U.S. laws require U.S. citizens to pay taxes on their world-wide income, irrespective of where they live. You will be taxed on your world-wide income even if you live in a foreign country, as long as you are a U.S. citizen.
This makes wealthy U.S. citizens renounce their citizenship as they feel that they are unnecessarily being taxed on their income. They believe that renouncing citizenship is the best option. If you are one such U.S. citizen who is looking forward to give up U.S. citizenship, you need to consider the following prior to taking such a serious decision.
- U.S. laws permit U.S. citizens to renounce citizenship but you need to remember that you cannot again become a U.S. citizen, once you give up American citizenship. You will not be protected by the laws of the U.S., after you give up citizenship. You cannot hold a U.S. passport and you will have to obtain temporary travel visas to visit the country. Your children will not be able to acquire or derive U.S. citizenship from you.
- While renouncing your citizenship, you must also renounce all the citizenship rights and privileges. If you seek to file a petition for renunciation of U.S. citizenship while in U.S., you must prepare yourself to live outside the country. Once you renounce citizenship, you will be subject to the immigration laws that are applicable to the immigrants.
- If you wish to work in U.S. after giving up citizenship, you will have to obtain a temporary work visa or get an employment authorization document. You will then have to travel to the country on non-immigrant visas. To get a work visa, you must be sponsored by a U.S. employer. You will also be subject to annual numerical limitations on visas. Your past criminal convictions are likely to make you inadmissible into the U.S. once you give up citizenship.
- The other thing that you need to keep in mind is that you will become stateless if you relinquish U.S. citizenship and if you are not a citizen of some other foreign country. Hence, you need to possess a foreign nationality to renounce U.S. citizenship. If you are stateless, you cannot travel to foreign countries and you may not be able to maintain residency in foreign countries. Apart from that, you will be subject to exit taxes.
Additionally, people who renounce U.S. citizenship will need to pay a fee of $2,350.