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It’s worse if the country you are expatriating to has a tax treaty with the US. Basically, those countries act as local IRS offices, with even casinos reporting winnings to the IRS just as they do to their local revenue offices.

I cannot strongly caution enough, however, to consider all ramifications of surrendering that citizenship. For all the faults of anything else, the US is still the most powerful international player in the known universe. Giving up those rights and protections is a major, major decision and not at all to be taken lightly or rashly.

Yes, you can always renounce your citizenship and live somewhere else, but (like everything) there are some crucial caveats you should consider.

To renounce your citizenship, you must find a country which will grant you either permanent status visa or citizenship itself. Also, you will lose all US protections if you are in a place which later destabilizes for some reason (you can’t go to the US embassy if some revolution breaks out, for example).

The Exit Tax itself can be considerable. Basically, think of everything you own right this instant. Then imagine selling it all as of the day before you expatriate. The tax is calculated on that Market to Market sum, above around $600,000 in value. This could significantly impact your retirement accounts, for example.

When it was proposed, it was called the Billionaire’s Amendment, but it applies to FAR more than just billionaires. The tax rate is calculated according to which tax bracket you fall into with that sum added to your existing ordinary income.

I’m a long time lurker but decided to log in when I saw this post, mainly because of the danger it poses to both the OP and any others who might be thinking the same thing.

Without commenting on your reasons for wanting to retire abroad, you should realize that for tax purposes, it doesn’t matter. You are an American citizen. It doesn’t matter where you are living, you are still subject to US taxation, regardless of whether a tax treaty is in place with your chosen country or not.

For retirement accounts, such as 401K and IRA or other securities, it’s all considered ordinary taxable income the moment you start drawing on it. Income you earn from business you are doing in that country might have some tax exclusions for you under the Foreign Earned Income code. You are still required to file a 1040 and failure to do so can result in a $10,000 fine.

The other option is to renounce your citizenship, but this poses its own financial problems. At the time of such a renouncement, you would be required to add up the value of all your assets (retirement, checking, savings accounts, homes, cars, artwork, etc.) and pay a lump tax on the value of them all. It’s called an Exit Tax and it was enacted to discourage the kind of thing you seem to be wanting to do.

Hope this helps and I strongly advise speaking to both a lawyer and a competent accountant before making any major decisions.