Other people have addressed my main point of "what if your kids later decide to go back to the US? " but I don’t understand this- if you and your husband relinquish your US citizenship now , the penalty will be to pay US taxes for another six years? Aren’t you paying US taxes now and won’t you be paying them for the next six years even if you don’t relinquish your US citizenship?x?
That was my thought too- even if they can have their citizenship renounced before they’re adults, that’s probably something they should decide for themselves.
IRS paperwork being a huge pain in the ass is enough reason if there are no other tangible benefits in a specific situation to being a US citizen. And FTR, all Canadian lotteries that I know of, certainly the government-run ones, are tax-free. The amounts are also paid out in a lump sum. So if you win a described prize of, say, $10 million, you actually get $10 mil and owe no tax on it, not $x per month or a lesser lump sum that is taxable, as in many US lotteries.
Again, my husband and I are not considering relinquishing our citizenship. We are not worried about the cost or penalties - we will remain US citizens and continue to pay taxes in perpetuity.
The issue is whether the kids want or should consider it.
I understand that you and your husband aren’t relinquishing your citizenship. But there’s a reason you aren’t ( or more specifically, that your husband isn’t) - maybe you don’t want to become a citizen of Switzerland, or maybe you want to be able to visit your parents easily or whatever the reason is that has nothing to do with costs or penalties. You aren’t keeping your US citizenship because you love paying more in taxes- there’s some other reason. And there no reason that can’t apply to your kids - that they might have a reason to keep their US citizenship. Maybe they’ll want to live with your parents for a year after college, or maybe they’ll want to go to grad school in the US (which will require a visa and I wouldn’t be surprised if it’s difficult to get one after renouncing your US citizenship). They might even decide to go to university in the US and remain there. Your two teenage kids can’t possibly know now whether they will want to give up their US citizenship - of course, they might consider it at some point but it probably shouldn’t be as soon as they turn 18, before they have even finished their education.
We are honestly not trying to push them to do so. The idea is actually a bit worrisome. Right now, my daughter is looking into uni in Europe or the U.K. She has been amazingly fortunate to have been able to travel to over 15 countries and she sees the world very differently than we did at her age. She is at the age where she questions everything and her reactions to the world are more emotional than logical.
After spending a few weeks in the US over the summer and watching more reports of mass shootings on television, hearing her friends discuss “active shooter drills” at school, watching her cousins struggle with enormous student loan debt… she does not consider the US a desirable place. She and her friends were harassed at the local mall, confronted by religious zealots for having a rainbow flag on a backpack. She doesn’t feel safe and now considers the US to be a violent and cruel country. She is a teenager and, like many teens, sees the world in black and white. She is passionate about LBGTQ rights, about gun control, about saving the planet, etc. etc. She says she never wants to go to the US again.
I’ve always just been American and never really considered being something else. When I was her age I didn’t have a passport and had never been outside the country. She is also potentially able to apply for Swiss citizenship within 3 more years, as the 10-yr rule is not necessarily applicable for minors and students. Of course, we are not allowing her to make such decisions right now. This summer trip has brought up many new questions from her and we are just discussing things and gathering info.
In regards to needing a visa to travel to the US - we’ve never had any issues getting traveling visas quickly and easily - I think only Australia and Russia have required visas thus far. But we’ve never had to apply for a visitors visa to a country where citizenship was renounced! That would probably open a huge can of worms!!
There are penalties for avoiding tax. In particular, there may be penalties for renouncing US citizenship to avoid tax but, as I remember, renouncing US citizenship just doesn’t automatically immediately remove your tax liabilities.
Also, as I remember, renouncing US citizenship to avoid tax requires more documentation.
If your kids haven’t had to pay US taxes yet, the procedure for renouncing US citizenship may not involve bringing their US tax status up to date.
Some of my family have renounced citizenship. No penalties of any kind were applied. Accounting fees for some of the tax returns were heavy.
I must say, I’m still a little salty from paying the US government 80K for selling a house that my husband solely owned, in another country, before he met me. (And one that wasn’t even generating income - it was a small house in which his father lived for 12 years rent-free.) Even if the kids never live in the US and buy a house in EU or AUS, the US would still have some claim to any future home they might buy/sell.
Anyway, we are not trying to avoid taxes ourselves. We are just looking into whether or not continuing citizenship for the kids is beneficial in the long run, especially if they no longer think of themselves as American and are more likely to settle in Europe or Australia.
We have time to explore this idea and will meet with immigration and tax experts down the line. Thanks, all, for sharing your insights.
I’ve not had to travel to the US since renouncing so don’t know if it would be any hassle at all. I go to Canada about once a year for work and always make sure to book a direct flight and not one that stops in the US just in case.
It’s something for us to consider. Even if no one wants to settle in the US, they might have issues just visiting for a cousin’s wedding or something like that. I’ve always found that visitor visas for less than 3 months are usually not a big deal but, like you, we’ve never had experience with visas after renouncing citizenship.
Many issues to ponder. Thanks everyone. 
Things have really changed since 50 years. A friend of mine left for Canada, draft notice in hand, and went immediately to the US consulate and renounced. They accepted it; it didn’t cost him anything and he certainly never filed a US tax return thereafter.
I know a woman whose father was American, but never registered her birth with the consulate and she has never ever filed US tax returns. In fact she has no idea (I never asked her, but that’s what her mother says) that she is supposed to. There is no way they could ever know about her since she travels on a Canadian passport.
Bumped.
A record number of people are giving up their US citizenship this year, and taxes seem to be a big reason why: A record number of people are giving up their US citizenship, according to new research. Here's why | CNN
You can read how wide and fine the net is in this concise Wikipedia article. If you are a “US Person”, they’ve got you.
I agree with that article, which makes it clear it’s not about tax. As the article indicates, it’s filling out tax returns which inspires Americans to renounce citizenship.
I think the recent law (forgot the acronym) is a huge pain in the ass when it comes to overseas banking and taxes. In reality, certain Americans have had to disclose financial information since the 1970s but the law was mainly intended to go after people with large bank accounts in Switzerland or under-the-radar cash flow in the Caribbean. Now the net is cast over a much wider area to the point where many foreign banks just don’t want to deal with US citizens, which hurts Americans’ employment and investment opportunities. The intent of the law was good, but it needs to be changed somehow.
The tax returns are bad enough, but the FBAR report, which asks for the exact same information as the 8938 but in a different format and can be filled in only online is absolute torture and that has been required only in the past few years.
But I did get a reward for having dutifully filed tax returns (even if I paid no taxes) for 50+ years: a check from the US treasury for $2400 to my wife and me. What a boondoggle.
I can see how she could have gotten that impression, but maybe you should try and raise your children to be a bit more open minded. I could pick any country and selectively find negative points and declare that I never want to go there. Instead of limiting your children’s options I would think you would want to make sure they have as many options available to them. And as far as taxes go, you keep talking about double taxation as the motivation, but the US personal income tax rates are some of the lowest in the world (Is the U.S. the Highest Taxed Nation in the World?-2016-07-22) So given the tax credit you get for paying foreign taxes in the countries where you earn the money, you shouldn’t be paying much if any US tax.
As I read it, it’s more frustration over Trump than taxes, and it’s not paying taxes that’s its the hassle of filing your taxes in the US that is a secondary reason.
FATCA. The BBC article I linked back then is still available Why expat Americans are giving up their passports - BBC News