Section 349(a)(5) of the Immigration and Nationality Act details a U.S. citizen’s right to renounce their citizenship by voluntarily “making a formal renunciation of nationality before a diplomatic or consular officer of the United States in a foreign state, in such form as may be prescribed by the Secretary of State,” and by signing an oath of renunciation. 

The government maintains a federal register of individuals who have renounced their citizenship. In the report issued in October 2023, the list of names spanned 12 pages. The report published in October 2024 has since more than doubled, spanning 30 pages. Why would s🍸omeone renounce the🌳ir U.S. citizenship?

The Process and Impact of Expatriation

Abandoning citizenship has serious consequences. You give up vari🌄ous rights, including:

• The right to vote in U.S. elections
• Government protection
• Assistance while traveling overseas
• Citizenship for children born abroad
• Access to federal jobs
• Unrestricted travel into and out of the U.S. 

Renunciation is a lengthy legal process that involves paperwork, interviews, and money. Because of the increase in the number of U.S. citizens seeking renunciation, the U.S. Department of State raised the fee for renunciation from $450 to $2,350, around five times more than the average cost in other high-income countries like the United Kingdom. In addition, some high-income citizens may owe a type of capital gains tax called an “exit tax” (officially called an ). 

Importantly, renouncing U.S. citizenship is almost always irreversible. Once you renounce, you cannot easily regain your citizenship. Despite these (and other) consequences, more and more people are choosing to r𝕴enounce their U.S. citizenship. Here’s why.

Why So Many Renunciations?

While the reasons for abandoning citizenship vary person to person, the recent spike in numbers is mainly due to newer tax laws, including the Foreign Account Tax Complianceꦫ Act (FATCA) of 2010. According to the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Service (IRS), FATCA is “an important development in U.S. efforts to combat tax evasion by U.S. persons holding accounts and other 澳洲幸运5官方开奖结果体彩网:financial assets offshore.”

FATCA requires reports on the following:

• U.S. taxpayers about their foreign financial accounts and offshore assets
• Foreign financial institutions regarding financial accounts held by U.S. taxpayers
• Foreign entities in which U.S. taxpayers hold a substantial ownership interest

Under FATCA, certain U.S. taxpayers with financial assets outside the U.S. that total more than the reporting threshold must report their assets to the IRS using Form 8938, Statement of Specified Foreign Financial Assets (the threshold varies based on your 澳洲幸运5官方开奖结果体彩网:filing status and whether you live in the U.S. or abroad).

The IRS warns there are “serious penalties for not reporting these financial assets.” It should be noted that the FATCA requirements are in addition to Form 114, Report of Foreign Bank and Financial Accounts (FBAR), which is the long-standing requirement for reporting foreign financial accounts. The penalties for failing to comply are significant and sometimes involve criminal liability.

The U.S. Tax System and Its Global Impact

Unlike most countries, the U.S. taxes its citizens on worldwide income—meaning U.S. citizens are taxed on their earnings no matter where in the world they live. While 澳洲幸运5官方开奖结果体彩网:foreign tax credits can mitigate this burden, they do not eliminate 澳洲幸运5官方开奖结果体彩网:double taxation, especially for higher earners who find themselves filing and paying taxes in both the U.S. and their country of residence.

The complexity and cost of complying with these tax laws can be overwhelming, prompting some Americans to renounce their citizenship to escape these obligations. Additionally, FATCA has made it more difficult for U.S. citizens living abroad to access banking services. Many 澳洲幸运5官方开奖结果体彩网:foreign banks now refuse to open accounts for Americans due to the reporting requirements, causing frust﷽ration for those living overseas.

Rise of Nomadic Lifestyles

The global pandemic accelerated the trend of digital nomadism—the lifestyle of working remotely while constantly traveling and residing in different countries. According to MBO Partners, the population of digital nomads in the U.S. increased by nearly 50% from 2019 to 2020.

This lifestyle can make navigating the bureaucratic and legal complexities of holding U.S. citizensh🎃ip more difficult. Some digital nomads renounce their𝓀 citizenship as a way to avoid residency requirements in certain countries, which might otherwise force them to choose one nationality over another.

Though 🐲these statistics do not indicate those leaving the U.S. for this type of lifestyle, it does s𒐪upport the notion that nomadic lifestyle adoption has been on the rise and could perpetuate U.S. citizenship renouncement.

Dual Citizenship

澳洲幸运5官方开奖结果体彩网:Dual citizenship can create conflicts, such as when two countries' legal systems require conflicting legal obligations. This co🎉uld arise due to military service obligations, taxes, or legal policies. For some people, renouncing U.S. citizenship is a practical way to resolไve these conflicting loyalties and simplify their lives.

In 2023, the U.S. naturalized 878,500 new citizens. Many of these individuals could have maintained dual citizenship with their home countries. Over time, some may choose to renounce one nationality in favor of the other, particularly if they find the U.S. tax system or navigating bureaucratic complexities too burdensome.

Other Reasons for Renunciation

While tax laws and dual citizenship are the primary drivers behind U.S. citizenship renunciations, there are other, more personal reasons. Historically, some Americans have renounced their citizenship due to opposition to U.S. government policies, such as during the Vietnam War.

Certain acts can also cause an individual to lose U.S. citizenship without formally renouncing it. Under the 澳洲幸运5官方开奖结果体彩网:Internal Revenue Code and the Immigration and Nationality Act (found in Title 8 of the United States Code), citizenship can be terminated (and therefore relinquished, not renounced) for several reasons, including:

• Applying for and becoming a naturalized citizen of another country (except Dual Nationality)
• Taking an oath of allegiance to another country
• Joining the armed services of another country engaged in a war against the U.S. or joining the armed services of another country as an officer
• Working for a foreign government while simultaneously being a citizen of that county
• Accepting employment by a foreign government in a job where an oath of allegiance, affirmation, or other formal declaration of allegiance is required
• Renouncing U.S. citizenship in a time of war, with the U.S. Attorney General’s approval
• Committing an act of treason or an attempt to overthrow the U.S. government by force (and being convicted by court-martial or a civil court)

The Bottom Line

Today, tax laws are resulting in record numbers of people renouncing their U.S. citizenship each year. However, it’s not as easy as putting your passport through the shredder. Because the law states that those wishing to renounce their U.S. citizenship must do so in person before a U.S. consular or diplomatic officer while in a foreign country, U.S. citizens cannot renounce their citizenship by mail, through a 澳洲幸运5官方开奖结果体彩网:third party, or while in the United States. 

Renunciation has significant consequences. Aside from giving up the benefits granted to U.S. citizens, the U.S. Department of State advises that anyone considering renunciation of their U.S. citizenship should understand that the act is irrevocable in almost all cases. Renouncing one's citizenship is one of the most solemn decisions anyone can make. Carefully weigh the pros and cons for yourself and your family. It is also recommended that you consult with an experienced tax professional to understand the tax consequences of renunciation.