Renouncing U.S. Citizenship – Second thoughts
You better be careful what you wish for, you must might get it!
The internet is abuzz with discussion about U.S. citizens wishing to expatriate.
So, far the comments have been dominated by:
– those who desire to to renounce U.S. citizenship
– those who are desperate to demonstrate that they lost their U.S. citizenship when they became citizens of another country
– those who are basking in the glow of knowing they are no longer U.S. citizens
But, there is anther side. Are there people who renounced U.S. citizenship and are now regretting it?
I received the following message from somebody who recently renounced U.S. citizenship:
I renounced US citizenship for a variety of reasons (a year ago) and am feeling more and more like did I make a mistake. I think things are horrible in the US but it seems so hard to find a place that is both open to immigrants and that offers me some of the opportunity I definitely experienced in the US. My family wants me to go back so much, but I really am opposed to so much of what the US is doing both in the US and without. But I am really struggling with doubts and fighting depression over my situation.
Any advice for building a support network? Thank you so much.
What are your thoughts on this? What advice would you give this person? Should there be a support group for those who have renounced U.S. citizenship? Many believe that renouncing U.S. citizenship will be the end of their problems. Will it be the beginning of a new set of problems?
Your thoughts?
Very interesting comments. Very interesting indeed.
It strikes me that a big factor is simply:
Do you have another place to go?
At the end of the day, renouncing citizenship is a very difficult thing. It’s important to recognize that in most cases (unless you are a very very long term expat) that renouncing citizenship will be painful.
Seems like:
1. Renouncing citizenship will be the end of one set of problems; but
2. May be the beginning of another set of problems.
Certainly the “covered expat” vs. “non-covered expat”is huge! On the other hand, maybe at this time in history, to be born American is simply to have lost the birth lottery. This is a point that James Dale Davidson implies in “The Sovereign Individual”.
But, here is another thought on this issue – comes from a comment an another site:
http://wwno.org/post/us-swiss-strike-deal-american-tax-evaders#comment-1026938482
“The USA has reverted back to its earlier ways and is now a plantation again. The US Govt is the “Massa” of the plantation and FATCA is the modern day “Fugitive Slave Act”.
The Fugitive Slave Act required that anyone who did not capture/arrest slaves would be penalized with a tremendous fine. What happens with FATCA and a bank that does not report a slave to Massa?
Slaves had to buy their freedom. What is the current fee for renouncing a US citizenship? How much when including the “exit tax”?
When a modern day slave leaves the USA plantation do they still have to pay Massa? Yes. Massa owns you unless you buy yourself away from Massa (costs of renunciation).”
What the US calls “citizenship-based taxation” is really “residence based life control”.
For this reason I see the renunciation issue as coming down to the question of:
Am a free person or the property of the United States?
Looking for another country?
“Where liberty is, there is my country.” – Franklin, Benjamin
http://quotationsbook.com/quote/23238/#sthash.36IhX1T4.dpuf
The U.S. is now very tyrannical.
@Notamused
I see no way that a U.S. citizen can reach their potential in a global world.
Either:
1. You never leave the homeland in which case you are shackled to a “sinking ship”. The problem is not the decline of and problems in America. The problem is that THE HOMELANDERS ARE BLIND TO THE PROBLEMS AND JUST SING THE AMERICA IS THE GREATEST SONG. This means there is little possibility of change. So, if they stay in America they “may” do well by American standards. But, American standards are low and getting lower …
2. They will leave American and be shackled and prevented from success by their U.S. citizenship. There is (I believe) one indisputable fact.
That fact is:
It is now impossible to live up to your potential, if you are a U.S. citizen abroad. There is an “IRS discount” or “US person discount” that you carry with you. Hate to put it this way, but Americans abroad simply do NOT have the same value as citizens of other countries. Whether it’s business, marriage, etc. they are toxic liabilities. Even adoption agencies are warning about adopting babies born in the U.S.
Young people who are either living outside the U.S. or thinking about moving from the U.S. need to consider the issue of their citizenship sooner rather than later. See:
https://renounceuscitizenship.wordpress.com/2012/08/21/letter-of-a-canadian-businessman-to-his-dual-u-s-canada-citizen-son-on-the-occasion-of-his-high-school-graduation/
Get out long before you are a covered Expat!
_____________________________________________________
One might ask “Why?” How could anybody be as stupid as the Obamas, Levins, Schumers, Casey’s of the world. It’s simply incredible.
It’s like there’s: Dumb, dumber and the Levinites.
@USCitizenAbroad
Well, yes, that goes along with what I wrote above.
It is a very tough decision because of the fear that one may not be able to return to visit family, attend business meetings and even take a holiday once in a while. This is particularly an issue if one is a dual citizen in a non Visa Waiver country. Those that I know who renounced all had passports from a Visa Waiver country and literally returned to the US for a visit within a week of getting their CLN. It is a terrible position the USG has put overseas citizens in with no rational justification or reason.
@Moose: …will all other countries just accept that countries have the right to punish their former citizens for life?
Some language from the current US/UK tax treaty (also found in many, perhaps most, other US tax treaties), elided and with a couple of my own annotations:
“4. …a Contracting State [the US] may … tax its citizens, as if this Convention had not come into effect … 6. A former citizen or long-term resident whose loss of citizenship or long-term resident status had as one of its principal purposes the avoidance of tax … shall be treated for the purposes of paragraph 4 of this Article as a citizen of that Contracting State [the US] …”
Following the lead of the MSM when reporting on ‘tax cheats’, I have heavily edited this to give the situation its most extreme spin. It covers only US source income, and stops after ten years. Nowhere near as atrocious as I made it look. In fact fairly easy to get round — just avoid investing directly in the US for a decade and mission accomplished.
But… here is a sign that other countries have already accepted, in limited form, US punishment of former citizens and residents. Camel’s nose?
@Steve Klaus, this is what I fear: that with the growing tensions between the US and Great Britain over Syria, the latter could be punished by having it’s visa waiver status withdrawn.
I’m anticipating having some times when I feel regret. That’s all. However, not enough regret to not go through with it. I also anticipate feeling as though I can get on with my life. If you grew up there I think the situation for you is different. For many though when you lay all the facts out on the table and look at what your life will be if you keep U.S. citizenship it simply is incredibly foolish to do so. There’s no real benefit to keeping it and a lot of financial burden. Also, I imagine feeling a lot of anger. For many of us we’re forced into a completely unworkable position with the U.S. This is their doing, not ours. They have demonized every person who ever moved away from there and every person with any remote tie to them that they could scoop up into FATCA.
@Mona Lisa, I feel the same as you do. Very well put!
@Yogagirl, you are right. Even if we returned there, it is not the same America anymore. We’re not going to find it again. Besides, how can you be a part of a place that truly hates anyone who has moved away from there for whatever reason. I’m tired of being told “You can move away but, here’s a list of punishments for doing so. Six of one and half dozen of another. They are going to demonize expats whether we renounce or not. Might as well renounce and be out from under their draconian ever changing penalty system.
@Watcher, if the sh*t hits the fan, I have little doubt that the UK would be willing to throw us under the bus.
Another thing I’ve come to understand is that while the UK technically has a residence -based taxation, there are many conditions and restrictions to be able to qualify. If you move abroad but still have property or even a bank account in the UK, you would still have to file with HMRC each year and could even be limited to I think just 90 days in the UK each year (including any partial day) before once again being subject to taxation on worldwide income…so even here, people have to be careful and watch out for technicalities that could entrap them.
@Atticus, I’d imagine that they’d believe that we should be willing to shoulder the compliance burdens as an expression of how much we still valued our US citizenship (or US personhood. ) They’d argue that a true patriot would even be willing to die for their country, etc., i.e. the ‘price for the privilege of holding US citizenship ‘.
I even met and had a conversation with an fellow expat at the IRS offices in the US embassy in London; she was elderly and had spent over 40 years in England but still expressed stoical devotion to her Homeland and could never understand the ‘gaul’ of Americans overseas choosing to renounce; to her, in spite of the huge annual costs and compliance restrictions, to do so would merely be a selfish act of expediency.
I also noted that she was friendly with the local IRS staff; and because she lived locally in Mayfair, she even knew them on first-name terms; it seemed a classic case of Stockholm syndrome. I also suspect that she was quite well-off, which would make compliance burdens proportionally easier; plus, of course, she was almost certainly a covered Expat.
@Mona Lisa, I wish our embassies here in Canada had ANY tax help. They do not offer that anymore so we’re on our own. As for the dear lady you spoke with. It is nice for her that she can AFFORD to comply every year until her death. That affords her the ability to speak as she does and continue to feel as she does though she could have some empathy for others who cannot.
There is a woman living on my street here from my home town in the U.S. so naturally we got to talking. She is appalled that I am renouncing but, she is A.) wealthy and B.) maintaining a second residence inside the U.S. she intends to return to one day. Under those circumstances she can afford to be shocked and gaze down her nose at my decision. I’m just going to have to dismiss such folks. I actually really like this woman just not on that topic. We no longer can discuss the matter.
@Atticus, I hear you. I completely agree that it’s unfair of these wealthier Expats to judge us when they’re much more able by their more fortunate circumstances to afford compliance costs. They could do with more empathy but I suppose their blind patriotism is effectively a religion and we’re infidels.
It’s good though that you two can remain friendly in spite of disagreeing on this heated topic. I was so relieved that my mother understood the practical problems I faced and that she realized it would be too costly and burdensome to maintain both citizenships.
I’ve concluded that once all my final paperwork has been filed next year, that there’s not much more point in going on and on about all this to people I know. They’ve heard it all before and are frankly weary of it. It sucks but life is not always going to be fair. At least it appears that I will have managed to junk through all the hoops with my life relatively intact, when at one point I genuinely lived in terror that I could lose visually everything.
My main concern now is whether I’ll continue being able to qualify for a visa-waiver. I wouldn’t put it past the US government to revoke eligibility for all former US citizens, especially renunciants. Could see them having to apply for special visas, particularly covered Expatriates.
@second thoughts
I especially took notice of this “but it seems so hard to find a place that is both open to immigrants and that offers me some of the opportunity I definitely experienced in the US.”
It sounds as if this person was not well established in another country before renouncing. Renouncing is definitely not a spur of the moment decision and certainly needs lots of thought. That said, we are all in different life circumstances and have different levels of insight regarding our situation, future plans etc. Perhaps some persons will regret renouncing and tend to look back to when they were a USC as a sort of golden age – a support forum might help them, but I can’t see why it should be connected to the IBS? . None of the posts I have read here on IBS lead me to believe that IBS users suffer from “renunciation-regret” . What I do see is a lot of “renunciation-relief” including my own.
There is a difference between regretting that you were put into such a situation so that you had to renounce to be able to continue your life and regretting the renunciation itself. I don’t anticipate many will actually regret the actual renouncing. It is what it is, and it’s not of our making.
@second thoughts, I agree with allou. If you were not well established in a second country before you renounced things could be much more complex for you for a while. However, this will not always be the case. The U.S. no longer represents the same opportunities it used to and there is no reason to assume it will ever again for the foreseeable future.
@”There is an “IRS discount” or “US person discount” that you carry with you. Hate to put it this way, but Americans abroad simply do NOT have the same value as citizens of other countries.”
This unfortunately is true, especially for US persons considering an internationally based career. It is probably one of the major factors behind the increasing number of young duals renouncing. If you are well-educated, talented and looking to be employed in an international environment, it is not an advantage to be a USC and dual. So many duals are renouncing the USC and are thus becoming more attractive employees/marriage partners/business partners etc.
@Atticus and @Allou, I don’t actually regret that I renounced because I concluded I didn’t have any other realistic option, given the circumstances. But it’s not going to stop me from suffering from ‘if onlys’. However, the US has effectively become like an abusive ex who isn’t going to let go easily.
I no longer think that the US was ever as free and with as much golden opportunity as we we’re led to believe in the past. As I’ve often said before, America is almost like a religion. It was (and probably still is!!!) a great country if you’re successful and rich. But if you’re poor or sick, it has a brutality that doesn’t exist in Canada or Western Europe which both offer more of a safety net.
I will give a good example: I have a good family friend on the East Coast who was born into wealth and was essentially a ‘trustafarian’. I admittedly envied her. But fate bad other plans; she was bit by a tick and now suffers from Lyme disease. She has bankrupted herself; all her efforts to find decent medical treatment have been in vain because no one in officially recognizes Lyme disease in her state so has no help via state assistance. I believe her life will be cut short. Had she been in Canada or the UK, I believe she would have got a much better deal in life. The system over there can be brutal.
Apparently there are two main kinds of reasons why people have second thoughts about giving up US citizenship — practical considerations such as being able to visit relatives and friends there, and emotional considerations of identity and belonging.
Regarding the practical: When I turned in my draft card and left in the 1960s, I fully expected never to be able to visit family in the US again. I did avoid going there for a number of years, but after a while I was able to resume visits with no problem (until recently, when they began to comment on the US place of birth on my Canadian passport). I don’t seriously expect the US to adopt a policy of prohibiting renunciants from visiting there — that would be very bad PR for the “Land of the Free”. I do anticipate some additional delay at the border if I visit there and have to present my CLN.
Regarding the emotional: I found the experience of leaving the US ultimately very freeing. Having grown up, like most USers, believing the myth that I had been born in the Greatest Country on Earth, my experience of leaving the US was initially saddening but also enlightening. Now the country of my citizenship is not such a big part of my sense of personal identity as it was when I was young. I see that there is no greatest country on Earth and that we are all struggling with how to live together equitably and peacefully.
I hope that those of you who are feeling regret or cold feet over renouncing US citizenship may ultimately find the experience freeing, too.
@USCitizenAbroad
Thank you very much for starting this thread. The discussion has been very interesting so far.
A while back i was speaking to a retired couple who were in the process of applying for Canadian citizenship.Some people were telling them they should renounce. Their only income were company pensions from the U.S. and they would later be receiving Social Security. They had virtually no savings. Their only savings were barely above the FBAR reporting limit in a single account at a very small Credit Union.They had none of the 4 letter Canadian registered accounts that can cause compliance problems.
All their family was in the U.S. They did not have ill feeling towards the U.S.They moved to Canada because they came to love a certain area and its residents while travelling as tourists.
Their U.S. tax return was very simple and was prepared by their U.S. accountant who charged a reasonable fee.
As much as I would encourage people to renounce, I just didn’t feel it was appropriate in their circumstance.
I can see how those who’ve renounced US citizenship would have problems adjusting if they haven’t established an allegiance for another country, that’s why it’s probably rare. The fine lady in London might love Britain but can’t afford NOT to comply with US taxes and likely faces an exit tax, making it unattractive for her to renounce. Both the conditions exemplified by USCitizenAbroad’s friend and the London lady make it a fallacy that disloyal Americans are renouncing in droves to evade US taxes.
What the London lady calls patriotism is likely nothing more than avarice, but gives her US citizenship the value she needs to make her feel good about her circumstances. The elitist Diane Francis refers to it as her ‘expensive perch’, while we mere mortals think of it as a boat anchor.
@Hazy, I agree. Had I understood things better, I would have completely stayed out of registered accounts and just saved in a simple savings account. I wouldn’t have bothered with investments or a pension plan and would have opted out of my employer’s retirement plan too just to save myself all the headaches…had I known, I could have been more like this couple and been able to affordably retained my US citizenship.
It’s caused me so much anguish, I can’t even begin to express it…I realise that they’re not being completely reasonable but it is what it is…I, after all, CHOSE to move abroad so should have had the sense to seek out proper advice before diving into investments which I didn’t fully understand, so I partially blame myself.
I know I have disappointed my father, who quite reasonably, had hoped that I could return to America if anything we’re to happen to my older spouse who is suffering from health problems…I feel I’ve let him down in a way by being somehow negligent. Of course the US is high-maintenance but it’s the hand of cards I was dealt so should have planned accordingly.
America IS different. It’s narcissistic but you either have to love it or leave it. No turning back.
@Bubblebustin, Yes, perhaps the older lady in London had to justify it all to herself though I suspect she was well-done enough for it not to be an issue. There are in fact investment houses in London that cater to US expats though these usually require a portfolio of at least a million before they’ll even consider you as a client.
I had originally hoped I could do something similarly but gradually learned that I simply didn’t have the means. I’d guess that such portfolios require higher maintenance to remain compliant and thus have higher admin fees than regularly managed portfolios. My financial planner will be moving me into a UK-compliant platform since the current US-compliant account no longer wants to retain me beacause I’m not worth enough. I’d also guess that it’s management fees will be lower too, at about 1.5% (including her annual fees) rather than the current 2%, which is quite high. I will alaid have more options in its asset allocation, etc.
“Slaves had to buy their freedom. What is the current fee for renouncing a US citizenship? How much when including the “exit tax”?”
As I’ve mentioned before, Canada has an exit tax too. It is true that Canada’s exit tax is paid on giving up residence as opposed to the US exit tax which is paid on giving up citizenship. But if you are born in a country and want to expatriate, at some point you have to give up both residence and citizenship (not necessarily at the same time) so the exit tax can’t be avoided.
It is normal and human to regret. Everyone does or should regret the current situation in one way or another.
I regret that I renounced, I also regret that I didn’t renounce sooner. I regret that my mom died, that I didn’t win the lottery, that I lost a friend, that I this and that I that. Regretting is a normal part of life. Everyone regrets something and there is always something about a renunciation that anyone can regret.
What’s important is how one processes this regretting. For me, I seem to follow the footsteps of my great, great grandfather, whom I just discovered and whose motto was:
That means: “Strive to move forwards and never stand still”. That’s how I lead my life, placing one foot in front of the other while striving to make best out of what one has.
I’m an accidental with a second passport that became a liability, so there wasn’t all that much angst.
If there are regrets, it will be ten or twenty years from now, when the relative positions of the Canadian and US economies will have changed again, and there may be some job I want or need on the other side of the border.
OTOH the passport, by itself, wouldn’t be that much use without a record of tax compliance. Defying the IRS from Canada is one thing, defying the IRS from the United States quite another. So to take advantage of a hypothetical future job, I would have to have a record of US tax compliance, retrospectively. Life is too short.
It’s just one of those life decisions that involve some future risk and uncertainty, but there are a lot of those.
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@monalisa1776, @Political Expat,
I think that that both of you are being a bit too pessimistic. There are a bunch of good people in the US and I think that the US generally still has good (misled) intentions. Banishings are highly unlikely (I think, even when the press claims otherwise). Yet, of course, anything is possible. I’d say, just relax, be cool, be positive and enjoy the situation as it is for as long as it last. It is unlikely that things will get much worse (in my view), but if they do, then we won’t want to go to America anyways since it will then have become too great of a risk.
Speaking of which, my local bank asked me today if I regretted having purchased a house in the US, since they heard of the banishment threat. I responded that, if worst comes to worst, then I’ll hire a lawyer to sell the house and the problem will be solved. It’s no big deal.
Can someone get a firm definite statement that not filling USA taxes for a Canadian citizen and resident is not extraditable? I may even file but not pay. I am just a former green card holder. Only income from USA was less than 24 K on a survivor right condo that had a negative capital gain and the USA is till holding on to 10% withholding. I did not send in closer connection (thanks Bill Clinton for this nonsense) form for 3 years I was a snow bird but I spend more than 183 day a year in Canada during that time.