If I and my wife renounce to my U.S. Citizenship, and become a resident on another country: 1) Would I still receive my social security benefits? 2) Would my wife receive her social security benefits being that she would get 50% of mine normally (without either of us renouncing citizenship)? 3) What would happen to our respective IRA accounts (what would we have to pay when withdrawing money from those, etc.)? Thanks!
1 Answer from Attorneys
Renouncing citizenship would have the effect of removing your right to claim social security -- stated another way -- "no". You won't be able to claim those benefits anymore.
In regards to the IRA question -- the tax withheld on an early IRA withdraw is payable whether you are a US citizen or not. Just as when you have a bank account in the US, the interest earned is consider income in the US, similarly the tax deferred earnings in an IRA is considered taxable income when you withdraw the funds (simplified explanation here). As such, it is the bank that holds back the money for the government, not you. Further, if you have no taxable status, you will pay the highest tax bracket (automatically withheld by the bank) in addition to any early withdraw penalties.
Be sure to speak with a tax attorney about this prior to doing anything. Our firm has considerable experience in immigration and tax law -- feel free to contact us if you wish to discuss further. 703-402-2723.
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