Nicolas Godbout, fiscaliste et planificateur financier, M. Fisc., Pl. Fin

Renouncing US citizenship: How does it work?

American citizen living in Canada  —   — Share

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In making the decision to renounce your US citizenship, you must apply for a certificate of loss of nationality, report to the US consulate and pay the fee of US $2,350 (rates as of December 31, 2020). In addition, the US tax authorities could surprise you if you do not comply with certain specific conditions since you could be considered a covered expatriate (see paragraph below). Among the criteria to be met, note the preparation of US income tax returns for the past 5 years. If this has not been done, you will first need to regularize your situation through the Streamlined Foreign Offshore Procedures.

Go to the consulate

Before going to the United States consulate, you will need to make an appointment by email in the prescribed form, attach the required forms and demonstrate that you hold American citizenship by presenting a birth certificate, a social security card, etc. When the documents are received by the consulate, you should be offered an appointment date. Once there, you will need to go through security measures before you can meet an agent.

Are you a covered expatriate?

You will be considered a covered expatriate if you meet one of the criteria predetermined by the Internal Revenue Code, US tax law. When you are treated as such, you will be subject to the departure tax (expatriation tax) and will be presumed to have sold most of your goods at their fair market value at the time of your expatriation. In some cases, US citizens may be exempt from departure tax, as long as they complete specific forms.

This article only covers some of the things to consider when you want to give up your US citizenship. The decision to give up your citizenship requires weighing the advantages and disadvantages associated with it. We suggest that you make an appointment with one of our tax experts. As US and Canadian tax experts, we are able to support you throughout the process of giving up your citizenship so that this is done optimally.