Renouncing U.S. Citizenship in Calgary: Key Tax Implications and Legal Challenges

Understanding the Complexities of U.S. Citizenship Renunciation 

Renouncing U.S. citizenship involves more than just giving up a passport—it comes with significant legal and tax consequences. In a recent interview with CIBC’s Popowich Karmali Group, Azam Rajan, a tax and immigration lawyer at Bordera Tax and Immigration Law, emphasized the importance of understanding the U.S. exit tax, IRS compliance, and financial risks before making this decision. Many individuals in Calgary and Edmonton are unaware of the tax implications until they begin the process, which is why professional guidance is crucial. 

At Bordera Tax and Immigration Law, our team, including tax and immigration lawyer Azam Rajan, helps individuals navigate the complexities of U.S. citizenship renunciation in Calgary. If you are considering this step, it’s essential to understand the legal process, tax obligations, and potential risks before making your final decision.

Legal Process for Renouncing U.S. Citizenship in Calgary and Edmonton 

Renouncing U.S. citizenship is not as simple as signing a form and handing in your passport. The U.S. government has a strict process that includes interviews, tax documentation, and potential waiting periods. 

• Appear Before a U.S. Consular Officer – Renunciation must be done in person at a U.S. Consulate or Embassy and requires signing an oath of renunciation. This can be done in Canada at consular offices in Calgary or other major cities. 
• Complete Form DS-4079 – This document helps U.S. officials determine if you tntend to give up your citizenship. 
• Obtain a Certificate of Loss of Nationality (CLN) – Once your application is approved, you will receive a Certificate of Loss of Nationality in Alberta, confirming you are no longer a U.S. citizen. 

While the process may seem straightforward, the real challenge lies in the financial and tax obligations that come with renunciation. 

The U.S. Exit Tax: What Canadians Need to Know 

Many individuals are caught off guard by the U.S. exit tax, which applies to certain expatriates who meet the covered expatriate criteria. This tax is designed to ensure the U.S. collects revenue from individuals with significant assets before they renounce their citizenship. 

You may be subject to the U.S. exit tax in Canada if: 

• Your net worth exceeds $2 million USD, including assets like property, investments, and retirement accounts. 
• Your average annual U.S. tax liability over the past five years exceeds $190,000 USD (2024 threshold). 
• You fail to certify five years of tax compliance by filing Form 8854 with the IRS. 

For high-net-worth individuals, failing to plan ahead can lead to substantial tax liabilities. According to Bordera’s very own Azam Rajan, in a recent CIBC Popowich Karmali Group interview, stated that one of the biggest surprises for individuals renouncing their U.S. citizenship is the potential U.S. exit tax. If classified as a covered expatriate, individuals may face a capital gains tax on worldwide assets, including Canadian property and investments. Rajan advises that advanced cross-border tax planning in Alberta can help reduce financial risks and prevent unexpected tax liabilities. 

Tax Compliance and Filing Requirements for U.S. Expats in Calgary 

Even after renouncing U.S. citizenship, former U.S. citizens must meet all tax compliance requirements. This includes filing final U.S. tax returns and ensuring all past obligations have been met. 

Key compliance steps include: 

• Filing Form 8854 – This document certifies that you have met all U.S. tax obligations before renunciation. 
• Reporting Foreign Bank Accounts (FBARs) – Even if you no longer reside in the U.S., failure to report foreign financial accounts can lead to severe penalties. 
• Handling Late U.S. Tax Returns – Some individuals discover they have unfiled tax returns. Using programs like the Streamlined Filing Compliance Procedures may help reduce penalties. 

Proper U.S. tax compliance for Canadians is critical to avoid IRS audits or unexpected tax debts after renunciation. 

Who Should Consider Professional Guidance? 

Renouncing U.S. citizenship involves legal, financial, and emotional considerations. While some individuals may not owe the exit tax, failing to properly navigate the renunciation process can lead to complications with the IRS, tax penalties, or even travel restrictions to the U.S. 

Bordera Tax and Immigration Law provides expert advice for: 

• Accidental Americans in Canada looking to sever U.S. tax ties. 
• High-net-worth individuals concerned about the U.S. exit tax. 
• Snowbirds and business owners navigating cross-border tax issues. 
• Individuals with past IRS compliance issues who need help filing delinquent forms. 

By working with a U.S. tax and immigration lawyer in Calgary, you can ensure that renouncing your citizenship is done legally, strategically, and with minimal financial impact. 

Making an Informed Decision: Contact Bordera Tax and Immigration Law 

Renouncing U.S. citizenship in Calgary or Edmonton is a significant decision that requires careful planning. Understanding the legal process, tax obligations, and financial impact is crucial before taking this step. The U.S. exit tax, Form 8854 filing, and tax compliance requirements make professional guidance essential for a smooth renunciation. At Bordera Tax and Immigration Law, our experienced team, including Azam Rajan, helps individuals navigate every step of the process. As Azam Rajan highlighted in his interview with CIBC’s Popowich Karmali Group, renouncing U.S. citizenship requires strategic tax planning to avoid IRS penalties, the U.S. exit tax, and compliance risks. At Bordera Tax and Immigration Law, we help individuals in Calgary and Edmonton navigate this process with expert legal and tax advice. Contact us today to ensure a smooth and legally compliant renunciation.