How to Relinquish U.S. Citizenship

Can you really give up your U.S. citizenship? Most people don't know that it's a surprisingly straightforward process. It might seem like a drastic move, but for thousands of Americans each year, renouncing U.S. citizenship is a very real decision. Let's dive into the specifics of how it's done, the challenges you'll face, and what your life might look like afterward.

The Real Question: Why Would You Do It?

What drives someone to relinquish their U.S. citizenship? For many, it’s not about rejecting American ideals but rather escaping the hefty tax obligations that come with being a U.S. citizen, even while living abroad. Unlike most countries, the U.S. taxes its citizens no matter where they reside. As Americans earn money globally, they're expected to report and, often, pay taxes on that income back to the U.S. This can become burdensome for expats.

Other reasons could be personal: political disagreements, wanting to align citizenship with a different nation where they spend most of their time, or even something as simple as avoiding the U.S. estate tax rules.

The Process Itself: How Does One Go About It?

Renouncing U.S. citizenship involves several important steps, and it’s crucial to get it right the first time. There’s no turning back, so let’s look at the key stages:

1. Schedule an Appointment at a U.S. Embassy or Consulate: You can't relinquish your citizenship remotely. You’ll need to physically attend an embassy or consulate in another country to formally submit your request. This can often be a waiting game, as appointments are sometimes hard to come by, especially in popular expat destinations.

2. Fill Out Form DS-4079: This form is required to determine your intent to voluntarily give up citizenship. It’s the first step in signaling that you are serious about your decision. You'll need to provide detailed answers regarding your reasons and actions that have led you to this point.

3. Complete Form DS-4080 (Oath of Renunciation): This is where things get official. By signing this form, you take an oath that you're giving up your U.S. citizenship voluntarily and with full knowledge of the consequences.

4. Pay the Renunciation Fee: The U.S. charges a substantial fee for relinquishing citizenship, currently set at $2,350. This fee is one of the highest in the world for giving up citizenship, but if you’re serious about doing it, this price tag is non-negotiable.

5. Attend Your Renunciation Interview: During the interview, you'll be asked about your intentions and understanding of the process. The consular officer will make sure you fully grasp the ramifications of your decision, which include loss of the right to reside in the U.S., vote, and receive certain benefits.

6. Receive Your Certificate of Loss of Nationality (CLN): After all is said and done, you'll be issued a Certificate of Loss of Nationality (CLN), which is proof that you are no longer a U.S. citizen. This can take several months to receive, but once it's in your hands, you're officially no longer a U.S. citizen.

Important Caveats: Are You Sure About This?

Relinquishing U.S. citizenship is not a decision to be taken lightly. Consider these factors:

• Tax Implications: Even after renouncing, you may still be liable for U.S. taxes. The U.S. has an "exit tax" for those with significant assets. If your worldwide assets exceed $2 million or your average annual net income for the last five years is above a certain threshold, you may be subject to this tax.

• Visa Requirements: If you want to visit the U.S. in the future, you'll need a visa, just like any other foreign national. This includes short visits for business or leisure. There’s no automatic right to reenter the country after you give up your citizenship.

• Social Security and Medicare: If you’ve paid into U.S. Social Security, you can still receive benefits in most countries even after renouncing, but Medicare is a different story. Unless you reside in the U.S., you won’t be able to use Medicare services.

• Estate Taxes: For those with considerable wealth, estate taxes remain a concern. Even if you are no longer a U.S. citizen, U.S. estate taxes can apply to your U.S.-based assets.

Case Studies: Real-Life Examples of Renunciation

Let's look at a few notable cases of people who renounced their U.S. citizenship and why they did it.

1. Eduardo Saverin, Co-Founder of Facebook: In 2011, Saverin gave up his U.S. citizenship ahead of Facebook’s IPO. His move was widely viewed as tax-related, potentially saving him millions in capital gains taxes. Saverin now resides in Singapore, where there are no capital gains taxes.

2. Tina Turner, Legendary Singer: In 2013, Turner relinquished her U.S. citizenship after living in Switzerland for nearly two decades. Her reasons were personal, as she had built a life in Europe and no longer felt connected to the U.S.

3. Denise Rich, Songwriter and Philanthropist: Rich renounced her citizenship in 2012, reportedly to reduce the tax burden on her estate. She was living in London at the time, and this decision was likely motivated by the U.S.'s estate tax laws.

A Growing Trend: Why Are More People Doing This?

Is renunciation becoming more common? Yes, it is. The number of Americans relinquishing their citizenship has been on the rise in recent years. In 2020 alone, nearly 7,000 people gave up their U.S. citizenship. While this number might seem small in the grand scheme of things, it reflects growing discontent with the tax obligations imposed on citizens abroad.

For many, the decision comes down to financial and personal freedom. With the rise of remote work and the ability to live in different parts of the world, more Americans are exploring life without the strings attached to U.S. citizenship.

What Happens After Renunciation?

After you've successfully relinquished your U.S. citizenship, the world may look a little different. Here's what you can expect:

1. Freedom from U.S. Taxes: You’re no longer required to file U.S. taxes or report your income, except for any obligations before the renunciation date. This can be a massive relief for many.

2. No Right to Vote: As a non-citizen, you lose the right to vote in U.S. elections. This can be a significant change if you've been politically active or feel strongly about U.S. politics.

3. Loss of U.S. Government Services: You won’t be able to access services such as a U.S. passport or consular assistance. In emergency situations abroad, you’ll need to rely on your new country’s government for help.

4. No Longer a U.S. National: Renunciation isn’t reversible. Once you give up your citizenship, you can’t just "get it back." You would need to go through the same immigration process as any other foreign national if you want to return to live in the U.S.

Conclusion: Is It Worth It?

Renouncing U.S. citizenship is a highly personal decision, and the reasons vary from financial freedom to personal beliefs. It’s not an easy path, but for those who feel weighed down by the responsibilities of U.S. citizenship—especially in the realm of taxes—it may be a choice that provides new opportunities.

However, it's essential to fully understand the implications before making such a life-altering decision. Be sure to consult with a tax advisor and legal professional who specializes in expatriation to guide you through this complex process.