What Happens to Social Security if You Renounce Citizenship

what happens to social security if you renounce citizenship

Voluntary renunciation of U.S. citizenship does not automatically prohibit you from receiving a Social Security benefit, nor does it result in the loss of your Social Security number. However, whether or not you will receive payments in the future is determined by your citizenship and current place of residency. If you’re not ready to renounce your citizenship, but want to disclose your unreported foreign income/assets, check out our guide to IRS Streamlined Foreign Offshore Procedures.

If you are eligible for Social Security and your renunciation process is properly completed, it will have no impact on your payment or collection rights after you leave the country and you may avoid exit tax, penalties, and other fees. Your SS number will remain the same but, you will no longer be taxed as a US citizen. Also, don’t forget there might be a difference between renouncing and relinquishing US citizenship.

Is it Necessary to File a Tax Return on Social Security Payments after Renunciation?

Generally, you don’t have to file a tax return to the United States on the social security payments after renouncing your citizenship. While it varies from state to state, most countries don’t require a tax return filed post-renunciation on a Social Security payout. 

The US will withhold a set amount in most fact patterns, and you will be free to do whatever you want with the rest. On top of that, you are no longer taxed by the US government on your worldwide assets/income after renunciation.  

Furthermore, if you want to fully appreciate the good things of renouncing your US citizenship, you will have to file Form 8854 and attach it to your final tax return to identify whether you are a “Covered Expatriate” or a “Non-Covered Expatriate.”An exit tax may be imposed on a Covered Expatriate based on your deemed gain on the items you own such as stocks, real property, partnerships, and bonds.

Any deferred compensation plans on your possession are taxed either of these ways:

  • You can choose to have received a full payout the day before your renunciation and be taxed appropriately on Form 1040.
  • You can choose to renounce any tax treaty benefit on such compensation plans and have the distributions taxed at 30% when you choose to cash them.

Social Security Benefits that are Available to Those Who Qualify

You have been deemed a non-resident alien (NRA) if you have renounced your US citizenship. As such, it’s critical to understand the regulations and exceptions that apply to NRAs under US Social Security. However, if you have paid into Social Securities for the entire 40 quarters, you will be entitled to receive benefits when you retire. 

Furthermore, you can normally continue to collect Social Security advantages as an NRA, just as you would if you were still a US citizen. However, a number of circumstances influence this, including US bilateral agreements (or lack thereof), country of residence, and current citizenship.

Depending on these variables, you may just receive a minimal tax adjustment or have your payments stopped after 6 months outside the US. But, even if your payments were discontinued because of having been outside the United States for more than six months, you will only need to return to the US for an entire month every six months to continue your payments.

For instance, if you have renounced your US citizenship on your own free will and are currently a citizen of one of the foreign countries below, you may continue to receive payments while outside the United States, unless you are receiving payments as a dependent or survivor. 

  • Albania 
  • Antigua and Barbuda 
  • Argentina
  • Bahama Islands 
  • Barbados 
  • Belize
  • Bolivia
  • Bosnia Herzegovina
  • Bulgaria
  • Brazil
  • Burkina Faso
  • Colombia
  • Costa Rica
  • Côte d’Ivoire
  • Croatia
  • Cyprus 
  • Dominica 
  • Dominican Republic 
  • Ecuador 
  • El Salvador 
  • Gabon 
  • Grenada 
  • Guatemala 
  • Guyana
  • Hungary 
  • Iceland 
  • Jamaica 
  • Jordan 
  • Latvia 
  • Liechtenstein 
  • Lithuania 
  • Macedonia 
  • Malta 
  • Marshall Islands 
  • Mexico 
  • Monaco 
  • Montenegro 
  • Nicaragua 
  • Palau 
  • Panama 
  • Peru 
  • Philippines 
  • Romania 
  • St. Kitts and Nevis 
  • St. Lucia 
  • St. Vincent and the Grenadines 
  • Samoa (formerly Western Samoa) 
  • San Marino 7 
  • Serbia 
  • Slovakia 
  • Slovenia
  •  Trinidad-Tobago 
  • Turkey 
  • Uruguay 
  • Venezuela 

Moreover, if you renounce your US citizenship but are not a resident of a foreign country included on the list, you will stop receiving payments after six calendar months of staying outside the US, unless certain circumstances may apply.

One way US ex-pats may keep their eligibility is through residence. As such, if you live in one of the famous ex-pat countries below, you may continue to collect benefits regularly:

  • Australia 
  • Austria 
  • Belgium 
  • Canada 
  • Chile 
  • Czech Republic 
  • Denmark 
  • Finland 
  • France 
  • Germany 
  • Greece 
  • Ireland 
  • Italy 
  • Japan 
  • Luxembourg 
  • Netherlands 
  • Norway 
  • Poland 
  • Portugal
  • South Korea
  • Spain 
  •  Sweden •
  • Switzerland 
  •  United Kingdom

Remember that there are other countries to which Social Securities cannot make payments, these include:

  • Cuba
  • North Korea, 
  • Azerbaijan
  • Belarus
  • Georgia
  • Kazakhstan
  • Kyrgyzstan
  • Moldova
  • Tajikistan
  • Turkmenistan
  •  Ukraine
  • Uzbekistan
  • Vietnam

Thus, if you have renounced your US citizenship, you will lose unpaid payments while in these countries. Why? Because only US citizens staying in these nations can accumulate unpaid payments and receive them after leaving the country.  

Points to Remember When Renouncing US Citizenship

Understanding how to renounce US citizenship does not imply that you must forego the retirement benefits or income that you had previously anticipated. Check out our guide to tax implications of renouncing US citizenship. It’s critical to educate yourself on the financial ramifications of your renunciation so that you’re aware of both the immediate and long-term tax filing obligations you may face if you opt to keep assets in the US. However, this news is positive for a US ex-pat who seeks to surrender his or her US passport and retire in the country of their dreams!

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