While both renouncing and relinquishing U.S. citizenship end up in losing your citizenship, they generally differ in how you would want to lose it with the intent of losing the citizenship and when the loss takes effect. Generally, relinquishing U.S. citizenship is considered a form of renunciation.
Renouncing U.S. Citizenship
With the immigration law, United States citizens have a right to renounce citizenship. According to Section 349(a) of the Immigration and Nationality Act (INA) (8 U.S.C. 1481(a)), there are 2 possible ways of renouncing US citizenship:
- For citizens abroad, you can make a formal renunciation of your United States citizenship in a foreign state before a diplomatic or consular officer of the United States. (8 U.S.C. 1481, Sec. 349 (a)(5))
- You can make a formal renunciation of your nationality in such form as may be prescribed by a designated officer of the Attorney General. (8 U.S.C. 1481, Sec. 349 (a)(6))
Relinquishing U.S. Citizenship
As initially said, to relinquish citizenship is a form of renunciation. For one to have a relinquished U.S. citizenship, you would have had voluntarily performed an expatriating act with the intention of relinquishing your citizenship. Such acts would include:
- Obtaining naturalization in a foreign country or state by voluntarily filing for themselves, or by someone duly authorized, after reaching the age of 18. (8 U.S.C. 1481, Sec. 349 (a)(1))
- Having taken an oath or any formal declaration of allegiance to a foreign state after reaching the age of 18. (8 U.S.C. 1481, Sec. 349 (a)(2))
- Serving or entering the armed forces of another state, given any of the following conditions are met: (8 U.S.C. 1481, Sec. 349 (a)(3))a. Such forces are engaged in hostilities against the United States.b. Serving as a commissioned or non-commissioned officer.
- Accepting employment with a foreign government after having reached the age of 18 if: (8 U.S.C. 1481, Sec. 349 (a)(4))a. One has the nationality of the said state.b. Accepting a position that requires an oath of allegiance.
- Having been convicted for an act of treason, attempting to overthrow, or bearing arms against the government of the United States. (8 U.S.C. 1481, Sec. 349 (a)(7))
After having renounced your citizenship, you will now be considered not a US citizen. You will lose all the legal rights you had as a US citizen including living and working in the U.S., voting in the U.S. elections, sponsoring your close family members for residency status, and a lot more.
As a former citizen, it will also be fairly difficult to get your US citizenship back as renunciation is basically irrevocable. However, you can try and ask a diplomatic officer for information on reinstatement if that would be possible.
Exit Tax
Upon renouncing your U.S. citizenship, this doesn’t mean that you’ll have no more obligations to the United States. Exit tax would be your last tax obligation once you have renounced your citizenship. The U.S. Internal Revenue Service has the right to impose this when you decide to renounce, but only if you meet certain criteria.
According to the internal revenue code, if you have a net worth of more than $2 million, including all your assets, this will be applied to you. For tax purposes, it is based on the inherent gain of everything you own. This will also include even your tax-deferred accounts.
Moreover, even if you don’t have a net worth of more than $2 million, but haven’t complied with your federal tax obligations for the last 5 years, then it will still be applicable to you once you have renounced.
