Renouncing USA citizenship
#1
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Thread Starter
Joined: Jan 2014
Posts: 34
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
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
#2
Re: 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
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
#3
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Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,135
Re: Renouncing USA citizenship
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.
#4
Forum Regular
Thread Starter
Joined: Jan 2014
Posts: 34
Re: Renouncing USA citizenship
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.
#5
BE Forum Addict
Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,135
Re: Renouncing USA citizenship
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.
#6
Forum Regular
Joined: Jul 2011
Posts: 106
Re: 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
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
#7
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Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,135
Re: Renouncing USA citizenship
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 ?
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.
#8
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Joined: Jul 2011
Posts: 106
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 ..
#9
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Joined: Aug 2013
Location: Eee Bah Gum
Posts: 4,135
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 ..
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.
#11
#12
#13
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Posts: 4,135
Re: Renouncing USA citizenship
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.
#14
Re: Renouncing USA citizenship
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.
#15