Hello. My name is Olivier Wagner. I have been preparing tax returns for American living overseas since 2012 and have a lot of experience with those who want to renounce U.S. citizenship. Today I will discuss the process of renouncing U.S. citizenship in Canada.
I have written articles about renouncing U.S. citizenship and the myths around renouncing U.S. citizenship in the past. Today’s blog post will more specifically discuss the process of renouncing U.S. citizenship in Canada.
By way of background, losing U.S. citizenship has to be done voluntarily. It used to be that the U.S. (and Canada) had a strong view against dual citizenship. A few decades ago, the assumption was that if you acquired another citizenship, you did so with the intent of giving up your U.S. citizenship. Now, the burden of proof has almost completely reversed. If you acquire another citizenship, you need to convince them that you did so with the intent of giving up your U.S. citizenship; that’s called relinquishment. If you can do that, you will get a certificate of nationality backdated to the day you perform that expatriating act, acquiring Canadian citizenship in this case.
Whether you go for a relinquishment which is what I just discussed, or whether you give up your U.S. citizenship as of the day of the appointment of the consulate, which would be called a renunciation, there used to be a two-appointment process. The first is during which the consulate will inform you of the consequences of renouncing U.S. citizenship, and the second is where you would renounce U.S. citizenship.
Appointment process in Canada
In Canada, the U.S. consulates have collapsed the two appointments into one. So you will attend a single appointment whereby the first part of the appointment would be to inform you of the consequences of renouncing, and the second part would be the renunciation itself, in which they assess that you understand what you’re doing and you’re acting voluntarily.
U.S. consulates were closed from March 2020 to August 2020, leading to a backlog of appointments. Once they reopened, they first started accommodating people who originally had appointments during that time before accepting new appointments. I would expect the wait time to be about six months.
You would contact that email to get on that waiting list. Then, the U.S. consulate will email you the forms. Once you respond, you will get on that waiting list.
During that process, you can choose to get an appointment at a given U.S. consulate or state that you’re willing to attend it at any consulate in Canada. If choosing the latter, you can get an appointment earlier because you could go to the first consulate where the appointment is available. The consulates you can renounce are in Vancouver, Calgary, Toronto, Ottawa, Montreal, Quebec City, and Halifax.
US expatriation taxes
You would file form 8854 the year after you renounce. If you are a ‘covered expatriate’, you would be subject to the exit tax.
The most common way to become a covered expatriate is if you have a net wealth of more than 2 million dollars, you would also be a covered expatriate if you fail to file five years of tax returns.
The “dual citizenship exception”
There is a dual citizenship exception. Those who qualify only need to file five years of tax returns; they do not need to comply with the first two conditions.
The dual citizenship exception applies to people born with U.S. and foreign citizenship. So, for instance, somebody born in the U.S. might have dual citizenship: U.S. citizenship because they were born in the U.S. and Canadian citizenship from their parents.
They need to:
– Continue to be taxed as a resident of the other country.
– Have spent less than 10 out of the past 15 years in the U.S.
Feel free to email me with any questions, and I’ll be happy to get back to you. Thank you.