How to Renounce Your US Citizenship: The Ultimate Guide

A few years back, Facebook co-founder Eduardo Saverin chose to renounce his US citizenship and become a citizen of Singapore instead. More recently, Green Day frontman Billie Joe Armstrong similarly declared his intention to renounce his citizenship. 

The ability to renounce your citizenship is an inherent right available to everyone. According to one survey, roughly one in four expats seriously considers renouncing their US citizenship and, in 2023, more than 5,000 people, double the amount in 2022, pulled the trigger on the renunciation process. 

Navigating citizenship and obtaining multiple passports has become increasingly complex and, in recent years, we have seen significant changes. Citizenship programs are becoming more problematic and rates or required ‘donations’ are increasing in many jurisdictions. 

Here at Nomad Capitalist, we’ve helped more than 1,500+ clients plan to either renounce their US citizenship or determine that they do not need to renounce because they can create a different plan to reduce their tax bill. 

Don’t hesitate any longer; apply to become a Nomad Capitalist client, and we can help you legally reduce your taxes and go where you are treated best.

The Increasing Number of US Renunciations

Before 2009, US renunciation levels stayed consistently under 750 people per year. However, in 2010, the renunciation rate more than doubled, from 742 in 2009 to over 1,500.

The number of people choosing to renounce has grown rapidly since then. By 2013, the rate had doubled once again, with almost 3,000 people choosing to give up their US citizenship. From 2015 to 2016, there was a 26% increase in renunciations, from 4,279 cases to 5,409. Numbers peaked in 2020 at 6,705 but by 2023, there were still 5,315 renunciations by US citizens.

There are strong historic precedents for citizens who feel unheard by their home country. The list of those who have renounced includes everyone from poet TS Eliot to actor Jet Lee, athlete Quincy Adams, scientist Robert Brout, politician Boris Johnson and the greatest chess mind ever to live, Bobby Fischer.

Out of a population of over 340 million citizens, 5,000 or 6,000 may not sound like a lot, especially if you look at the inward migration numbers. However, the numbers reflect a growing desire by more and more US citizens to explore their global options in terms of tax, lifestyle and personal freedom. 

 If you’re reading this, the chances are you’re already part of a small group of open-minded people who are willing to go where they’re treated best in order to enjoy the benefits of a better life. Plenty of wealthy people are happy to stay in one place their entire lives, even if it costs them a huge chunk of money.

On the other hand, there’s another group which prefers to go where the system works better for them and where they are no longer caught in the US’s worldwide tax net. For this group, it’s all about going where they’re treated best by choosing to renounce their US citizenship.

For the millions of immigrants who come to the United States each year, it may be difficult to understand why anyone would want to renounce a citizenship that they have fought so hard to attain.

But the truth is, for some successful people, that same citizenship has become a burden.

The remarkable thing about the past few years is that these numbers have been growing dramatically.  Something obviously must have changed to send renunciation rates sky-high with no indication of them slowing down.

So, as more citizens jump ship, the obvious question is, ‘why?’

Why do People Renounce US Citizenship?

First, what does it mean to renounce citizenship?  Put simply, renunciation is the voluntary act of giving up your citizenship.

Citizenship comes with both rights and responsibilities. Many people who wish to renounce their citizenship may not agree with some of these obligations, such as the requirement to pay an ever-increasing percentage of their money in income taxes.

Anyone choosing to renounce their citizenship must also be cognisant they are relinquishing their claim to any of the rights that come with it. These rights include everything from voting in US elections to receiving government protection and assistance while travelling abroad. Citizenship rights can also include:

• The right to bestow citizenship on any children born overseas
• Access to the US job market and federal jobs
• The unrestricted right to live in and travel in and out of the United States.

For some, these integral rights are simply not worth surrendering. For others, particularly US citizens living and working abroad, they are minor details in the bigger picture of arduous requirements in the form of foreign income and foreign company reporting, not to mention the Internal Revenue Service (IRS) tax take.  

For many, everything changed when the Foreign Account Tax Compliance Act (FATCA) was enacted. 

FATCA created many new reporting, filing and tax obligations for US citizens, including companies, jobs, foreign bank accounts, trusts and assets located around the world. Each one has its own form to complete and a different set of reporting requirements to fulfil. 

Paying a large tax bill is one thing, but when you have to spend precious time and money completing an endless pile of paperwork just to tell the government what you owe them – tax compliance is elevated from a significant challenge to a financial burden.

Another major issue FACTA created is that, in its wake, many banks no longer want to work with American citizens. The paperwork US citizens have to deal with is even worse for foreign banks that choose to take on US citizens as customers. For some, the business isn’t worth the hassle and they often turn away anyone with a US passport.

It is easy to see that, for anyone conducting business overseas, FATCA can be extremely debilitating. 

The only way out, in some cases, is to cut the cord and find a new home. If you renounce, you no longer have to file a US tax return, report your non-US bank accounts, foreign companies or the income you earn unless it is US-sourced. In short, you no longer have to report or pay tax on anything you’re doing overseas. 

It’s unsurprising then, that this is what more and more people are deciding to do. So, while some US citizens are moved to renounce for different reasons, the foreign income reporting requirements are a motivating factor for a growing number.

The Renunciation Process 

Renouncing requires much more than simply giving notice and throwing out your passport. It is a legal process that requires your physical presence and involves paperwork, interviews and money. Here’s what you need to know:

Choose Where to Renounce

Your renunciation must be done in person before a diplomatic or consular officer located outside of the United States. It’s done externally because the US doesn’t have embassies in its own country and doesn’t want the hassle of kicking you out afterwards. It’s easier for them if you’re already out of the country.

This means that you need to present yourself at a US Embassy or Consulate in order to renounce. While the legal process is the same no matter where you go, the steps vary depending on the diplomatic post you choose.

For example, the majority of renunciations happen in a small percentage of diplomatic posts, including London, Dublin, Bern, Amsterdam, Seoul, Hong Kong, Canada, Australia and New Zealand. It stands to reason that the staff at these locations are more experienced and have a more formalised process. However, because of the higher volumes of people choosing to renounce at these locations, there is often a much longer wait for an appointment.

Having a more formalised process isn’t always a good thing. The staff may be more prepared to direct you through each step, but it also means that the process is more bureaucratic. Reports suggest that the renunciation process at these locations can take up to six months or longer.

Some of those with a higher volume of requests have created additional requirements to renounce at their specific diplomatic post. These are typically posts closer to the United States and the most significant hurdle is the requirement to be a local resident in order to renounce. 

Take the US Embassy in Canada, for example, which is overwhelmed by dual Canadian-US citizens who relocated long ago and are now fed up with the paperwork required to finish the job. While these individuals could renounce in another country, they tend to favour Canada due to its proximity and convenience, neglecting other potential options.

But there are ways around this. We advise clients of the many advantages of going to a less obvious diplomatic post where there are fewer obstacles and where the entire process is less formal and more pleasant overall. Most importantly, these less-obvious routes usually have shorter wait times with many people securing an appointment and successfully renouncing citizenship in a matter of days.

We’ve helped countless people renounce in embassies around the world and we’ve seen some complete the process in as little as a week. On one occasion, our team called to enquire about a renunciation appointment for someone, and the embassy staff replied, ‘Sure – come in tomorrow!’

So, there are embassies that make the process much easier and it should come as no surprise to anyone that the popular embassies and consulates are going to be harder to get into. 

If time is an issue, you could ‘appointment shop’ to find a location that won’t drag the process out, or you could work with a team like ours that’s familiar with the process and knows the best and quickest places to renounce.

Complete the Interview Process

After you choose where you are going to renounce, you need to attend two interviews. Again, the process differs depending on which embassy you go to but, generally, you need to call in to confirm your appointment.

You can schedule most US citizen services online but you need to call to confirm that it’s for a US citizenship renunciation. Not all online appointment software at US embassies and consulates specify the purpose of the appointment, so we always recommend you call to let them know.

There is a bit of a dance involved, which is another reason why working with the Nomad Capitalist team, which has experience of how the system operates, is helpful.

In the past, some US Embassies would let you come in and complete the whole process in a single day but it’s not clear if that option exists anymore. These days, you should plan on two separate interviews with at least a few days between each one.

The first interview is to ensure that you know what you are doing. While it can come across as a last-ditch attempt to talk you out of the decision to renounce, the officials are simply trying to determine that you are renouncing of your own free will and are not under duress.

Then, depending on the embassy or consulate, you will have to come back for a second interview anywhere from a few days to two weeks later. If you’re waiting any longer than that, you’re probably going to the wrong embassy.

At the second appointment, you will be required to raise your right hand and read the oath stating that you want to renounce your US citizenship. This will finalise your side of the citizenship renunciation process.

Await Authorisation

During the renunciation process, you will be given a set of documents you must complete and sign:

• DS-4079 – to be filled out before your appointment
• DS-4080, 4081, 4082, and 4083 – to be completed during your appointment.

 These forms include your oath of renunciation, a statement of understanding and a witness attestation of renunciation.

Once all of these documents are prepared and you have taken your oath, the paperwork will be sent to the US State Department in Washington, DC, where they will process, stamp and seal the renunciation. 

So, even though the day that you take the oath of renunciation is the day that you are officially no longer a US citizen for tax and other purposes, it will be several months before you receive your Certificate of Loss of Nationality (CLN) confirming the fact.

While you do have to factor in the possibility of an error occurring, it’s very rare for a renunciation to be rejected once the oath is taken and the forms are submitted.

Either way, the lag between renunciation and receiving your certificate can create both opportunities and challenges.

One such challenge is that, even though you are no longer considered a US citizen, a foreign bank may refuse to allow you to open an account until they see your CLN. You may have taken the oath and no longer have tax and filing obligations to the US, but some banks will want to be certain.  

However, along with potential problems, there may also be some limited-time opportunities. In some of the smaller embassies, we’ve seen situations where the officials have told the individual renouncing that they can hang on to their US passport and travel back to the United States if they need to tie up any loose ends. 

Usually, you hand over your passport after taking the oath, but since the CLN is the final nail in the coffin, some diplomatic posts will let you hold on to your passport until the certificate arrives. Still, don’t bank on this happening – it’s always best to have your affairs sorted out beforehand.

Bear in mind that renouncing your US citizenship doesn’t mean that you need to shut down everything in the United States. There are certain assets and accounts that you can keep open. 

People often believe they have to make a last-minute dash to take care of their affairs in the US, especially if they’ve been living overseas and have left things unattended. But that’s not necessarily the case.

What Happens after you Renounce US Citizenship?

If you’ve planted the correct flags before renouncing – such as getting the right second passport, setting up your business offshore and establishing a new ‘tax home,’ – you can quickly move on to a life of greater freedom and opportunity. 

But renouncing does come at a cost, both financially and otherwise. Here are seven things you should be prepared to deal with following your renunciation:

Final Taxes and Fees

By renouncing US citizenship, individuals can free themselves of most future tax obligations and will be treated as non-resident aliens for tax purposes. This means they will no longer have to pay US income taxes and be free of all reporting requirements for the remainder of their life unless they choose to invest or do business in the United States.

However, before you can declare yourself completely free, you will need to file one final US tax return. There are many myths about how this works, with some people believing they don’t need to file anything at all and others worrying they have to file for the next ten years (which used to be the case).

The main reason you need to file a final tax return is that, depending on when you renounce, you will most likely have been a US taxpayer for at least part of that year (a good reason to renounce at the end of December). But regardless of when you renounce, you’ll have to file a final tax return for any days you are a US citizen.

Even if you had just one day as a US citizen, any money you earn over the Foreign Earned Income Exclusion will be subject to tax for that time. Your final tax year will be counted from January 1st until the day that you renounce.

Besides paying your taxes for your last year as a US citizen, there are two other ways the US Government will try to squeeze more money out of you on your way out the door. 

The first is by charging a ‘renunciation fee’. Before FATCA, the fee was a grand total of US$0, but when the government saw more and more people jumping ship, it decided to take advantage of the situation and charge people for the right to renounce.

On that basis, the fee has risen an astounding 422% to US$2,350 and even though it was recently announced this charge would drop to US$450, it has yet to do so. 

Another cost is for those who qualify as a ‘covered expatriate’. This fee involves paying taxes on your assets and only applies to those who meet one of the following tests:

• You have US$2 million or more in assets
• You have had an average federal tax liability (liability, not salary) over the last five years of US$201,000 per year
• You cannot certify tax compliance.

If you meet any of these three tests, you are considered a ‘covered expatriate’ and must pay taxes on your assets before the US Government allows you to leave. You will receive a US$866,000 exemption, but after that, you must pay capital gains tax.

You’ll need to file separate forms to indicate whether you’re a covered expatriate and owe exit tax – if you do owe, you must pay the required amount upon renouncing. This process can quickly become complicated and you must take some very specific actions.

That’s why it makes sense to have proper guidance from someone who has experience with renunciation. If you have recently decided to renounce your US citizenship, relying on a local guy from Kansas will lead to problems. It is crucial to seek the service of someone experienced with the forms and the renunciation process.

You should also note that renunciation will not shield you from possible prosecution for crimes committed in the US or exempt you from meeting your financial responsibilities, such as child support payments.

Furthermore, if you maintain any property in the US, you will also lose advantages that only US citizens have to shield them from the estate tax. US citizens can shield millions of dollars in property from the estate tax, while non-US citizens can only shield US$60,000.

A similar issue exists for those wishing to avoid gift taxes. US citizens can gift unlimited amounts of property to a spouse who is also a US citizen without paying a gift tax. If you were to gift anything to a non-US citizen spouse, you would only be given a small annual exclusion limitation before the gift would be taxed as well.

US Visa Requirements

Another cost of renunciation only becomes an issue if you try to maintain a presence in the United States.

If you ever want to return to the US, for example, you will need to obtain a visa. As a tourist, you will only be allowed to visit for up to three months at a time and you will not have the right to work in the country.

Some countries have easier access to the US than others. For example, if you are a Canadian citizen, you don’t need to do anything – you can just come back almost as if you’re an US citizen, despite the fact that technically, the US can deny you entrance. 

Or, suppose you hold one of approximately 41 different passports that are part of the visa waiver program (VWP). In that case, you will only need to complete an Electronic System for Travel Authorisation (ESTA) online at least 72 hours before you fly to the United States for the first time and pay $21. More than 99% of the people who apply are approved and, once you are approved, the visa is valid for two years. However, if you’ve visited one of a handful of blacklisted countries, such as Iran, then you’re not eligible for ESTA, even if you’re from one of the visa waiver countries.

The bottom line is that you can’t just get on a plane and go to the United States.

A major challenge is that it’s very difficult to get a passport from most of the 41 VWP countries. In short, you’re probably not going to get one of these VWP-enabled passports unless:

• You have a parent from one of the countries on the list
• You can get citizenship by descent in a place like Ireland or Italy
• You just happen to have lived in and become a naturalised citizen of a place like Australia
• You choose to go the citizenship by investment route that gives you US ESTA access from €600,000 (US$650,000) from Malta.

Those are really the only ways you’re going to get into the US without a visa.

For everyone else, you’re probably going to be stuck with a passport that requires you to get a US visa.

Look, it’s not the end of the world. The US visa process adheres to technical requirements and if you meet them, you should get a US visa valid for up to ten years with multiple entry privileges. Dealing with visa applications can be nerve-wracking, but it’s a reality for many people around the world.

Foreign Visa Requirements

After giving up your US passport, you will also likely need visas for other countries, not just the United States. Thailand, Serbia, and Costa Rica are among the most difficult countries to enter in their respective regions, being almost as strict as the United States. 

How difficult or easy it is to secure visas depends on the new passport you secure. For example, if you are granted an EU passport through descent, you can travel freely within the region. Most other passports will require visas to travel abroad.

Again, this is not the end of the world.

Many US citizens view securing travel visas as a process akin to playing cards with the devil. Such anxiety limits many citizens’ travel options and opportunities worldwide.

It doesn’t have to be that way.

It’s pretty easy to get a visa in some countries. We know most Americans are not used to getting visas, but if you’ve been to Cambodia, Turkey or Vietnam then you’ve at least gone through the process of getting an e-visa. There’s a good chance you’ve gotten a visa before without even realising it.

There is also the chance that you may have an easier time travelling with your new primary passport. Some passports, like Grenada, for example, have visa-free access to China and Russia, countries that are particularly difficult for US citizens to enter. With your new passport, you may have visa-free access to other countries that you had trouble getting into with your old US passport.

Set Yourself Up for the Future

You’re going to have a different set of needs as an ex-US citizen.

US citizenship has its advantages after all, such as simply answering any questions about your country of tax residence as the United States.

That’s one thing that US citizens have to their advantage that Canadians, Australians, and others do not: you can tell a bank that you are a tax resident in the US and give them a US address, even though you do not live there. Doing this as an Australian or Canadian citizen would establish your tax residency in that country, potentially allowing a case to be built against you and forcing you into a tax trap.

One way around this issue is to set up a mailbox service in the US so that you can still give banks and other people a US address, even after you renounce. Bear in mind, if you’re not a US citizen and you don’t have a US visa, they may not believe that you are really a US resident. So, having tax residence outside of the US is a good idea, not only to help you get visas but to help you with the financial system.

There are other things that you should prepare for as well if you plan to maintain a successful offshore life as being a nomad is increasingly unappealing for immigration and banking purposes.

Once you have a new passport you may still face questions. For example, if you need a visa to travel or you want to open a bank account, you may be questioned about your tax residence, address and lifestyle. You’ll need to be prepared for such questions because you will no longer have the option to fall back on simply saying you’re a US citizen.

It’s not a big deal, but there are some basic steps and preparations that need to go into it.

Receive Government Benefits after Renouncing

Many people worry that they will lose their right to government benefits if they renounce. 

The bottom line is that you may lose access to some benefits, but not all.

Social Security is the main benefit you will maintain access to after your renunciation. You can receive your payments overseas. As long as you have worked at least 40 calendar quarters (10 years) in the United States, you will continue to receive your Social Security benefits even after you renounce your US citizenship.

You also maintain your right to Medicare benefits though there is a catch: most of those benefits are only available in the US. That means you retain the right but you do not maintain access. You may have the possibility of using your Medicare benefits during a trip to the US if you can procure a visa, but there are no guarantees.

The benefits that you will lose all rights to when you renounce are things like military benefits, municipal pensions, state government pensions – basically, any income based on previous work done for the US government (at any level).

No Going Back Without US Citizenship?

If you renounce your United States citizenship, will you end up on a list and never be able to visit the US again?

No. Depending on where you have citizenship, in theory, you could enter the US the very next day with no problem.

Will you be restricted to returning to the United States for only a few days a year?

No. Most visas will give you 90 days at a time, and you can easily renew them by leaving the country and coming back.

However, though you will maintain your Social Security benefits, it’s crucial to understand that you cannot get US citizenship back once you renounce. According to the US State Department, the act is ‘irrevocable’ and cannot be reversed except under some very select circumstances.

How to Renounce Your US Citizenship: FAQs

Enjoy Your New Financial Freedom

The day after you’ve successfully renounced your US citizenship you can, should you want to, declare a dividend from a foreign company, open a new bank account or start a corporation, without being compelled to report your action to the US authorities. 

In fact, you no longer have to tell the US anything you do as a non-citizen. They’re now foreign government and it’s no longer their business. 

Of course, you need to check with your legal counsel before doing anything in that regard. But you are free from the US once you renounce so, once you’ve decided to move on, you should enjoy the freedom that making the decision to leave brings.

As a final – and very important – note: if you are considering renouncing your US citizenship for any reason, make sure to investigate all your options for getting a second passport first. This will be one of your most important tools in preserving your freedom should circumstances ultimately dictate that you need or want to leave the US.

Otherwise, you face the risk of becoming stateless upon renouncing your US citizenship. This is one reason we often discuss the importance of having a Plan B here at Nomad Capitalist. Even if you don’t plan on renouncing, things can change in an instant, so it’s good to know you have the option if the need arises. 

If you’re considering renouncing and would like to take the next step with confidence, contact us here.