A growing number of Americans are calling Canada their home. The Maple Country is a great destination for US citizens to relocate with similar cultures and practices.
However, should you consider renouncing US citizenship and becoming a resident of Canada permanently?
The decision to give up your US citizenship should be well thought out. You must account for all the vital factors to make an informed decision.
There is no going back once you decide.
Below are a few considerations to include in your decision-making.
The US taxes its citizens irrespective of their location. That means you are liable to file your return to the IRS and pay your taxes even if you live abroad.
You can face penalties and legal hassles if you miss paying your US taxes.
Additionally, you must pay your Canadian taxes. Dual taxation can soon become complicated and add up to a significant amount yearly.
Renouncing US citizenship can be a practical choice if you want to settle in Canada. You are no longer required to pay taxes to the IRS.
However, you must file a final tax return using IRS Form 8854. You may also need to pay an exit tax.
Leverage IRS Streamlined Tax Amnesty Filing
You must be tax-compliant for five years to renounce your US citizenship. However, some expats may not fulfill this requirement.
They can take advantage of the IRS’s streamlined tax amnesty filing to become tax compliant. It is an easy process to file taxes for three years missed due to an honest mistake.
You can reduce or even avoid any penalty for missing your taxes.
The streamlined filing takes care of your unpaid taxes for three years. If that does not make you tax compliant, you must pay for additional years for giving up your US citizenship.
Access to Financial Resources
Severing your ties with the US can limit your access to specific financial services. Institutions may be discouraged from working with you due to your non-US citizenship status.
They may also show less interest due to the Foreign Account Tax Compliance Act (FATCA) reporting implications. The nature of services may include banking, investment, and retirement planning.
Consequently, Canadian citizenship may open the doors to global financial services. You can gain more flexibility in managing your investments and finances worldwide.
It is a hub for global companies to set up bases and offer services. You can access a wide range of providers that may not operate in America.
Additionally, you free yourself of your US financial responsibilities to make choices that align with your objectives.
Settling in a foreign country brings the challenges of cultural adjustments. However, that is not the case with Canada.
The two countries are neighbors and share many cultural and emotional ties. You don’t feel like visiting a foreign country when you switch locations between the two nations.
Canadian citizenship can help you embrace cultural diversity. The country is home to a large number of immigrants from around the world.
Every province is unique and offers a melting pot of culture. You are likely to feel right at home and pick up unique emotional and cultural connections.
However, it is necessary to evaluate factors like the level of your connection to the US. It is best not to renounce your citizenship if you feel strongly about your roots.
Weigh both sides to decide wisely.
Renouncing US citizenship is a complex process. It has several steps, and you must fill out countless forms.
Additionally, you need to attend a renunciation appointment and clear your financial liabilities. It is often necessary to work with professionals to ensure a smooth process.
The US also charges you a fee for your severance, which is above $2,000. You must fulfill all formalities accurately to give up your US citizenship.
Be mentally and physically prepared to carry out all bureaucratic processes and duties.
Renouncing US citizenship should be an informed and well-considered decision. Assess all pros and cons with your financial and tax implications. Learn more about processes like the streamlined tax amnesty filing to make the process hassle-free. You should also work with a professional to ensure your application is error-free.