- within Tax topic(s)
- with Senior Company Executives, HR and Finance and Tax Executives
- in Canada
- with readers working within the Accounting & Consultancy, Business & Consumer Services and Insurance industries
Every year, as June 15 rolls around, hundreds of thousands of Americans living abroad receive the same unwelcome reminder: it's time to file US taxes again. For many, it's not just a box to check off. It's a stressful, expensive, and often overwhelming process. Tracking down foreign account statements, converting currency, understanding complex US and cross-border tax rules, praying you don't owe any US tax, and then paying high accountant fees on top of that—it's no wonder so many expats dread this season.
If you're feeling the stress of this annual burden, you're not alone. June 15 serves as a stark reminder of how challenging it can be to stay US tax-compliant. But here's the good news: it doesn't have to be this way. 2026 can be the last year you ever file a US tax return if you take the right steps to renounce your US citizenship correctly.
A 2024 CNBC article highlights that many American expats are considering renunciation due to the high costs and complexity of filing taxes from abroad. Additionally, a recent Washington Post article noted that between 2024 and 2025, there was a significant rise in the percentage of US expats considering renouncing, with the tax burden being flagged as the number one reason.
The United States is one of only two countries (the other being Eritrea) that taxes citizens on worldwide income in life and in death, creating financial and administrative burdens that often outweigh the benefits of holding a US passport. We previously reported that the 2025 One Big Beautiful Bill Act failed to alleviate, in any meaningful way, the tax and financial burdens on Americans living abroad. Instead, US expats are left to continue grappling with complex reporting requirements and harsh financial consequences. The growing trend of renunciation underscores the potential benefits for those looking to make 2026 their final year of filing.
The Expat Ordeal
While many expats are open to dual citizenship for sentimental reasons, in many cases, a thorough analysis would reveal that the cost of keeping the citizenship far outweighs its benefits. The citizenship-based taxation regime creates numerous issues for Americans living abroad. Most fundamentally, all US citizens are required to file tax returns reporting their entire worldwide income, even if that income has nothing to do with the United States. In addition to this basic filing requirement, US citizens must also complete an array of extensive informational returns to disclose bank accounts, trusts, and interests in certain overseas corporate entities. For many expats, compliance costs alone can reach thousands of dollars annually, even before any tax is paid to the United States.
Additionally, compliant expats are subject to harsh tax consequences on transactions that are otherwise tax-favoured in their resident jurisdictions. For instance, selling a principal residence located in a country that exempts such sales from capital gains tax can trigger hundreds of thousands in US liability with no foreign tax credits to ease the burden.
Likewise, the US tax system does not honour or provide corresponding tax shelter treatments for the specialized tax-favoured retirement and savings accounts used in many countries (e.g. the Canadian RRSP and TFSA, AustralianSuper, New Zealand KiwiSaver and UK ISA). This results in an unfavourable tax mismatch for expats living in these jurisdictions who seek to comply with the burdensome US tax filing requirements each year. Not to mention the double-tax nightmare if one has an interest in a non-US privately held company, including operating companies for professionals like doctors, dentists, lawyers, consultants, or other entrepreneurs. Further, Americans living abroad can find it very difficult to invest in certain asset classes, including mutual funds and ETFs, due to punitive taxes imposed by the United States on controlled foreign corporations (CFCs), passive foreign investment companies (PFICs), and global intangible low-taxed income (GILTI).
And if the US tax problems during life were not enough, US expats are also concerned about the US estate tax in death. This estate tax regime subjects Americans living abroad to a graduated tax on the value of all assets above a certain threshold, irrespective of any estate tax shelter they may otherwise be afforded in their country of residence. Although the One Big Beautiful Bill did increase the unified gift and estate tax credit, there is no guarantee that this favourable policy will endure in the current turbulent political landscape or remain as high as it is in the year you die (if you die as a US citizen). Because of this uncertainty, many expats may benefit from using the credit now to implement tax-planning strategies to avoid the US exit tax when renouncing US citizenship rather than waiting and risking unfavourable changes in the future. One who does not die a US citizen can avoid the US estate tax regime completely in death.
In recent years, there have also been legislative actions seeking to strip expats of fundamental rights and privileges currently enjoyed. For example, a new bill introduced by Senator Bernie Moreno (R-OH) proposes that the US eliminate the legal recognition of dual citizenship. Under the proposed legislation, anyone holding US citizenship and another nationality would have just one year to choose between forfeiting their foreign nationality or be stripped of US citizenship permanently! This bill fails to consider nuances created by family ties, tax residence, global mobility or the "Accidental American" dilemma. Similarly, on August 1, 2025 Congressman Abraham Jamal Hamadeh introduced the Proving Residency for Overseas Voter Eligibility Act (PROVE Act), seeking to amend the Overseas Citizens Absentee Voting Act to require non-military Americans living overseas to provide evidence of US residency for the voter or a spouse, parent or legal guardian, as a condition of receiving an absentee ballot. If passed, this bill will result in the disenfranchisement of many expats or create significant financial burdens by forcing them to maintain US residency.
With few legislative proposals advancing the welfare and rights of US expats over the last few decades, proposals like these reduce them to tax-paying instruments with little or no political voice or impact in US policymaking, rather than being a vital part of the American fabric.
Why Renounce in 2026?
Renouncing your US citizenship is a serious decision, but for many, it's a strategic one. Renunciation can end years of complex reporting requirements, save you hundreds of thousands in tax preparation costs, and eliminate US tax owing in life and death for you and your loved ones. At the same time, it can eliminate the annual stress of being tied to a tax system that no longer reflects your life abroad. Renouncing now also insulates you from any unfavourable changes in US tax law that may be forthcoming under current or future administrations. By planning ahead, you can secure a renunciation appointment this year and ensure that your 2026 return is your last. However, you need to move quickly, as the 2026 renunciation dates are running out worldwide!
Renouncing your US citizenship or terminating your Green Card can be a complex and intimidating process, and it must be done correctly. Failing to renounce properly can result in a US exit tax on all your worldwide assets, disbarment from the US for life, inheritance tax upon death, loss of treaty benefits, and more. We can ensure that the renunciation is done correctly to avoid all these potential pitfalls and more. Our team of experienced US tax attorneys and accountants helps between 900 and 1,200 people terminate their US status correctly every year across six continents – more than any firm in the world. As seasoned renunciation experts, we are equipped to frame the right questions and help address all tax, legal and estate issues of the renunciation process.
If you or a family member is a US citizen or Green Card holder considering renunciation, we invite you to visit our dedicated webpage for more information. This page contains links to register for our upcoming renunciation webinars. You can find one tailored to your geographic location in our events listings.
These webinars thoroughly review everything you need to know about the US citizenship renunciation process and available options, allowing you to make an informed decision about what is best for you and your family.
Moodys Tax Law is only about tax. It is not an add-on service, it is our singular focus. Our Canadian and US lawyers and Chartered Accountants work together to develop effective tax strategies that get results, for individuals and corporate clients with interests in Canada, the US or both. Our strengths lie in Canadian and US cross-border tax advisory services, estateplanning, and tax litigation/dispute resolution. We identify areas of risk and opportunity, and create plans that yield the right balance of protection, optimization and compliance for each of our clients' special circumstances.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
