Look up the HEART Act on becoming an expatriate. There is now a price to pay for US citizens who want to relinquish their citizenship (in most cases).
The thing about relinquishing citizenship is, there is now an exit tax. And in order to get an appointment to renounce or relinquish, there is now a $450 fee payable to Dept. of State at the embassy where you renounce (relinquish).
Being a covered expatriate is currently not as bad as it sounds (although it can possibly get worse in the future, and who knows, might just be tomorrow when they change the rules again). While there is that $2 million net worth issue, the thing is, the first $626,000 (I think I've got the dollar amount right, I know it's over $600,000) is exempt from taxation.
And here's the thing. It's only an exit tax on UNREALIZED GAINS. In other words, if you have real estate that you bought 20 years ago and have not sold, then you have not realized the gain. So they tax you as if you had sold it the day before you renounced citizenship in USA. (So sell the property before you renounce. You'll end up paying taxes on the property anyway either way.) (If the real estate you sell is your primary residence, you still have a $500,000 exemption on the gain when you sell it . . . for now, anyway. They're probably going to close this thingy soon, too, so grab all the exemptions and deductions you can while they're still in play!)
If you are planning to renounce, one part of getting your affairs in order if you are not planning to return to the USA except to visit from time to time is to cut all ties. In other words, sell property and take the money. That way you will have the cash on hand in order to be able to pay the taxes due. Because the tax is due whether you sell it or not, and if you don't have the cash to pay it, then that's your problem, Mr. IRS-man still wants his money.
The thing is, it's a ONE TIME tax. Once you pay it and leave the US, you are done with the IRS. The days of having to still report and file stuff for 10 years after expatriating are over and gone, thanks to the HEART laws that brought the exit tax into being. Nowadays whenever you expatriate, you have one last tax return to file, which is usually due the April 15th after you renounce.
I am a member of the private site over at SovereignMan, and although the newsletters and other updates are worth it, one of the biggest benefits of membership is the private forum where other like-minded individuals come together and openly discuss strategies and help each other out. And the information is not just for people with big bank balances. There are options for opening offshore bank accounts for every budget, and options to obtain second citizenships legitimately for just about every price level from $7,500 or so up to $500,000. Obviously the lower price levels also involve longer waiting periods (2-3 years) before obtaining the desired results. (The $500,000 option involves a 6-week process for a family of four, without having to visit the location in order to get the job done.) There is also lots of info on where to go if you are looking to open bank accounts or companies in other countries, both for the US citizen and those outside the US. It's easier for just about everybody outside the US except the Chinese! And what I like is, most of the time these are not contacts that are just referrals, the contacts are people who get the job done and who Simon Black has personally done some sort of business with. They are stable, not fly-by-night operators just out to snatch a buck, as in take your money and then fail to deliver. In addition to all of that, there are also other members who have shared their own personal contacts as well, inside the forum.
Oops! I didn't mean to sound like a raving commercial for the SovereignMan site. It's just that there's a lot in there for the money.
