Frequently Asked Questions

Frequently Asked Questions2020-03-19T23:55:27+01:00

Issues related to expatriation: process, law, details

How does the exit tax provision in the 2008 HEART law affect immigration to the US?2020-03-20T00:24:44+01:00

The exit tax is clearly aimed at wealthy US citizens who renounce their citizenship in order to escape life-long taxation by the US. Nonetheless, because of the way it was written, it appears likely that it will have an effect on highly skilled immigration to the US because it also applies to non-U.S. citizens who have had permanent residency rights (green card holders) for any part of 8 of the previous 15 years.

A wealthy non-US citizen thinking about moving for an extended period to the US for a work position, to start a company, or to make investments will find his assets subject to the exit tax and the inheritance provisions of the law when he leaves the US and gives up his permanent residency.

We think it likely that because of this tax, many wealthy non-US citizens will simply not consider permanent residency in the US. Similarly, we personally know of many individuals who have had permanent residency in the US for less than 8 years who are now surrendering their green cards and leaving the US or trying to find short-term, non-immigrant visas.

We usually recommend to anyone consider moving to the US to enter on an E-2 visa (which is not a green card). Having an E-2 visa avoids the entire exit tax issue.

Issues related to tax

If I renounce citizenship at an embassy, am I still liable for US for the next ten years?2020-03-20T00:10:48+01:00

No.

Your US tax obligations as a US citizen stop accruing on the day you formally renounce citizenship in a US diplomatic post.

Note that it might take a few months for the Department of State in Washington D.C. to actually approve your renunciation. But it doesn’t matter – your tax obligations stop on the day of your renunciation, assuming that your expatriation is eventually approved.

Before passage of the 2008 HEART act, US law contained a provision to make you still liable for US taxes until you filed Form 8854 with the IRS, even if you had already formally expatriated in a US diplomatic post and the Department of State had already approved the renunciation.

 

 

If I expatriate, how do I do my US taxes that year?2020-03-20T00:20:04+01:00

A renunciant has to file an IRS Form 1040, Form 1040NR, and Form 8854.  The other forms, like an FBAR, and Form 8938, are also required as most renunciants will have bank accounts outside the US.

Misc

If I renounce, do I have to close my bank, my brokerage accounts, or sell my real estate in the US?2020-03-20T01:37:13+01:00

No.

There’s nothing in the US law that prevents you from keeping your US-based accounts after renunciation or opening new ones.  Or, to continue to own US real property.

However, you would need to inform any existing bank or broker (and tell any new brokers before you begin an account) of your new status as a non-resident non-citizen so they can take out the proper taxes.

One point to consider is that many US financial institutions do not accept non-resident clients or only offer limited services for them. You’ll have to check with your individual banks and brokers to see.

Holding US real estate will trigger potentially high US inheritance (estate) taxes.

About the site

How can we contact you?2020-03-20T00:16:08+01:00

Send us an email : click here

We’ll try to respond to any legitimate messages. Depending what you write, it might take us a while to get back to you or update the site with new information, but we’ll do our best.

Our policy is that all emails are confidential. We never put anything you send us on our site without your explicit approval.

Who is this site intended for?2020-03-20T00:06:22+01:00

We have advised 100s of individuals and families on renouncing US citizenship. We decided to make a public site so we give help to anyone who’s interested.

This site is intended for US citizens who have lived for a long time outside the US, and have a non-US citizenship, and are considering renouncing US citizenship. This site could also assist US permanent residents (aka green card holders) but not US citizens.