Everything You Need To Know About Renouncing U.S. Citizenship

 

Section 349(a)(5) of the Immigration and Nationality Act (INA) covers the loss of nationality under various circumstances, including the voluntary act.  Although permissible, there can be dire consequences if it’s taken lightly. Therefore, in this article, we briefly cover all the aspects of renouncing citizenship so that you can make an informed decision. 

 

Why Do People Renounce their Citizenship?

The motivation behind renunciation can be traced back to tax avoidance.

Foreign Account Tax Compliance Act (FACTA) is a tax regulation that targets explicitly U.S. citizens that have assets outside the country. Under this act, such individuals are required to report those foreign assets. Renunciation is also a way to avoid double taxation. A U.S. citizen in a foreign country is obligated to pay taxes to the United States and the country of residence.

There are some downsides to this as well. Despite the renunciation, the applicant still has to file their previous tax obligations. Additionally, the individual has to file a Form 8854 along with the last five years tax record.

Also, if it’s found that the motive for renunciation is solely based on tax avoidance, then the person may be barred from entering the United States ever again.

 

How to Renounce Your U.S. Citizenship?

According to the provisions of Section 349(a)(5), the renunciation process can only take place in person.

To renounce their U.S. citizenship, a person must:

  1. Appear before a U.S. consular or diplomatic officer in a foreign country.
    • Meeting with the diplomatic agent should take place in the foreign U.S. Embassy or Consulate.
  2. Sign an oath of renunciation.

Failing to meet the criteria will render the renunciation null or void, with no legal authority.

On the applicant’s end, the process is quite simple. But the complexity and intricacy of the matter make it a daunting task for the U.S. Embassy or Consulate. And this is reflected in the cost of renunciation, which amounts to $2,350.

 

Rules for Minors

Laws dictate that citizenship is a personal thing, and so is the act of renouncing. The Consulate thoroughly assesses a minor’s application to renounce their citizenship.

They are informed of the implications or consequences that follows after the act of renunciation. Additionally, they must demonstrate that their action isn’t influenced by the parent(s).

The importance of intent and voluntariness can be judged because parents or guardians can’t renounce the citizenship of mentally insufficient individuals.

 

What Do you Risk Losing?

The biggest threat that comes with the act of renunciation is statelessness.  Statelessness devoid the person of any protection from the government should they run into some trouble. It also limits their options to work, travel, property ownership and health facilities.

 

Limitations of the Renunciation

Act of renunciation requires you to give up all the rights and privileges of being a U.S. citizen. But there’s no escape from some of the obligations. The person renouncing citizenship still has to repay their debts and clear their taxes.

Moreover, renunciation isn’t a way to avoid prosecution for a crime someone committed or may commit in the future. And laws of the United States would be followed in the court procedure.

 

Irreversible Nature

Renouncing one’s citizenship is an irrevocable act. No request for reinstatement will be entertained after that. However, under section 351(b) of INA, only the individuals who renounced or lost their citizenship before the age of eighteen can request reinstatement.

Department of State will only consider such requests if they are made within six months after attaining the age of eighteen.

 

Conclusion

A random act of renunciation can get one into a lot of trouble, with statelessness being a major one. And since the action is irrevocable, it’s essential that you fully understand what the act of renouncing U.S. citizenship entails.

 

For expert information regarding Renouncing U.S Citizenship contact Expat US Tax.