Can I give up my US citizenship?

Giving up your US citizenship shouldn't be taken lightly. We'd always recommend speaking to an immigration lawyer to make sure you’re doing it for the right reasons. The first question they will probably ask is whether you have citizenship in another country, i.e. the UK. If you haven't, giving up your US citizenship would make you stateless, which you don’t want.

If you have UK citizenship and no intention of going back to live in the US, you’ll need to go through the renunciation process which involves making an appointment at the US Embassy, taking your US passport there and formally giving up your citizenship. An immigration lawyer will be able to provide more details of the process.

In the year you give up your US citizenship, you'll then need to file a final US return. This will be a dual status return, where you report your worldwide income up to the date of expatriation.

If your net worth is more than $2 million, you will be liable for exit tax which is calculated as if you had sold everything on the day of expatriation. In this case, some people might give assets away prior to expatriation to be under the $2 million threshold.

There is, however, an exemption of $800,000 on your gains. So, if your deemed gain is less than $800,000, you may not have to pay any exit tax.

Ultimately, if you will end up owing several hundred thousand dollars in exit tax, this may be reason enough not to give up your citizenship. This is why it’s important to speak with a specialist tax advisor.

The question of renunciation of your US citizenship is a fraught one for personal reasons too. You will of course have to think about potential tax liability including exit tax, but also about the benefits for simplifying your life.

It is relatively rare for people to want to give up their access to the US, and if you have substantial family ties back to the US it's makes it much harder to return there in future.

No matter your situation, there are always investment solutions out there. Being a US citizen doesn't make things impossible when it comes to investing, it’s just about choosing from a slightly different menu.