The $450 Fee to Quit America Hides a Much Larger Bill

Renouncing U.S. citizenship carries a State Department fee of $450, but tax attorneys, exit taxes, and foreign account compliance costs can push the true price into five or six figures.

The State Department charges $450 to process a renunciation of U.S. citizenship, a fee raised from $450 in 2014 — itself a 422 percent jump from the prior $95 rate.
Covered expatriates — those with net worth above $2 million or average annual net tax liability above $190,000 — may owe an exit tax treating all worldwide assets as sold on the day before expatriation.
Tax attorneys specializing in expatriation routinely bill $5,000 to $30,000 or more for the compliance work alone, before any actual tax liability is calculated.
Outstanding foreign bank account reporting obligations under FBAR and FATCA can generate separate penalty exposure running into the tens of thousands of dollars.
Renunciants must also file Form 8854, the expatriation statement, and failure to file correctly can result in the IRS treating the individual as a U.S. citizen indefinitely for tax purposes.

The State Department will sever your legal bond with the United States of America for $450, payable at a U.S. embassy or consulate abroad. That figure, set in 2014 after a 422 percent increase from the prior $95 fee, covers the administrative cost of the appointment. It does not cover much else.

MarketWatch reported this week on the constellation of costs that prospective renunciants routinely underestimate. Tax attorneys who handle expatriation cases say preparation fees alone — untangling years of foreign account disclosures, filing compliance paperwork, and advising on timing — commonly run between $5,000 and $30,000 before any actual tax bill is calculated.

For “covered expatriates,” defined under Internal Revenue Code Section 877A as individuals with net worth exceeding $2 million or average annual net tax liability above $190,000 over the prior five years, the exit tax treats all worldwide assets as constructively sold the day before expatriation. Unrealized gains become immediately taxable. Retirement accounts face a separate deemed-distribution rule.

Foreign bank account reporting failures under FBAR and FATCA carry their own civil penalty schedules, potentially dwarfing the underlying tax owed.

The renunciant must also file Form 8854 with the IRS. Failure to file correctly keeps the clock running on U.S. tax obligations indefinitely.

The $450 receipt from the consulate window is, in most cases, the cheapest document in the folder.