Renouncing US citizenship is a difficult, emotional choice, but for some US citizens living in Canada, it feels as if expatriation is the only option. Indeed, expatriation is the only way to completely free oneself of a lifetime of US tax obligations.
Indeed, by renouncing US citizenship, you will gain many freedoms; for example, you will be free to benefit from investing in TFSAs and Canadian mutual funds and ETFs. You will be free of the US estate and gift tax regime, and you will no longer have to comply with the IRS’s often onerous and expensive tax reporting and tax filing obligations.
US citizens considering expatriation need to know that the process may be arduous; it is also expensive. Additionally, certain factors must be proven to the US government before one can expatriate; for example, US citizens living in Canada must be tax-compliant for a certain number of years before expatriating.
High net worth individuals may also have to do extensive financial planning prior to renouncing US citizenship to avoid paying US exit tax.
When considering whether to give up US citizenship, Americans living in Canada should weigh all the pros and cons of expatriation with the help of a cross-border financial planner as well as an experienced legal team specializing in immigration.