Expatriation Exit Tax Planning

Expatriation Exit Tax Planning


Helping Expats End Their Tax Liability to the United States

U.S. citizens regularly renounce their citizenship, and green card holders give up their status. If you’re an American living abroad, you probably left the U.S. for important reasons. Moving for a job, to be closer to family, or for a change of scenery are just a few reasons why Americans choose to take up long-term residence somewhere beyond the states.

Despite living abroad, however, all Americans worldwide retain tax filing liabilities – even if they don’t intend to come back to the United States. When you live in another country as a citizen or long term resident, you must still report your income to the IRS and file a tax return.

How Does U.S. Citizenship Renunciation Work?

Renunciation of U.S. citizenship is a voluntary process that allows individuals to formally give up their U.S. citizenship and relinquish the associated rights and responsibilities. Here's a general overview of how U.S. citizenship renunciation works: 

  1. Eligibility: U.S. citizens who are 18 years or older and possess the mental capacity to understand the consequences of renunciation can initiate the process.
  2. Intent: Renunciation requires a clear and voluntary intent to give up U.S. citizenship. It is important to note that renunciation cannot be done under duress or to avoid taxes or legal obligations.
  3.  Appointment: To renounce U.S. citizenship, individuals must schedule an appointment at a U.S. embassy or consulate in their country of residence. It is advisable to contact the embassy or consulate beforehand to understand the specific requirements and procedures.
  4. Interview and Documentation: During the appointment, individuals will have an interview with a consular officer. They will be asked to complete Form DS-4079 (Statement of Understanding Concerning the Consequences and Ramifications of Relinquishment or Renunciation of U.S. Citizenship) and pay a renunciation fee.
  5. Oath of Renunciation: After the interview, individuals will be required to take an oath of renunciation, sign the necessary documents, and submit them to the consular officer. This includes the formal renunciation statement (Form DS-4080). 
  6. Certificate of Loss of Nationality: If the renunciation is approved, the U.S. Department of State will issue a Certificate of Loss of Nationality (CLN) as proof of the renunciation. The CLN serves as evidence that the individual is no longer a U.S. citizen. 
  7. Tax and Legal Considerations: Renouncing U.S. citizenship may have significant tax and legal implications. It is crucial to consult with a tax advisor or attorney to understand the potential consequences, including any applicable exit taxes or ongoing obligations. 

It's important to note that the process and requirements for renunciation can vary, and it is advisable to consult with the U.S. embassy or consulate and seek professional advice to ensure a thorough understanding of the process and its implications.

What are Exit Taxes?

Additionally, you may be subject to exit taxes, which the United States ties to any change in citizenship or visa status. Among other rules, this means the deemed sale of assets are taxed as if they were sold the day before the date of expatriation.

Contact Our Expatriation Exit Tax Planning Attorney

Obviously, this can be problematic for expats who truly wish to renounce their U.S. citizenship and be free of their U. S. tax liabilities. An expatriation exit tax planning attorney from Castro & Co. can help you work toward eliminating your obligation to pay U.S. taxes. Simply renouncing your citizenship may not free you of your tax liability. However, working with our attorneys can help you rest assured that your intended split from the United States is legally secure. Contact us today to renounce U.S. Citizenship.

Contact the expatriation exit tax planning attorneys from Castro & Co. to arrange a consultation and learn more about your options.

Expatriation Tax Planning Strategies That Can Work for You

Even if you don’t think your move away from the U.S. will be permanent, it may be an indefinite length of time before you return. It is OK not to know when you will return to the United States, or if you will ever return. However, it’s not OK – at least from the government’s point of view – to shirk your tax responsibilities. You must report your foreign income and file U.S. tax returns.

Our expatriation exit tax planning attorneys can provide legal advice and assistance as we have for many clients in situations like yours. We understand the legal options that can apply to you that may provide the solutions you need. Whether you intend your move to be permanent or not, we can thoroughly assist you.

Critical components of your expat tax plan can include:

  • Voluntary Tax Compliance
  • Foreign Earned Income Exclusion
  • Foreign Grantor Trusts
  • Covered Expatriate vs Non-Covered Expatriate Status

Do you need an international tax lawyer who can help you understand your rights as an expat? If you need to free yourself from legal and tax obligations to the U.S., contact Castro & Co. online for help.

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