There are a couple ways to get citizenship. First, if you happen to be of significant means is citizenship via investment, this is available in St. Kitts and Dominica. But if you have the six-digit dollar figure needed for that, then you’ll want to hire a legal advisor like Mark Nestmann b/c you don’t need me then.

The second and more common way is to get residency in another country then after a certain number of years you’ll qualify for naturalization and citizenship. So look for a country that you’d enjoy living in and then check that governments immigration website for visa info. Not all visas lead to citizenship so look carefully. For instance, retirement visas are often residency only and don’t lead to naturalization. So you may want to talk to an immigration attorney, or better yet, search for expat forums to find others that have immigrated to that country for some free initial answers. And then once you found your a good place with potential visa options, visit on a tourist visa and make sure you like it. If you do like it, then talk to an immigration attorney for that country, tell them you hope to naturalize as a citizen in time so you choose the right visa program, and then get the visa. Live for the required amount of time and then you can apply for your second passport. Not easy, I know. It’s much easier once you’ve found another place you enjoy and have moved there and have set up an enjoyable life.

Have you joined any expat forums yet?

Oh, there is a third way too, if you happen to have parents or grandparents with a foreign citizenship in certain countries like Ireland, you might qualify for citizenship via ancestory. But this is unlikely for most people.

Expatriation is not a benefit for people who desire to remain 100% in the US. It’s beneficial for world travelers and people who spend the majority or all of their time living and traveling outside the US. In that case, expatriation is useful to free you from the compliance-headaches that the US government imposes on its citizens no matter where they live (amazingly freeing), to open opportunities for business relationships and banking that are now closed to US citizens as persona non-grata, and to bring fairness to the taxation burden given the US is the only country in the world that taxes based on citizenship and not residency (as every other country world taxes based on residency, which is equitable and makes sense), meaning many successful individuals living abroad have to pay taxes to two countries–where they live (as they should and makes sense) and also to the US (merely because you hold a blue passport)–which is incredibly detrimental & hurts your competitiveness particularly if you’re an entrepreneur.

Great article that touches on another reason why taxation needs to be based on residency, not citizenship, in our modern world: http://www.economist.com/node/21542413

But to answer your question, I believe you’d file 1040 for all your income up to your renunciation date (Jan 1 – Dec 20th, in your example). Then for the period from Dec 20 to the end of the year, you’d file 1040NR to declare and pay income tax on any US-sourced income, just as other non-resident persons who has any US-sourced income would do.

Of course, I’m not a tax attorney. But this is from another duo of former-US citizens here: http://renunciationguide.com/FAQ.html#TaxFilingsTheYearOfRenunciation

p.s. You probably know this, but don’t forget to get a 2nd citizenship & passport before renouncing.

You said, “Your final tax return will be from January 1st through the day you expatriate….” and “If your renunciation date is any day other than December 31st, you’ll be filing your final tax return on Form 1040NR.”

So, does it mean, if your renunciation date is Dec. 20, you will only need to file 1040NR instead of filing both a 1040 for the time before Dec. 20 and a 1040NR for the days after Dec. 20? Could you please clarify on this?

Thanks.