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Renouncing USA citizenship

Renouncing USA citizenship

Old Dec 2nd 2023, 3:19 pm
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Default Renouncing USA citizenship

Now that the US has lowered the cost back down to a realistic $450 has anyone reconsidered renouncing. I am retiring back to the UK after 25 years in Florida. The cost and hassle of annual tax filings to the US and the restrictions from UK investment companies on US citizens has me thinking about my wife and I renouncing. I wouldn’t do it for a few years as I would want to keep the option of returning open if I can’t deal with UK weather etc. I have one adult child living on either side of the pond, but would probably be happy with the 3 month visitor option for when I want to visit the US.
My retirement will put me in the 40% tax bracket in the UK and would benefit from being able to explore the tax benefits of ISA’s.
Anyone else reconsidering now that’s its way cheaper
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Old Dec 2nd 2023, 8:40 pm
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Default Re: Renouncing USA citizenship

Originally Posted by Slalomdude
Now that the US has lowered the cost back down to a realistic $450 has anyone reconsidered renouncing. I am retiring back to the UK after 25 years in Florida. The cost and hassle of annual tax filings to the US and the restrictions from UK investment companies on US citizens has me thinking about my wife and I renouncing. I wouldn’t do it for a few years as I would want to keep the option of returning open if I can’t deal with UK weather etc. I have one adult child living on either side of the pond, but would probably be happy with the 3 month visitor option for when I want to visit the US.
My retirement will put me in the 40% tax bracket in the UK and would benefit from being able to explore the tax benefits of ISA’s.
Anyone else reconsidering now that’s its way cheaper
I presume you would still have income/pensions from the US, therefore you would still be required to file US taxes each year.
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Old Dec 3rd 2023, 8:43 am
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Default Re: Renouncing USA citizenship

Originally Posted by Jerseygirl
I presume you would still have income/pensions from the US, therefore you would still be required to file US taxes each year.

Exactly our situation which is why we are not considering renouncing even though we have no relatives left in the USA. We continue to manage our investments in the USA remotely and it works just fine. I converted our after tax investments into “HMRC Reporting” ETF funds so they get the more favorable UK tax treatment on capital gains and dividends. Even if you don’t convert funds there is no problem in holding after tax mutual funds but all capital gains and “qualified” dividends will taxed in the UK as regular income.
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Old Dec 3rd 2023, 2:09 pm
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Default Re: Renouncing USA citizenship

Originally Posted by durham_lad
Exactly our situation which is why we are not considering renouncing even though we have no relatives left in the USA. We continue to manage our investments in the USA remotely and it works just fine. I converted our after tax investments into “HMRC Reporting” ETF funds so they get the more favorable UK tax treatment on capital gains and dividends. Even if you don’t convert funds there is no problem in holding after tax mutual funds but all capital gains and “qualified” dividends will taxed in the UK as regular income.
So if investments are none HRMC reporting, even though they are Roth and tax free in US, their dividends or withdrawals will be taxable in UK ?
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Old Dec 3rd 2023, 3:34 pm
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Default Re: Renouncing USA citizenship

Originally Posted by durham_lad
Exactly our situation which is why we are not considering renouncing even though we have no relatives left in the USA. We continue to manage our investments in the USA remotely and it works just fine. I converted our after tax investments into “HMRC Reporting” ETF funds so they get the more favorable UK tax treatment on capital gains and dividends. Even if you don’t convert funds there is no problem in holding after tax mutual funds but all capital gains and “qualified” dividends will taxed in the UK as regular income.
Originally Posted by Slalomdude
So if investments are none HRMC reporting, even though they are Roth and tax free in US, their dividends or withdrawals will be taxable in UK ?
I was referring to after-tax investments. Anything inside a pension wrapper receives exactly the same treatment from HMRC as they do in the USA which means that distributions from an IRA are taxed as regular income and distributions from a Roth IRA are tax free.

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Old Dec 13th 2023, 10:40 am
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Default Re: Renouncing USA citizenship

Originally Posted by Slalomdude
Now that the US has lowered the cost back down to a realistic $450 has anyone reconsidered renouncing. I am retiring back to the UK after 25 years in Florida. The cost and hassle of annual tax filings to the US and the restrictions from UK investment companies on US citizens has me thinking about my wife and I renouncing. I wouldn’t do it for a few years as I would want to keep the option of returning open if I can’t deal with UK weather etc. I have one adult child living on either side of the pond, but would probably be happy with the 3 month visitor option for when I want to visit the US.
My retirement will put me in the 40% tax bracket in the UK and would benefit from being able to explore the tax benefits of ISA’s.
Anyone else reconsidering now that’s its way cheaper
I'm in the same situation . My pension is USA State pension . I have found that I can't even get the best interest rates from my HSBC UK bank account because I'm a dual citizen . Does anyone know how to legally get the same interest on investments that UK citizens get ?
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Old Dec 13th 2023, 3:56 pm
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Default Re: Renouncing USA citizenship

Originally Posted by countrygirl33
I'm in the same situation . My pension is USA State pension . I have found that I can't even get the best interest rates from my HSBC UK bank account because I'm a dual citizen . Does anyone know how to legally get the same interest on investments that UK citizens get ?
Being resident in the UK is probably key here, not citizenship. My wife and I happen to be dual USC/UKC living in the UK and also have HSBC savings accounts. As far as I know, there are no better rates if we were to drop our US citizenship. The UK tax free ISAs and premium bond payouts are available to UK residents but are taxable by the IRS if you are a USC.

If your US State pension is your only US income then renouncing citizenship could be a good option because once a UK resident it is not taxable at all by the IRS but all/most of your UK income is still taxable by the IRS while you are still a USC.
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Old Dec 13th 2023, 4:20 pm
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Default Re: Renouncing USA citizenship

Thanks again DL ! Actually, I have a Cal State Teachers pension and my deceased husband's pension which is Federal Government . The only other income I have is from USA Schwab mutual funds and little interest from a US bank account. I do own a house in US still and may end up renting it rather than selling at this point . So if I renounced citizenship then the gross pensions would be paid into my HSBC Uk accounts and I would only owe HMRC tax ? It seems it would be much easier to renounce. I'm assuming I could still keep my Medicare as long as I keep paying the premium . I have been paying the premium past two years while in UK as I still go back to visit for a few months and get medical appts taken care of ..
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Old Dec 13th 2023, 4:50 pm
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Default Re: Renouncing USA citizenship

Originally Posted by countrygirl33
Thanks again DL ! Actually, I have a Cal State Teachers pension and my deceased husband's pension which is Federal Government . The only other income I have is from USA Schwab mutual funds and little interest from a US bank account. I do own a house in US still and may end up renting it rather than selling at this point . So if I renounced citizenship then the gross pensions would be paid into my HSBC Uk accounts and I would only owe HMRC tax ? It seems it would be much easier to renounce. I'm assuming I could still keep my Medicare as long as I keep paying the premium . I have been paying the premium past two years while in UK as I still go back to visit for a few months and get medical appts taken care of ..
I’m afraid this is above my pay grade

I have 2 private US pensions myself plus SS for myself and wife and some dividends from a Vanguard account plus Roth IRA distributions but I don’t know that if I renounced my US citizenship that those income streams would not be taxed by the IRS. It is only this year that our daughter moved back, our son moved back in 2017, so we now don’t expect to ever need to travel to the USA except possibly as tourists. I have assumed that we will always have to file US taxes.
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Old Dec 13th 2023, 9:18 pm
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Default Re: Renouncing USA citizenship

Thanks DL . I think you are probably correct and we will always have to file US taxes :-(
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Old Dec 18th 2023, 11:17 pm
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Default Re: Renouncing USA citizenship

Originally Posted by Jerseygirl
I presume you would still have income/pensions from the US, therefore you would still be required to file US taxes each year.
A non-US citizen living in the UK would need to file taxes if they had a private pension in the US?
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Old Dec 19th 2023, 3:33 am
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Default Re: Renouncing USA citizenship

Originally Posted by Cape Blue
A non-US citizen living in the UK would need to file taxes if they had a private pension in the US?
If you have income of any type from the US you must file US taxes.
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Old Dec 19th 2023, 7:55 am
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Default Re: Renouncing USA citizenship

Originally Posted by Cape Blue
A non-US citizen living in the UK would need to file taxes if they had a private pension in the US?
Originally Posted by Jerseygirl
If you have income of any type from the US you must file US taxes.

I think this is right, you would have to file taxes as a non-resident alien. I have some money from my ex-employer in Louisiana reported on a W2 every year and I still have to file and pay State income taxes, as a non-resident, on that income every year. I also have to pay FICA and Medicare taxes on that income to the IRS.
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Old Dec 19th 2023, 11:05 pm
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Default Re: Renouncing USA citizenship

Originally Posted by durham_lad
I think this is right, you would have to file taxes as a non-resident alien. I have some money from my ex-employer in Louisiana reported on a W2 every year and I still have to file and pay State income taxes, as a non-resident, on that income every year. I also have to pay FICA and Medicare taxes on that income to the IRS.
Ouch - so I have an old savings account that produces a few bucks, but what we are saying is that as a non-USA citizen living in the UK I would have to file on my 401k when I start to receive it?
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Old Dec 20th 2023, 2:01 am
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Default Re: Renouncing USA citizenship

Originally Posted by Cape Blue
Ouch - so I have an old savings account that produces a few bucks, but what we are saying is that as a non-USA citizen living in the UK I would have to file on my 401k when I start to receive it?
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