So you want to renounce your citizenship?
Hello happy campers Sovereign Dave coming at you with some important news if you’re considering renunciation.
When we say renunciation in this article we’re talking about actually giving up your citizenship. We’re not talking about becoming an ex-pat meaning you don’t live in the United States anymore but you don’t give up your citizenship that’s a different story. For us and this article, we are considering renunciation as you actually want to “renounce” and give up your US citizenship.
There are several things you’re going to want to consider before even thinking about renunciation is the right move for you. Let’s look at a list of the possibilities and opportunities that are available to you based on this important choice you’re thinking about making.
There are five important things to consider when discussing the subject of renunciation. Here they are and in no order of importance.
- You need to have somewhere to go before you think about renunciation.
- Do I really never have to pay taxes again?
- What about my friends and family?
- How much does it cost to renounce?
- What happens to my existing business?
So let’s take a look at these in order starting with number one. You do need to have somewhere to go you can’t just renounce your citizenship and give up your passport without having another passport or a place of residence. It’s important you consult a financial advisor, legal counsel that works specifically in this field, and get proper guidance and consultation on the legal ramifications that can happen when you renounce your citizenship.
It’s not as simple as going out in public and recording yourself saying you no longer want to be a citizen. In order to do it legally, you actually have to go into a US consulate somewhere on the planet and physically renounce your citizenship. In order to do that you need to First determine your exit tax which is going to require the assistance of the right kind of financial advisor, CPA, and or legal help. Why you ask, because of course you have to pay an exit tax depending upon your financial circumstances.
That brings us to number two. Once you FINISH with your renunciation and you’re done you do not have to pay taxes again or file taxes again. Of course we are not legal and financial advisers or a registered CPA so there may be extenuating circumstances. But yes, one of the main points of doing a renunciation from the United States is so that you never have to be taxed on your worldwide income again.
So that brings us to point number three, what about my friends and family? Well, they can come to visit you. and you can come to visit them. Depending upon where you have your residency and new passport, you may have visa-free travel back to the United States. Just because you renunciate doesn’t mean you have to leave the United States forever although most people who do tend to travel and live in foreign places and have not much of a desire to come back.
Now we are on to point number four, how much does it cost to renunciate? This is a loaded question. Depending on your financial circumstances and how much you’ve made oh, there are complex calculations at work to determine your exit tax. of course, the United States charges one of the highest fees to file for renunciation it’s well over $2,000 now. Besides that, you have your renunciation tax which is the percentage of all income made over around $170-180,000 a year based on an average of the last five years as of the writing of this article.
Then you have the exit wealth tax which is a percentage of your overall net worth. We won’t get into the details here of what it actually costs because it could change at any point in time with the Democrats in charge. they basically take all of your assets everything that you own put a number on it and assume that you’re selling it and you have to pay a tax on it if it’s over a certain amount. so if you wait too long to do a renunciation it could cost you dearly.
Finally, we have the question of what happens to my existing business. Well, that’s a good question and requires some legal counsel in order to answer correctly. If your existing business can be done from anywhere on the planet then you can continue to do business you’ll just do it as a citizen of a different country. if you’re here in the United States and you happen to renounce your citizenship but I have a business here then you’ll just become a foreign business owner. again, it’s important to have proper legal & financial guidance if you’re considering going through a renunciation process.
The interesting part is when you do renounce your citizenship you do get to keep your Medicaid Medicare and Social Security income. You still have a Social Security number.
It really wouldn’t surprise me to see them remove this option of renunciation, and not allow someone to renunciate ever so they could tax them all the way through their death. If I were you and you were thinking about doing this, it would be a good idea to fill out an executive class application on our website so we could put you with the proper people to get answers to these important questions.
This is Sovereign Dave signing off and I’ll see you on the inside.