Yes, you likely still have U.S. tax obligations after renouncing citizenship, including a final tax return and potentially an "exit tax" on worldwide assets, as you must certify compliance for the prior five years and may become a "covered expatriate". Even as a non-resident alien, you'll need to file Form 1040NR for U.S.-sourced income, and existing tax rules for retirement funds and pensions still apply, often with withholding, to ensure all U.S. tax liabilities are settled.
If you renounce your U.S. citizenship and do not already possess a foreign nationality, you may be rendered stateless and, thus, lack the protection of any government. You may also have difficulty traveling as you may not be entitled to a passport from any country.
Will I Still Owe US Taxes After Renouncing My Citizenship? Yes, renouncing your US citizenship does not immediately end your tax obligations. You are required to file a final US tax return for the year of renunciation, covering the period up to the date you officially renounce your citizenship.
You do have to pay to renounce your US citizenship, it is not free. Far from it. The renunciation fee alone is a steep $2,350, although the State Department recently proposed to lower it to $450. In addition, you have to travel to a United States consulate at least once for the interview and renunciation oath.
You cannot vote in U.S. elections. You cannot have a U.S. passport or benefit from U.S. consular services. You lose the right to work or live in the U.S. without a visa. You lose the U.S. government's protection abroad.
If you've paid into Social Security through U.S. payroll taxes, you're still entitled to receive benefits—even after renouncing your U.S. citizenship.
The U.S. exit tax is a final tax bill charged to certain U.S. citizens and long-term Green Card holders that treats their renunciation or status change as a 'deemed sale,' taxing the unrealized gains on their worldwide assets as if they were sold for fair market value the day before they left.
According to the IRS, most Americans who renounce their citizenship don't owe any exit tax because they don't meet the “covered expatriate” thresholds. The State Department charges a flat $2,350 administrative fee for renunciation.
Regaining U.S. citizenship post-renunciation is challenging, requiring standard naturalization processes. The renunciation fee as of 2025 is $2,350, covering administrative costs.
Additionally, keep in mind that renouncing your citizenship does not get rid of any debts or obligations that you made while living in the U.S. as a citizen. For example, if you move to a foreign country and have federal student loan debt, then you will still owe on the loan(s).
The IRS 7-year rule primarily applies to keeping records for claiming a deduction for bad debts or losses from worthless securities, allowing a longer period to file for a credit or refund, but it's not a universal audit limit; it's often a recommended safe buffer for general record-keeping, with the standard IRS audit period usually being 3 years, extending to 6 years for substantial income omission (over 25%) or foreign income issues, and indefinitely for fraud.
However, missing a tax payment does not mean you are forever barred from U.S. citizenship. Nonpayment is a discretionary concern, which the USCIS officer will weigh into the decision of whether you have shown good moral character.
People renounce U.S. citizenship primarily due to the complex and burdensome tax obligations on worldwide income, the administrative hassle of complying with laws like FATCA (Foreign Account Tax Compliance Act) and FBAR (Report of Foreign Bank and Financial Accounts), and a desire for greater simplicity or a new national identity, often after gaining citizenship in another country, while political dissatisfaction also plays a role. Many are long-term expats or "accidental Americans" who find the compliance costs and banking issues outweigh the benefits of U.S. citizenship.
Yes, you can absolutely still access your 401k after renouncing US citizenship. You remain eligible to receive your 401k distributions, though they may be subject to US taxes and possibly taxes in your new country.
A lawful permanent resident married to a U.S. citizen may be eligible to naturalize—become a citizen—after three years of living in marital union together. To qualify for naturalization under the marriage-based three-year rule, you must also: Be at least 18 years old.
Several celebrities have renounced U.S. citizenship, including Tina Turner, Jet Li, Josephine Baker, Terry Gilliam, and Eduardo Saverin, often for tax, lifestyle, privacy, or to escape U.S. racial discrimination, with reasons ranging from seeking tax advantages in Singapore (Saverin) to finding a new home in Switzerland (Turner) or France (Baker).
What is the US exit tax? The U.S. exit tax is a final tax bill imposed on individuals who renounce their U.S. citizenship or long-term Green Card holders who give up their resident status.
I'm a U.S. citizen living and working outside of the United States for many years. Do I still need to file a U.S. tax return? Yes, if you are a U.S. citizen or a resident alien living outside the United States, your worldwide income is subject to U.S. income tax, regardless of where you live.
The initial process for relinquishing is largely the same as renouncing, starting with an appointment through the consulate. Instead of renouncing, however, you're aiming for a Certificate of Loss of Nationality applied retroactively.
Read our guide below to learn more about why Americans renounce their US citizenship, what the process to do so involves, how much it currently costs, and more. The current fee to renounce US citizenship is $2,350. A 2024 announcement that the fee would decrease to $450 has yet to be implemented.
Renouncing your U.S. citizenship will not automatically cancel your tax obligations. Prior obligations remain, so you would only be a non-resident on an ongoing basis. You must notify the IRS of the change in your status by filing Form 8854 and then filing a copy with the Department of Treasury as well.