13 NEW CITIZENSHIP AND RENOUNCING YOUR U.S. CITIZENSHIP
Renouncing your U.S. citizenship is the only true way to get out
of paying U.S. taxes, and with the exception of a few possible
strings attached, the process is very much achievable. For anyone
who faces significant income taxes and a desire to leave the
United States, this is a viable option.
Depending on how you structure your post-U.S. life, it is quite possible
to avoid personal income taxes entirely. Find a nice no-tax alternative
country for securing new citizenship, like Dominica or Saint
Kitts and Nevis, keep your offshore business in the same one, or better
yet for further diversity, use yet another no-tax haven like Belize for
business purposes, and keep your personal banking and investments
in Switzerland, Liechtenstein, Austria, Panama, or even Andorra. As
with the other strategies presented here for going offshore, the
sooner the better, while the opportunities still exist. All good things
are subject to change.
The Internal Revenue Service could perceive people in a high tax
bracket who want to renounce their citizenship as wanting to avoid
taxes. The government has developed some posturing to discourage
and limit this practice. A person with over $100,000-a-year income at
the time of renouncing U.S. citizenship might still be required to pay
income taxes for 10 consecutive years thereafter. There is also the
rather unlikely possibility that should your reason for leaving the
United States be “tax motivated,” that you could be permanently exiled,
that is, unable to ever return to the United States. It remains to
be seen if this tactic is constitutional and this has yet to be tested.
But not returning to the United States may not be a problem
either. Your children and grandchildren may like coming to visit you
during the holidays in sunny Corfu in the Greek Islands, where the
government will not tax your retirement income. Or, they may enjoy
speaking Spanish with the locals when they find you have taken up
painting in San Miguel de Allende, Mexico. Probably they’ll want to
join you on that leisurely sailing trip through the Caribbean while
you country-shop for your next retreat. After years of paying high
taxes and working hard to legally avoid them, not being able to go
back to the United States may be a nonissue. It could be just what the
doctor would order.
Even if you wish to renounce your U.S. citizenship after you have
expatriated your personal and financial affairs offshore, you must
first obtain new citizenship in a favorable country, preferably with no
income tax and other taxes. There are many possibilities, but Dominica
and Saint Kitts and Nevis can give you citizenship as fast as
within 60 to 90 days—and with it comes their passport, which in both
cases is good for visa-free travel to 90 countries. Other citizenship opportunities
exist, but without guarantees, unlike these two countries,
which promote their Economic Citizenship Programs aggressively.
Both of these countries, at the time of this writing, are excellent for
this purpose. Neither of them imposes personal income tax, and both
of them permit dual citizenship; nor will they report your activities or
status back to the U.S. government.
Once you obtain your new citizenship and your life is now entirely
offshore, you can renounce your U.S. citizenship whenever you wish
(see Part Four: “Offshore Citizenship and Retirement Opportunities”).
This is the final step in expatriating, and to get there, you should
take it in steps, as outlined here. Prior to renouncing your U.S. citizenship,
you should seek professional advisors with specific expertise
in this area.