Who has renounced, is in process of renouncing, or thinking about renouncing?

I've been in the UK since 2002, UKC since 2007, and did the traditional panicked streamlined compliance in 2017. I have zero ties to the US and no intention of ever living there. My US citizenship feels like a burden at this point. I am tired of living in fear of what the IRS might do to me if I screw up in some way, or if treaties change, or if they change their mind about something. So I'm doing it. I have a goal of having renounced by 2023.

I would love to hear stories about renouncing, lessons learned during the process, how it feels and what happens before, during and after. Please share away!

(I'm on my way to London this afternoon for an appearance at the embassy tomorrow morning to have my middle name added to my US passport. My US passport and UK passport currently do not align and the UK won't give me a renewal until they do. See, just another expensive hoop for me to jump through for no good reason, but I do need to get my UK passport in order to renounce, so...has to be done!)

I think about renouncing but won’t consider it until our daughter leaves the USA. She and her Australian partner plan on moving to Australia within the next 5 to 10 years. Once she has left I can’t see us ever needing or wanting a US passport and the ongoing burden of holding one.

Looks like the renunciation process has been suspended…

Looks like the renunciation process has been suspended…

Obviously my timeline would be dependent upon when the service is available, but I intend to be ready as soon as it is ready.

My main concern would be eligibility for SS retirement benefits after renunciation and any spousal benefits that maybe lost.

My main concern would be eligibility for SS retirement benefits after renunciation and any spousal benefits that maybe lost.

There's a flat tax of 30% on 85% of your Social Security, which you can still draw as an NRA, in essence you would be taxed 25.5% of your SS payment, so I have read recently.

There's a flat tax of 30% on 85% of your Social Security, which you can still draw as an NRA, in essence you would be taxed 25.5% of your SS payment, so I have read recently.

Do you have a source for that by chance?

The UK/US tax treaty states that SS paid to a resident in the UK is taxed only in the UK, it doesn't as far as I can see make a distinction between USCs and non-USCs. 

https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/uktreaty.pdf

We had a member renounce several years ago.  I'll find the post (search function isn't great on this site).

Considerations:
Do you have any family ties still in the USA?  As you'll have tourist limitations for visits if someone is ill and you need to help care for them.
Social security - as you say, you will still get this
Inheritance/children - again, can all be dealt with, just may not be as simple

I fully support everyone doing what's best for them.  But I can say with confidence that keeping compliant with the IRS and Treasury takes me less than an hour per year.  And considering I get the tax credit and have received the stimulus money, it keeps me a happy bunny.  I COMPLETELY understand that many people are more than happy to eliminate that for no further paperwork pushing.

I'll go dig out that post.

When you file your final 1040, (to the date of expatriation) you'll then need to file a 1040-NR on any U.S. sourced income for the rest of the year and for all years going forward. 401(k), IRA etc custodians will need a W-8 BEN  for change of status. The default is 30% withholding, although there maybe mechanisms' to reduce this via the treaty. As Durhamlad alluded, SS is only taxed in the U.K. and there is no withholding as an NRA.

Inheritance tax thresholds are very low on any U.S. assets as an NRA. There is a U.S. and U.K Inheritance and Estate Tax agreement, but heavy ready.

Would you file your dual Status Tax return yourself, or have it done via a professional?

As others have said, the entitlement to SSA benefits is unaltered by renouncing, and any benefits are only taxed in the UK.

If you have 40 quarters or more of US minimum contributions, claiming SS benefits is as normal even if you have renounced, but WEP does apply if you are applying on your own account. If you have less than 40 quarters of minimum US contributions, you are still entitled to the SS benefit provided you have sufficient UK NI contributions, but the benefit is based only on the number of US SSA contribution quarters. This is possible by the UK/US Totalisation Agreement and does not effect your UK NI benefit. In the latter case, WEP does not apply.

As was said, I know of at least 5 or 6 UKY members who have renounced. "DrSuper99..."(?) gave a full account. KFDancer may remember the correct user name. Check out the past posts in the members list.

I'm also aware of several who thought of renouncing, but were deterred by the Exit Tax threshold. (All assets, including the full value of retirement plans, home value, investment assets, etc. greater than $2 million.)

Found it.  She's the only one I've been aware of in my time here, but certainly many people do it each year.  Her experience was written here:

https://talk.uk-yankee.com/index.php?topic=78367.msg1061907#msg1061907

A bit of admin after all was done:

https://talk.uk-yankee.com/index.php?topic=77186.0

It’s a whole lot more expensive than it was in 2012!


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Found it.  She's the only one I've been aware of in my time here, but certainly many people do it each year.  Her experience was written here:

https://talk.uk-yankee.com/index.php?topic=78367.msg1061907#msg1061907

Well done. A lot of real memory joggers on that thread.

RW was another. We exchanged several PMs after he renounced. He had a most interesting background with a family tied militarily and diplomatically to the UK. A real loss to the US, not that they care. IOTA was another, but they cancelled their UKY account afterwards. I can think of several others, but forget their user names. It's also a topic on the BritExpat site for UKCs who have lived in the US but are returning to the UK. Some have renounced, others have real concerns with the Exit Tax.

Tax seems to be the only real reason regarding renunciation, and each individuals situation is different. You mentioned time required to do the US return. I spend an hour on my UK tax return, but days on my US return with sorting numbers for 8938 mostly. After a person has lived here for decades and has UK accounts, pensions, etc., the number of foreign financial ties can become fairly large.

 

I've considered it seriously a few times. My tax situation was very burdensome for a few years, due to the GILTI tax changes and the fact I owned a small business in the UK. It really made me hate being American - I felt like I was being punished for being an expat! My long time US accountant even gave up on my taxes because of the incredible complexity of changes and I had to find an (expensive) specialist.

I think if you have anything outside the standard permanent employment situation, US taxes get very complicated, very fast. For example, my in-laws wanted to gift a stocks and shares ISA to my kids, but that would cause all kinds of tax headaches I just don't want to deal with so I had to turn them down. There is also risk of new US tax legislation causing yet more headaches. The US tax climate is very anti-expat at the moment I feel, and I think it is probably only going to get worse in the future.

So in my opinion, if you have no intention of ever living in the US, you can save substantial future headache by renouncing. I will probably go through the process for my ex as soon as it opens up again since she has no desire to live in the US. And again with my children when they are 18 depending on what they want to do.

There are drawbacks of course - the fees are very high now, and there is no sign of the embassy opening up to renunciations any time soon. And if you have any ties to the US (like I do), it can be a very difficult decision.

Do you have a source for that by chance?

The UK/US tax treaty states that SS paid to a resident in the UK is taxed only in the UK, it doesn't as far as I can see make a distinction between USCs and non-USCs. 


https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/uktreaty.pdf

www.ssa.gov/international/AlienTax.html

The tax treaty you link refers I believe to social security paid by the UK in the UK and taxed in the UK, so the US wouldn't tax it again. But if I were no longer a citizen, it wouldn't matter to me. I would only be British. I won't have to worry about any of that again after I renounce. That's my understanding as of now, but I've only just started learning and may not have this right. Either way, I am not depending on US SS to make up a big portion of my retirement income, though every little helps!