We received a question from Denise from Canada.
The question is: “I’ve heard a lot of words to describe people who were no longer U.S. citizens – “surrendered”, “relinquished”, “renounced” U.S. citizenship. What is the difference between these three terms?”
Surrendered
First of all, “surrendered” is not a term defined in either the Internal Revenue Code (IRC) or the Immigration and Nationality Act (INA). It is a casual term to describe people who gave up their U.S. citizenship regardless of the method used.
Relinquished
This term describes people who performed an “expatriating act” with the intention to relinquish U.S. citizenship. Common expatriating acts include acquiring another country’s citizenship. Or being a state worker for another country, joining the army of another country etc. You can find the list in Section 349 of the INA.
Section 349 of the INA (8 U.S.C. 1481), as amended, states that U.S. nationals are subject to loss of nationality if they perform certain specified acts voluntarily and with the intention to relinquish U.S. nationality. Briefly stated, these acts include:
1. obtaining naturalization in a foreign state upon one’s own application after the age of 18 (Sec. 349 (a) (1) INA);
2. taking an oath, affirmation or other formal declaration of allegiance to a foreign state or its political subdivisions after the age of 18 (Sec. 349 (a) (2) INA);
3. entering or serving in the armed forces of a foreign state engaged in hostilities against the United States or serving as a commissioned or non-commissioned officer in the armed forces of a foreign state (Sec. 349 (a) (3) INA);
4. accepting employment with a foreign government after the age of 18 if (a) one has the nationality of that foreign state or (b) an oath or declaration of allegiance is required in accepting the position (Sec. 349 (a) (4) INA);
5. formally renouncing U.S. nationality before a U.S. diplomatic or consular officer outside the United States (sec. 349 (a) (5) INA);
6. formally renouncing U.S. nationality within the United States (The Department of Homeland Security is responsible for implementing this section of the law) (Sec. 349 (a) (6) INA);
7. conviction for an act of treason against the Government of the United States or for attempting to force to overthrow the Government of the United States (Sec. 349 (a) (7) INA).
Above all, no formal notification needs to take place for the U.S. citizenship to be lost (for immigration purposes). One would simply perform such an act with the intention to relinquish U.S. citizenship. He/she could rightly claim to no longer be a U.S. citizen after performing that act.
What’s about U.S. taxes?
However, for tax purposes, it’s not an easy process as it seems. For example, if the expatriating act occurred after 2004, one would continue to be taxed as a U.S. citizen. He/she should notify the Department of State and then files form 8854 with the IRS.
Practically speaking, that notification takes the form of going to a U.S. consulate, convincing them that the expatriating act occurred and applying for a Certificate of Loss of Nationality. The fee for this procedure is $2,350.
Renounced
Renunciation takes place when a U.S. citizen makes an appointment at a U.S. consulate and applies for a Certificate of Loss of Nationality. The fee for this procedure is $2,350.
Unlike the relinquishment, the loss of citizenship would occur right there and then. As soon as the U.S. citizen tells the consulate employee “I’m out of here”. Also, the U.S. citizen wouldn’t need to convince the consulate officer that an expatriating act occurred since the expatriating act would occur during the appointment at the consulate.
As for a relinquishment, one would need to file form 8854 in order to no longer be a U.S. taxpayer.
You might wonder “If it’s less cumbersome (no need to convince a consulate officer of my expatriating act) and the fee is the same, shouldn’t I just renounce?”
While the relinquishment allows stopping being a U.S. citizen at an earlier date, this could be advantageous in a few scenarios:
- The expatriating act occurred before 2004, then no further action would be needed for tax purposes
- If the taxpayer had children who were born after the expatriating act and wants to keep the children out of the U.S. tax system. If the parent was not a U.S. citizen.
Either way, you want to document your separation with the United States with a Certificate of Loss of Nationality, file form 8854 and honestly certify that you were tax compliant for the prior 5 years. You want a “clean break”.
Would you like to book a free 20-minute consultation call with U.S.citizenship and tax expert? Book your spot here and have your questions answered by a team of 1040 Abroad.
The blog post was originally posted in 2017. It was updated on September 12th, 2018.
Can I ask a question about relinquishing US Citizenship
Dear T Mack,
you can either ask question here or reach us out by dropping email at owagner@1040abroad.com.
Thanks!
Someone knows what is the difference between relinquishing citizenship “under oath” or “by affirmation”
Actually, renouncing is just one way of relinquishing U.S. citizenship. Renunciation is the form of relinquishment that takes place in the presence of the U.S. State Department (Consulate or Embassy).
Only those who “renounce” are subject to provisions of the Reed Amendment (which has only applied a couple of times anyway). The Reed Amendment is the part of the Immigration and Nationality Act that mandates that those who renounce U.S. citizenship to avoid U.S. taxation become excludable aliens. Please note that (at least at present) the Reed Amendment is not being applied to those who renounce. But, it does exist in the statute.
Therefore, all other things being equal (which they rarely are), a form of relinquishment other than renunciation is preferred.
My husband was a dual citizen (US and Canada) when our children were born. When they entered their teens we “activated” their US citizenship in anticipation of their possible move to the US for college. At the end of that process my daughter had a US passport, my son a SSN (card). I believe at the time it was done this way based on their relative ages. It was not presented as a choice. Both children, now adults, stayed in Canada for education and work. My husband and my son recently successfully went through the renunciation process and now hold only Canadian citizenship. My daughter has been held up because our accountant could not file tax returns for her because she has no SSN (we think). How do we find out if indeed she has an assigned SSN? If she does not, must she obtain one? How exactly do we do that? Thank you.
Hi Jutta,
You would need to apply for a Social Security Number for her daughter (if she already has one, she will just receive a card with that number). Check https://www.ssa.gov/foreign/canada.htm to see which office to submit a form SS-5 to.
Thanks.
Hello, I was born in the US in 1958 and lived there until 1967, returning for 3 years between 1976-1978 and 1980-81 for education. I have never worked there or lived there since. I did claim Canadian citizenship through my mother in 1981 which entailed giving an oath to the Canadian government and have the documents from that event. Is this adequate for relinquishing and what evidence would be considered?
Thank you,
Hi Demeter,
U.S. citizens are taxed on their worldwide income regardless where they live.
In order to renounce U.S. citizenship, it’s extremely important to fully catch up with all your U.S. taxes before. You may want to use the Streamlined Filing Compliance Procedures. This allows you to become tax compliant and avoid penalties for not filing your taxes earlier. You will need to file your tax returns for the previous five years. Your last final tax return will be filed for the year of the renunciation and it is called a “dual return”.
We have fully covered the topic and provess of renouncing U.S. citizenship here: https://1040abroad.com/faq/renouncing-u-s-citizenship/ Give it a read and contact us at info@1040abroad.com if you have further questions or need our help.
Hi
I was born in the US in 1986, and my parents applied for a passport at birth but they were not provided with a Social security number as I think they only just started issuing them later that year.
I left the US at 6months old and obtained Australian citizenship at age 10 (1999)
I have only renewed the US passport once, in 2011. As I have no social security number and have never lived or worked in America I have never filed taxes, would I be able to relinquish my citizenship and what taxes would I need to file if any…?
Hi Ninja! Yes, you can relinquish your US citizenship. Since you live in Australia, you most likely paid enough tax there to offset any tax liability to the US.
Hello, my nearly 17-year old son was born in the UK to a US father and Danish mother; we got him a passport for each nationality, though he’s not got a SSN.
He will lose his Danish citizenship at 21 if he hasn’t lived in Denmark for 7 years previous to that or is living there then. He has been wanting to renounce his US citizenship since a few years back, for a variety of reasons, but we’ve held him off and asked him to wait until he’s 18.
As the UK is no longer going to be in the FoM area then and he is interested in moving to Denmark or Sweden when we are able to, it now seems a good idea to get it done, as Denmark wouldn’t be able to make him stateless and would have to let him retain his Danish citizenship after 21 (though we’re hoping to leave the UK before then, it might not be possible). However, we cannot afford to pay over $2,000 to renounce and our son has Aspergers, which possibly could be seen as a complicating factor as he’s still a minor.
Could you suggest a way in which we could go about relinquishing or renouncing his citizenship?
Hi Zelda! I agree regarding the complications he’s facing. This is an immigration question rather than a tax question, I would invite you to contact John Richardson at citizenshipsolutions.ca ; his email is john@citizenshipsolutions.ca
A late thank you, Olivier, I will get in touch with Jason.
I appreciate you took the time to reply and advise.
What is the difference between ‘renunciating’ and ‘relinquishing’ one’s citizenship?
Hi Jason! Check our FAQ where we explained the difference between “renouncing’ and ‘relinquishing’ one’s citizenship in detail. https://1040abroad.com/faq/renouncing-u-s-citizenship/
My husband moved at age 5 from the US to Canada. He has become a Canadian citizen and will remain here for life. He did receive a US SSN before coming to Canada and a US passport when he needed a passport for work travel. Since becoming a Canadian he has used a Canadian passport for travel. He paid US taxes for a few years but we stopped as it cost us well over $5000.00 for filing fees and he only paid less than $30.00 US taxes in a 4 or 5 year period. Also we live in a small rural area and the only accountant that was accredited to file US taxes retired. He has never received anything from the US government in regards to services or rights.
What would be the proper way for him to relinquish his US citizenship with the least amount of financial hardship, as he is getting close to retirement and does’t want to be stuck having to contend with the US tax regulations then.
Hi Wanda LaPlante! Please, contact our team at info@1040abroad.com so we can discuss your husband’s situation in more detail.
I was born in the UK and married an American Citizen. I lived in the US for 26 years and moved back to the UK in 2018. I have Social Security income paid in to my US bank account. I also have other minor income from investments.
I filed taxes in the UK and the US for tax year 2018/2019 and paid the relevant taxes. If I give up my US Citizenship can avoid making a US tax return in the future. I will obviously declare my worldwide income to include the income I get from the US. Also if the answer in yes, how do I go about giving up my US Citizenship? Thankyou
Hi Jane! It depends on the amount of Social Security benefits you receive. You might have to file a 1040NR as a Non-Resident Alien. If you want to renounce your US citizenship, you must be compliant for the prior 5 years and make an appointment at the US embassy to do it. You just need to attend the appointment in person and pay the government fee. After you renounce, you will need to file your Final Tax Return. You can find more information on our website FAQ section.
Hi Jane,
It depends on the amount of Social Security benefits you receive. You might have to file a 1040NR as a Non-Resident Alien. If you want to renounce your US citizenship, you must be compliant for the prior 5 years and make an appointment at the US embassy to do it. You just need to attend the appointment in person and pay the government fee. After you renounce, you will need to file your Final Tax Return. You can find more information on our website FAQ section.
So just to be clear… if I’m a US citizen at present, been living in Japan for the past 6 or 7 years and filing tax in US whole time (for the past 35+ years), and I became a Japanese national, I’d still have to pay the $2350 fee, regardless of how I “get rid of” my US citizenship? There is no way around that fee? What if I don’t pay it?
Hi Shawn! It is a government fee you pay at the US embassy when you renounce your citizenship. You cannot renounce your citizenship without it.