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Taxes Due Upon Renouncing Citizenship

Celebrities threatening to leave America if Donald Trump was elected president included Barbara Streisand, Miley Cyrus, Amy Schumer, Samuel Jackson, Rosie O’Donnell and Whoopi Goldberg.

According to Salon magazine, O’Donnell and Goldberg also threatened to move abroad if George W. Bush got elected, along with Matt Damon, Tim Robbins and Susan Sarandon. Spoiler Alert: Trump and Bush got elected, and all those people are still here. All could have benefitted from wise tax counsel before making such bold, unfulfilled statements.

First of all, moving to the country of choice, Canada, is not easy. You have to have a lot of money, a sponsor and a Canadian job (or job offer) to even be considered. Secondly, U.S. persons must continue to report their worldwide income and pay taxes. Thirdly, they can choose to join Eduardo Saverin, co-founder of Facebook, and rock star Tina Turner as the only high-profile U.S. citizens to renounce citizenship.

Renouncing U.S. Citizenship Requires:

• A fee of $2350 paid to the State Department.

• A possible exit tax similar to capital gains for those with assets exceeding $2 million.

• A 30% withholding tax on certain forms of subsequent U.S. source income including dividends and deferred compensation.   

• Be prohibited from purchasing firearms under the Gun Control Act of 1968.

• Reciting an oath where you, “absolutely and entirely renounce your United States nationality, together with all rights and privileges and all duties of allegiance and fidelity to the United States of America.”

That last one was what changed Elizabeth Taylor’s mind in 1968.