Renouncing US Citizenship

Are you a U.S. citizen or Green Card holder worried about complex tax obligations and considering renouncing your citizenship? Here are a few things you should consider before proceeding with the renunciation process.

Tax Consequences of Expatriation

Individuals who renounce their citizenship may be subject to an exit tax if they are classified as covered expatriates. A covered expatriate is someone who expatriates after 2008 and meets one of the following tests:

• Personal net worth test: Net worth exceeds $2 million on the date of expatriation. This includes all worldwide assets (e.g., bank account balances and the fair market value of real estate).
• Tax liability test: Average annual net income tax liability exceeds $211,000 (for 2026) over the five years preceding expatriation.
• Certification test: Failure to certify compliance with U.S. federal tax obligations for the five years preceding expatriation.

If you are a covered expatriate in the year you expatriate, you may be subject to income tax on the net unrealized gain on your property, as if the property had been sold for its fair market value (FMV) on the day before your expatriation date. This applies to most types of property interests held on the date of expatriation.

Gains exceeding the exclusion amount ($910,000 for 2026) are taxed at applicable capital gains rates under Section 877A. This applies to a wide range of assets, including real estate, stocks, and business interests.

Exception: Certain dual citizens may qualify for the exception described above if they satisfy both of the following requirements.

• You became at birth a U.S. citizen and a citizen of another country and, as of your expatriation date, you continue to be a citizen of, and are taxed as a resident of, that other country.
• You were a resident of the United States for not more than 10 years during the 15-tax-year period ending with the tax year during which you expatriated.

Relief procedures

The IRS has established Relief Procedures for Certain Former Citizens to help individuals come into compliance with their U.S. tax obligations while avoiding classification as covered expatriates.

Only taxpayers whose past compliance failures were due to non-willful conduct may use these procedures. All eligibility criteria must be strictly met.

1. You have relinquished your U.S. citizenship after March 18, 2010.
2. You have no filing history as a U.S. citizen or resident.
3. You did not exceed the threshold in IRC 877(a)(2)(A), related to average annual net income tax for the period of 5 tax years ending before your date of expatriation.
4. Your net worth is less than $2,000,000 at the time of expatriation and at the time of making your submission under these procedures.
5. You have an aggregate total tax liability of $25,000 or less for the five tax years preceding expatriation and in the year of expatriation
6. You agree to complete and submit with your submission all required Federal tax returns for the six tax years at issue, including all required schedules and information returns.

Renouncing U.S. citizenship is a Department of State procedure. For more information, please visit the U.S. Department of State’s website or contact a U.S. embassy or consulate. Loss of U.S. Citizenship (i.e. Expatriation) - U.S. Embassy and Consulates in the United Kingdom

The renunciation fee was reduced from $2,350 to $450 in April 2026; however, this change does not affect the exit tax rules.