How to Leave America Forever     

What do Elizabeth Taylor, Yul Brynner, TS Eliot and Tina Turner have in common?

They all left the United States of America.

No, they didn’t just jump on a plane and jet off on holiday – they left it for good by renouncing their citizenship and claiming a more desirable passport.

Hard as that may be for many US citizens to believe, much less understand, it’s true.

And they’re not alone. An average of 3,000 people do it every year – some for political reasons, but many for tax reasons.

Apart from actually handing back their US passports, they all have one thing in common – they know how difficult breaking up with the USA really is.

For the citizens of most countries, the idea of leaving forever is pretty simple: pack your bags, jump on a plane and never return.

Sure, securing the right to remain in a new country might get complicated.

But, once you’re out of your home nation, there’s generally little reason why its government would bother you again.

Sadly, in the United States, it doesn’t work that way.

The US is one of a tiny number of countries that still taxes its citizens even after they emigrate. 

No matter where you live, the Internal Revenue Service (IRS) will tax your worldwide earnings for as long as you remain a US citizen.

Yes, there are exemptions for some offshore Americans in the form of the Foreign Earned Income Exclusion (FEIE) up to a maximum exclusion amount of US$126,500 in 2024.

But things get very complex if you earn more and, anyway, the FEIE doesn’t solve the time- and energy-sapping burden of tax reporting to the IRS.

It’s hard to escape the conclusion that the only way to escape the IRS’s long shadow is to truly leave America forever and renounce your US citizenship.

This comprehensive analysis explores exactly what it takes to renounce your US citizenship, escape your federal tax burden and leave the US for good.          

What it Means to Leave the USA Forever

For context, our definition of leaving America forever involves permanently relocating to another country with no plans to be a US resident again.

It assumes you prefer to escape the US tax system, which involves renouncing your US citizenship.

When you renounce, you rid yourself of all associated responsibilities, including your US tax obligations. 

However, you also give up all associated rights. This includes the right to permanently reside in the United States, vote in elections or receive US government protections overseas.      

But it doesn’t mean you can’t come back to visit – t’s not as though you’ll automatically be denied entry.

At the same time, you will no longer have an American passport and so your ability to return will depend on holding the correct visa (or permissions under a Visa Waiver Program).

So much will ride on the new country – i.e. the new foreign country – you decide the move to.

Pros and Cons of Leaving America Forever

The US is among the highest tax nations in the world and, as long as you remain a US citizen, you’re taxed on your worldwide income every year. 

So, the most obvious appeal of relinquishing your US citizenship is the chance to escape the overbearing US tax system.

That’s because once you give up your US citizenship and all US-based sources of income, and provided you don’t hold any US Situs assets, you’ll no longer have to file a US tax return or pay the IRS again.  

You can also open up a new world of low-tax offshore countries. 

However, the decision to renounce your US citizenship is irrevocable, so make sure you’re comfortable with the idea of never having the US job market to fall back on.  

There are other benefits and challenges to living abroad, which is true of most countries.

These range from embracing local culture and, perhaps, a lower cost of living to having to learn a local language.

How much research you do before moving overseas will make the difference between a smooth transition or a difficult one.

Understanding how you’re going to access a residence visa or residence permit, how you’re going to work abroad and how you’re going to negotiate all kinds of red tape in your destination country can make or break your future.

To summarise:

Pros:

• You get the chance to escape the US tax system     
• You may not have to file another tax return to the IRS      
• You’ll (most likely) reduce your overall tax burden.
• You get the change to embrace a new life and different culture.
• You open a new chapter in your life with more freedom.

Cons:

• There’s a US$2,350 application fee
• You’ll lose the right to live, work or travel in the United States without the correct permissions     
• You lose overseas protection from the US Government     
• You’ll find it much harder to get a job in the United States.
• You will face new kinds of red tape and have to develop new relationship with foreign banks.

How to Move from the US Forever

Schedule an Appointment

You must renounce in person at a US Embassy or Consulate outside of the United States. You can contact your chosen embassy directly to schedule an appointment.

The legal process is the same no matter where you go, although we advise you to be strategic about the diplomatic post you choose. 

Some have much higher volumes of Americans looking to renounce with longer wait times for an appointment. 

In the experience of the Nomad Capitalist team, this includes the diplomatic offices in London, Dublin, Bern, Amsterdam, Seoul, Hong Kong, Canada, Australia and New Zealand.

The staff are more experienced in these offices, but we’ve found the process to be more stringent and bureaucratic. 

If it’s convenient for you to renounce at a less popular post, we’d recommend doing so.  

The Interview Process

Although the process can differ slightly depending on where you renounce, you’ll generally need to attend two interviews.

The first interview is to ensure you understand the consequences of your decision. You can expect to be asked why you are renouncing and if you understand the downsides of giving up your citizenship.      

It can come across as if the embassy staff are trying to change your mind, but it’s their job to check you’re renouncing voluntarily and without coercion. 

You pay your US$2,350 renunciation fee at this interview stage.                

The second interview usually occurs a few days or a couple of weeks later. Here, you’ll read the oath stating that you officially want to renounce your US citizenship. 

The day you read your oath will be your last official day as a US citizen, for tax purposes at least. 

In most cases, you’ll have to hand in your US passport after your second interview, so don’t expect to easily be able to return after this point. 

It’s best to handle all your personal, business and estate matters in the US before you apply to renounce.      

Paperwork

There’s a host of forms to be completed.     

Form DS-4079 serves as your request for an interview to leave the US. You’ll have to complete it before your appointment. 

Forms DS-4080, DS-4081, DS-4082 and DS-4083 will be completed during your appointment with guidance from the diplomatic officer. 

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

You’ll have to include other documents as part of your application, including: 

• Evidence of US citizenship
• Copies of all current foreign passports
• Certificates of naturalisation or citizenship for any country, including the United States
• Proof of any name changes, if applicable.

Receiving your Certificate of Loss of Nationality 

Once you complete your oath and submit your documents, you can no longer consider yourself a US citizen.

Your documents are submitted to the State Department in Washington, DC, for final confirmation. 

It’s very rare for your application to be denied at this stage so, generally, you can expect it to take three to six months to receive your Certificate of Loss of Nationality (CLN).

This serves as the official proof that you’re no longer a US citizen and you’ll often need to show this when opening a financial account overseas, so the wait can be inconvenient. 

Filing Your Final Tax Return  

After renouncing, you should complete and submit Form 8854 to the IRS with your annual income tax return. 

The purpose of Form 8854 is to: 

• Inform the IRS of your renunciation and/or the termination of your tax residency
• Certify your compliance with all federal tax obligations of the last five years
• Provide the information that determines whether an exit tax bill will be due and how much is owed. 

If exit tax is due, you must pay that alongside any other taxes owed for that tax year.

You also have to submit a Dual Status Return for your year of renunciation: this will involve filing Form 1040 for the days you were a US citizen and Form 1040R for the days after you renounced.

Remember, you’ll still have to file a US tax return (Form 1040-NR) in the years after renouncing if you still receive income sourced in the United States. 

This could include passive income from US stocks, US rental properties or any other US situs assets that are deemed sold for a fair market value. 

Hopefully, though, by then, you’ll already be enjoying the fruits of a lower tax bill in a different country. 

There are strategies, such as gifting, that can be employed to minimise your exit tax. 

What Does it Cost to Leave the US?

Applying to renounce your US citizenship requires a US$2,350 fee, a figure that has become controversial as it has risen. 

The US State Department has announced plans to reduce the fee to US$450 following numerous protests from Americans overseas, but it has yet to do so.

On top of that, you may have to pay an exit tax before you finalise your renunciation. 

Although there are some exceptions, an exit tax will generally be due if: 

• You have a net worth of over US$2,000,000.
• You have an average net income tax bill over a specific threshold for the five years preceding your renunciation (US$201,000 in 2024). This amount is adjusted each year for inflation.
• You have failed to certify compliance with federal tax obligations during the five years before your renunciation.     

The calculation of an exit tax bill can be complicated. 

It’s based on the tax you would pay if you sold all your assets before expatriating, considering your unrealised capital gains, retirement funds and interests in non-grantor trusts.     

This means successful entrepreneurs and investors may have to pay a pretty penny to leave America forever unless they’re smart about reducing their exit tax bill ahead of time.

How to Leave America Forever: FAQs

Is it Smart to Ditch Your US Citizenship?

Renouncing your US citizenship and leaving North America forever isn’t the best move for everyone.

For starters, you’ll need to be in a situation that allows you to claim citizenship elsewhere. 

As we often highlight, the foremost advantage of renouncing citizenship is the significant reduction in income tax burden by escaping the US’ global tax net.

Renouncing your US citizenship not only reduces your tax burden but also lessens the filing requirements for US citizens.

You won’t need to stress about compliance, which frees up your time and valuable resources.

It also means that you won’t have to deal with any new laws the US may implement in the future – in short, you’ll be done with the US tax system for good.

Many former US citizens tell our Nomad Capitalist team they feel better using their new passports, feeling freer to bank and do business wherever they wish without Uncle Sam looking over their shoulder.

Overall, if you’re a successful entrepreneur or investor, then renouncing has benefits that are worth considering.

To fully benefit from renunciation, you need to make the right choices about where to move, store your money, invest and purchase real estate.

That’s where Nomad Capitalist comes in. 

We’ve helped thousands of high-net-worth individuals to lower their tax bills, build their wealth and better protect their assets via international diversification. 

Our clients are paired with experts in tax, investment strategy and immigration so they can create their dream nomadic lives without a hitch.

Learn more about how our unique holistic Nomad Capitalist plans can help you here.