What are the drawbacks to renouncing U.S. citizenship
October 13, 2011 7:53 AM   Subscribe

Thinking of renouncing U.S. citizenship. Can you think of drawbacks I haven't considered?

I'm 45. I've lived in Canada for 44 years, and am also a Canadian citizen. Have U.S. citizenship because I was born there, and one of my parents is American.

I'm seriously thinking about renouncing my U.S. citizenship. The tax filing requirements (and FBAR reporting, which feels like such an invasion of privacy) are time-consuming and expensive, and it feels like the tax laws are always changing in the U.S. Since I'm never there (and don't have any connections to the U.S.) I'm worried I'll overlook something that impacts me.

I can't really see any drawbacks to renouncing my U.S. citizenship, but maybe I'm overlooking something? Just wondering if anyone else has gone through this thought process before, and what they came up with.

It would be no change for me, as far as I can tell. My life is in Canada - my family is here, my work is here. I have no memories of living anywhere else, and no desire to live anywhere else.
posted by Anxietygirl to Law & Government (21 answers total) 9 users marked this as a favorite
Oddly enough, I've spent quite a bit of time thinking about this, largely due to this (self-link but really relevant) discussion about what would happen if Superman renounced his citizenship.

The basic point is that if you do this, you run into the possibility of expatriation tax. The IRS basically assumes that anyone renouncing their US citizenship is doing so for tax reasons--a good assumption much of the time--and if you make or have enough money, this could be really expensive.

But as you don't really seem to have much in the way of connections to the US--have you ever even filed a US tax return?--this could be a lot easier than it would for a more traditional US citizen. You'll still need to consult with a local immigration lawyer, but the really big issue seems like it might not apply.

Still, the long and short of it is that if you've never lived in the US, worked in the US, or have plans to do either in the future, not being a US citizen anymore doesn't really seem to have much in the way of consequences, immediate or otherwise, particularly if you've already got Canadian citizenship.
posted by valkyryn at 8:04 AM on October 13, 2011 [2 favorites]

Just so you know, US law does technically bar people who renounce their citizenship for tax reasons from ever entering the US again. It as, as far as I can tell, never been enforced, but the law does exist. For reasons such as that one (obscure laws that may apply to you in ways you never thought of), you should consult an American immigration attorney (and possibly an American tax attorney as well) before taking this step.
posted by decathecting at 8:05 AM on October 13, 2011 [3 favorites]

There are places in the world (the UAE for example, but there may be others), where having US citizenship would get you a visa free travel permit, while as a Canadian you would require a visa.
posted by bardophile at 8:15 AM on October 13, 2011

Do you have children or are you planning on ever? There might be advantages they would want someday by being dual-citizen or whatever they would be that you haven't thought of?

I'm far from an expert but I wish I had considered a way to get my daughter dual-citizenship "just in case" there would be an advantage someday for her
posted by thilmony at 8:25 AM on October 13, 2011

When you file your taxes in the US do you get credit for the tax you pay in Canada? I am an American citizen who lives in France. I pay tax in France and file in America as required by law. For the last three years I've been getting $800 "back" from Uncle Sam even though I don't actually pay any tax in the US. I don't understand it. My accountant charges me $600 to file so I come out slightly ahead. Like I say, I don't understand it.

I agree with you about the FBAR filing. I feel like its an anvil hanging over my head just waiting for me to forget something. $10,000 minimum fine is no laughing matter. On the other hand I console myself with the thought that the IRS has many more high value client/victims to deal with first.

thilmony's point about kids' citizenship is a good one to consider.

Good luck
posted by pandabearjohnson at 8:37 AM on October 13, 2011

I know a number of Canadians who have taken advantage of dual citizenship to get jobs (including remote jobs while living in Canada) with US companies. It's a tremendous advantage there because the companies don't have to get you a visa, which they usually can't be bothered to do. It may not be an issue for you, but it's definitely worth considering for your kids.
posted by restless_nomad at 8:59 AM on October 13, 2011 [5 favorites]

Travel abroad is a hell of a lot easier with American citizenship, and if something were to happen an American Embassy will carry a hell of a lot more weight in your favor than a Canadian one.
posted by Blasdelb at 9:07 AM on October 13, 2011 [1 favorite]

Response by poster: Thanks all.

It is not an issue for my kids, since I do not meet the residency requirement to pass on citizenship to them (to do so, I would have had to have lived in the U.S. for at least five years before they were born, with two of those years after the age of 14. I lived there from when I was born to a little over one year, so -- not even close).

Decathecting - do you have a source for that info on U.S. law? My understanding of the renunciation process is that they do not ask for a reason, and I am not obliged to give one. In any case, I wouldn't be renouncing to avoid taxes -- I don't owe any. It would be because I am not sure how to keep current with the changing regulations in a country that I do not live in and don't have any ties to.
posted by Anxietygirl at 9:08 AM on October 13, 2011

Reference on expatriation tax, if you trust the IRS as a credible source.
posted by whatzit at 9:14 AM on October 13, 2011

Renouncing your American citizenship might not be so easy, according to this IHT opinion piece
posted by bluefrog at 9:28 AM on October 13, 2011

Travel abroad is a hell of a lot easier with American citizenship, and if something were to happen an American Embassy will carry a hell of a lot more weight in your favor than a Canadian.
Swings and roundabouts on this. While there's probably some truth in it, my anecdotal experience is that US passports tend to attract worse treatment from people who can get away with it. There aren't many people who think Canadians need taking down a peg or two, but plenty with that belief about people from the US.
posted by howfar at 9:28 AM on October 13, 2011 [2 favorites]

Travel abroad is a hell of a lot easier with American citizenship, and if something were to happen an American Embassy will carry a hell of a lot more weight in your favor than a Canadian.

Not if you want to go to Cuba. And it wasn't the American embassy who freed those American hostages in Iran.
posted by Sys Rq at 9:41 AM on October 13, 2011 [3 favorites]

Travel abroad is a hell of a lot easier with American citizenship

I travel outside of NA fairly often. This has never been my experience on a Canadian passport. Now, if you had said an EU one, I might agree.
posted by bonehead at 10:05 AM on October 13, 2011 [1 favorite]

Travel abroad is a hell of a lot easier with American citizenship

That is plain wrong.

1. A US passport may make you a primary target for terrorists and Americans are disliked in many parts of the world, incl. South America and the Middle East. Not to mention countries like Cuba, Iran and North Korea.

2. Most of the EU Passports are one of the best if it comes to visa free travel. Ranking, countries not requiring a visa based on citizenship:
1 Denmark 157
2 Finland 156
2 Ireland 156
2 Portugal 156
3 Belgium 155
3 Germany 155

Source http://richkao.squarespace.com/home/2009/3/25/best-passports-to-own.html
posted by yoyo_nyc at 10:48 AM on October 13, 2011 [5 favorites]

The law I referenced is the so-called "Reed Amendment," Public Law 104-208 ยง 352. As I said, I have found no evidence that it's ever been used, but the law gives discretion to the Attorney General to deny reentry to aliens who have been determined by the AG to have renounced their citizenship in order to avoid US taxation. The AG has discretion to make that determination, and the law doesn't say what criteria or evidence must be used to decide or what, if any, avenues exist to appeal that determination.

I'm not saying that the Reed Amendment is a reason not to renounce your citizenship. I'm saying that the existence of the Reed Amendment and the possibility that there are other obscure laws that apply to people in your situation is a very good reason to consult a skilled attorney before making this decision.
posted by decathecting at 11:47 AM on October 13, 2011

If you get locked up in prison in Iran or a hostile country, the USA will not barter for your return.
posted by amazingstill at 12:01 PM on October 13, 2011

Probably not an issue but you can never, ever buy a gun or ammunition legally in the US again (or even pick one up).
posted by bartonlong at 3:51 PM on October 13, 2011

That's interesting bartonlong, do you have a link? I can't find any more info...
posted by crabintheocean at 3:57 PM on October 13, 2011

I don't have one. I believe it is part of the 1968 gun control act though. I know when you buy a gun and fill out a 4473 form one of the questions they ask you is if you have ever renounced your citizenship. This was a response to whatever the hell was going with Lee Harvey Oswald leading up to his assassination of JFK. BTW the 1968 gun control act was pretty much made possible by the assassination of the Kennedies and how they assassins got their weapons. The act was also used to protect us gun manufacturers from cheap wwII surplus firearms then flooding the market. A lot of the stuff ATF does related to this act is really a matter of regulatory fiat and not actual written law. One of the many things that frustrate law abiding gun owners. (sorry for the derail).
posted by bartonlong at 4:37 PM on October 13, 2011

The Straight Dope on renouncing U.S. citizenship.

From the article:

In 1991 a survey asked two thousand U.S. citizens, "What are you willing to do for $10 million?" Twenty-five percent of this very classy group said they'd abandon their families; 23 percent said they'd become a prostitute for a week. Only 16 percent said they'd renounce their U.S. citizenship.
posted by George Clooney at 5:02 PM on October 13, 2011 [2 favorites]

This is an excellent guide to renunciation of US citizenship. It also contains a section on the Reed Amendment that basically says that this is an unworkable, un-enforceable law.

I also don't see any significant difference between US and Canadian citizenship vis-a-vis international travel. Wikipedia (with a grain of salt, of course) says that US citizens can travel to 169 countries without a visa; Canadian citizens can go to 164. Unless you plan to visit Mongolia frequently, I don't think you should take this into consideration.

(WRT your kids, I assume your spouse is not an American citizen?)
posted by andrewesque at 7:47 AM on October 14, 2011 [1 favorite]

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