representation Ms. Jo mentioned. I voted consistently, in both Federal and State elections, while I lived in Canada. My representatives could never be bothered to even reply to my messages with a form letter.

And btw - I am a CPA. After a few years of struggle, I had to pay tax specialists to ensure I was in compliance with U.S. tax laws. I don’t miss that annual expense.

This is not accurate. The FBAR form requires you to list every
financial account you own abroad, or that a related trust/corporation
owns. The name of the financial institution, name of account holder,
account number, maximum balance for the year. (Assuming the total of
all accounts >$10,000). It is onerous. Do you as a U.S. citizen living
in the U.S. have to report this to the government? No.

So, if you live in Europe, but you leave your investments with a US stock broker and the bulk of your cash in a US bank you have nothing to report but your local "convenience" bank account and even then only if it has more than $10.000 in it.

Sorry guys, I live in Europe, but not in a persoal world where I have anything to report. But my local bank does send me some form to complete every year. They say its for compliance with US law. Really it just veryifies my address.

Do you as a U.S. citizen living in the U.S. have to report this to the
government? No.

Because every transaction over $10.000 is reported to the US government (on your behalf LOL) by the US bank. Or this is what my banker told me years ago.

Because every transaction over $10.000 is reported to the US government (on your behalf LOL) by the US bank. Or this is what my banker told me years ago.

Correct - but the FBAR is required if the $500 balances in your various accounts add up to $10000 at any point during the year, not for individual transactions.

Also correct that U.S. domiciled accounts are not listed on the FBAR. So not an issue in your case unless you moved a stack of money through (e.g.) Wise at any point last year - if it held $10000 on any single day, you need to report it via FBAR.

Anyway, those are some of the nuances I mentioned. In the case of most people who moved directly from the U.S. to abroad, renunciation doesn’t even cross the horizon as a thought for many years. Or ever, if you have things like VA medical care or close family or a home you’re keeping. I am not suggesting it as a strategy for your first leap abroad. But after a while abroad, U.S. citizenship has few benefits and only chronic irritants. It is a very personal choice and best made over time. This also assumes you have citizenship elsewhere, in a country you would be happy to repatriate to or stay in. You are not allowed to be stateless, so this doesn’t even come into play until you have a second citizenship.

(And in what I swear is purely random, today I put on clothes that are red, white and blue ;))

So far I can see of no advantage of loosing my US citizenship. But thats my simple existence.

I dont have hundred of European investments to report; and dont need or want to have them. But even if I had 10, its one piece of paper and maybe 15 minutes.

I pay a bit more in taxes, but the savings in the cost of living more than offsets that.

I keep a US address and I keep a US private post office box that scans or forwards my mail as I request.

I pay for my life using a US ATM card or a US Credit Card as freely as anyone using a European credit card or ATM card. What I might be saving on is all the fees the the bank in my country can charge.

I get to vote in US elections and with my US address I suspect I could vote in local elections. Not sure of the legality on that so I will avoid it.

I still have a US driver's license.

Absolutley no need or bother to deal with changing citizenship. There is no benefit in my one particular situation. If I did, then I would have to move all my finances here. 40 years of relationships in the industry would be lost. My free, to me because of relationships, rewards credit card would be lost (okay minor). I would have to learn an entirly new set of investment and banking laws ..... which is harder and higher risk then filling out some US government forms once a year.

If I were younger, then I would ask myself, where I would have the greatest opportunity to aquire wealth for retirment. I think the answer is the U.S. But I am not young, my citizenship and residence in the US served me well in the aquistion of wealth.

Then there is this one last, most important thing. I am proud to be a US/Texas Citizen. I would rather be compared to all of the foreign nationals I helped get citizenship in the US over the years (part of my job description) than be compared to the Americans that left for France. Not a critisim, just a personal reality. Oh, almost forgot, I am an Aggie, so that is the final limiting factor.

This is not accurate. The FBAR form requires you to list every financial account you own abroad, or that a related trust/corporation owns. The name of the financial institution, name of account holder, account number, maximum balance for the year. (Assuming the total of all accounts >$10,000). It is onerous. Do you as a U.S. citizen living in the U.S. have to report this to the government? No.

Thank you Nelly for bringing some actual facts to bear on this claim.

Germany, for example, requires renunciation of other citizenships to become naturalised

I know absolutely nothing about these things, but I'm not sure if it's really handled that rigidly. My daughter acquired American citizenship about 10 years ago and was allowed to keep her German citizenship - which is very practical when traveling to the EU.

Germans can acquire other citizenships. and retain German (only within the last 20 years or so--you used to have to renounce German, but now you can get permission to retain German citizenship before obtaining another). Others can only acquire German by renouncing (again, with loopholes).

Another fun fact re: financials
-- When an expat cashes out their Roth IRA, they have to pay taxes on the income in their home country.

--It's also harder for expats in Europe to invest in certain areas because the laws get sticky (I can't speak to other places, but I would imagine there are similar issues). That means you are often financially better off investing as a local, which can be restricted if you are not a citizen.

There are all sorts of demographics in this subject. For an old retired fart being resident in another country has no substantial downside. Sure, a few adjustments, but nothing earth shattering. How do I know? Well, I'm doing it.

Now, when I was 45, no way I would consider it as there is no country better to be in to aquire wealth than the United States.

I reiterate that renunciation is a very personal choice, after a long time living abroad and with as close as possible to certainty that you will not wish to return to live in the U.S. It’s a one-way trip. But it is not a bad or unpatriotic thing. It does not imply a hatred for the U.S. in any way. Or even for Aggies ;) I am not implying in any way that it should be everyone’s choice. But once you are sure you don’t want to (or can’t afford to) return, renunciation does simplify your financial life and remove some recurring challenges. You have to be truly sure though. After 30 years, I was. Before that, I was not ready.

I also stand by my statement that complying with all the various IRS and Treasury rules is not as simple as 15 minutes/year. I am financially literate and trained in U.S. taxation, and I still found it challenging. It is not necessary and I don’t know why the U.S. has adopted this route but it is what it is. Complex and confusing.

I did pay the confiscatory higher renunciation fee. C’est la vie.

But it is not a bad or unpatriotic thing. It does not imply a hatred
for the U.S. in any way.

I would never judge.

I also stand by my statement that complying with all the various IRS
and Treasury rules is not as simple as 15 minutes/year.

And for my situation you would be wrong. My having done it, continuing to do it, in my particular poor boy retired old fart situation know that it can be 15 minutes.

Although I understand if you are working, investing in Europe, building wealth in Europe .... well that could be a different can of worms.

But I would suspect that a very large segment of expats are like me.

You might be surprised. The expats I know are mostly younger or middle aged, working, and often retire in their home countries. I know very few retirees, most of whom are married to a local and/or have kids who are local. A few have "gone native," but they came when they were younger and stayed. I know virtually nobody who decided to retire here.

You tend to be aware of the crowd you run with LOL

INFLATION IS MAKING RETIREES REASSESS THEIR OPTIONS
The Social Security Administration (SSA) recently stated that the number of Americans drawing their benefits from overseas grew from 413,000 to 760,000 in the last three years.

However, even that substantial growth is an underestimate as many retirees deposit their funds in US banks but draw the cash overseas, and these withdrawals are not visible to the SSA. (this would include me)

While less precise, the State Department estimates that 9 million Americans live abroad, and experts suggest that 5 million of these have retired abroad, or 12% of the nation’s 45 million retirees.

https://harveylawcorporation.com/millions-of-americans-retiring-abroad/

@Nelly

Always thought that your posts indicated an intelligent assessment of things. A CPA is not given out with breakfast cereal packages. Nice Post nominals. That requires some hard grafting. GAAP and IFRS take some keeping up with. (GradDipCa) My best Post nominals are BWSL.

My wife, DIL and her Italian relatives (and now mine) have acquired a villa for members of my family, and me, in San Valentino, Southern Abruzzo, 20 – 27th April 2024. They live in the north around San Pio delle Camere and L’Aquila. Smart people sending us south. Followed by a week in Masseria Orimini. Looking forward to it. An unmolested part of Italy filled with beautiful people.

Have empathy with people facing the dichotomy of getting in or getting out of a country.

Regards Ron

Other sources say otherwise:

https://www.internations.org/expat-insider/2018/us-americans-abroad-39625

https://expat-assurance.com/en/expatriation/american-expatriate-statistics/

It's true that retirees make up the single largest bracket, but working age expats span several age brackets. Within this there are two groups--those who worked abroad, then retired and stayed, and those who left upon retirement.

But the reality is that numbers are insanely unreliable and are all estimates since the US government doesn't actually track expats.

My article had 2 numbers which if you average is about 30% of the expats are retired. Your two say 18% and 23%; I would say if accurate, that's a fairly large segment of the expats. But admittedly less than I expected. Based on where i live and who I've met, I would have guessed a third or more.

I think that Mr E has a valid point about taxes from abroad being easier if you keep your assets at home and aren't working here. My travails with the IRS were during a period when I was operating a consulting firm outside the U.S. and thus had various returns and tax issues to address in both countries. Nevertheless, I don't miss the extra worry and work!

Of course I have no idea how many expat retirees there are. I will say you have to really want to do it as it's not always an easy change. Especially if you haven't lived outside the U.S. earlier in your life. A little paperwork more or less isn't going to be the deciding factor as to whether you will do it and whether you will find joy in the doing.

This thread started as a question about renunciation and the associated fees. I was just trying to address the question by sharing my experiences. It is a sensitive subject as it's tied up with identity and defining "home". I think I have been clear that renunciation is by no means a mandatory part of expatriation/emigration. It's just another of one's many life decisions.

Nailed it! For some, renunciation is out of the question. For some, it's no big deal. And the same goes for acquisition of new citizenship--important to some, no big deal to others. Identity is complicated, and there is no right or wrong answer.