Accidental American: Should She Renounce?

Question

My mom was born/lives in Canada, but just found out she is also a US citizen. We are getting her caught up on all of the US stuff, but it’s a lot of paperwork. She started to wonder if there are any tax benefits to being a dual citizen?

Her plan now is to get caught up on all of the US filings, and then renounce the US citizenship, unless there is some sort of benefit to staying a dual citizen.

Answer

The thing about US citizenship is that you have to look at it from two angles: Tax, and Intangibles.

From a tax perspective, there aren’t any benefits. In fact, one could say that it’s generally a negative, as you have to file extra tax paperwork every year.

But from an “Intangible” perspective, you gain things like greater ability to travel and a greater ability to work.

So a person needs to weigh the extra paperwork required to maintain dual citizenship vs the intangible benefits of remaining an American.

Separately, when a person starts to look at renouncing US citizenship, you open the door to possible expatriation tax. Look into “Covered Expatriate” status and see if she is caught by the rules or not.