• A record 3,415 Americans ditch their passports
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[b]A record 3,415 Americans ditch their passports[/b] Source: [url=http://money.cnn.com/2015/02/12/pf/americans-expat-citizenship-passports/index.html]CNN Money[/url] _______________ [quote][img]http://i.imgur.com/Gxv7QhU.png[/img] Goodbye, sayonara, ciao, Uncle Sam! The number of Americans choosing to give up their passports hit a record 3,415 last year, up 14% from 2013, and 15 times more than in 2008, when only 231 people renounced their citizenship. Experts say the recent surge is coming from expats who no longer want to deal with complicated tax paperwork, a burden that has only gotten worse in recent years. Unlike most countries, the U.S. taxes all citizens on income, no matter where it is earned or where they live. The mountain of paperwork can be so complicated that expats are often forced to fork over high fees to hire an accountant -- some say they pay as much as $1,000. One new law designed to catch tax cheats -- the Foreign Account Tax Compliance Act -- requires individuals to report certain foreign assets, and for banks to disclose all foreign accounts held by Americans. That's in addition to another provision that mandates Americans to disclose foreign bank holdings worth more than $10,000. "More and more are considering renouncing," said Vincenzo Villamena of Online Taxman, an accountant who specializes in expat taxes. "There are a lot of uncertainties about FATCA and [its] implementation; I don't think we've seen the full effect that FATCA can have on people's lives." As both expats and financial institutions rush to understand the new law, some banks have chosen to kick out their Americans clients rather than comply. If a bank mistakenly fails to report accounts held by Americans outside the U.S. -- even checking and savings accounts -- they can face steep penalties. As new procedures are put in place, "the pace of U.S. citizenship relinquishments is likely to slow," said Nigel Green, CEO of the deVere Group, a financial advisory firm. "People are becoming aware of the various compliant ways they can mitigate the negative effects of FATCA, without having to take the drastic and often emotional step of giving up their American citizenship." But it's going to be a few years before renunciations start to taper off, Villamena said. "You do have a lot of people queuing...there are people still waiting to get their second passport [before they] renounce," he said. "Obviously, you can't give up your [U.S.] passport unless you have another one." Of course, some Americans giving up their passports could very well be fat cat tax cheats, fleeing to known tax havens to preserve their wealth. But it's illegal to renounce your U.S. status to escape paying taxes, and giving up your citizenship now doesn't mean Uncle Sam won't come after you later for back taxes. "From an international perspective, the world is split into two halves -- the people who are desperate to get U.S. citizenship, and the people who are desperate to give it up," Chris McLemore, senior counsel at Butler Snow, told CNNMoney in December.[/quote] Pretty interesting. Fun fact: Argentine citizenship is non-renounceable. Meaning that, if I ever wanted to get a citizenship from another country which required me to renounce my current citizenship... I'd have a bad time. :v: [editline]13th February 2015[/editline] Unless of course, I'm the fucking Dutch princess Maxima. That'd make things a *lot* snappier, heh.
Funny how we put all this effort into taxing some Joe who moved to Canada last year when there's billions of dollars missing from certain people and companies that just gets swept under the rug.
[QUOTE=Mr. Someguy;47130834]Funny how we put all this effort into taxing some Joe who moved to Canada last year when there's billions of dollars missing from certain people and companies that just gets swept under the rug.[/QUOTE] That's nothing - it's not really on topic, but have you read about the Feds cracking down on importing cars? If you own a Land Rover Defender in the US, [URL="http://jalopnik.com/why-are-the-feds-obsessed-with-seizing-these-peoples-ol-1672381729"]you're gonna have a bad time.[/URL] If you want to import a Nissan Silvia, [URL="http://jalopnik.com/how-an-imported-nissan-silvia-nearly-got-a-man-20-years-1684706334"]you'll end up facing 20 years in prison and a $250,000 fine.[/URL] That's fucking ridiculous.
The article says that "unlike most countries" the United States taxes based on citizenship and not residency. That is an understatement. The only two countries in the world that tax based on citizenship are the United States and Eritrea.
This is ridiculous..
Dude, you have to be pretty goddamn rich to even consider renouncing US citizenship. This is about tax evasion, not people being oh-so-burdened by having to pay an accountant to keep their shit in order. Maybe all the Fortune 500 CEOs will just get Cayman Islands citizenship so they can go be with all the unpaid taxes they smuggled out of the country.
[QUOTE=Pretiacruento;47130791][b]A record 3,415 Americans ditch their passports[/b] Source: [url=http://money.cnn.com/2015/02/12/pf/americans-expat-citizenship-passports/index.html]CNN Money[/url] _______________ Pretty interesting. Fun fact: Argentine citizenship is non-renounceable. Meaning that, if I ever wanted to get a citizenship from another country which required me to renounce my current citizenship... I'd have a bad time. :v: [editline]13th February 2015[/editline] Unless of course, I'm the fucking Dutch princess Maxima. That'd make things a *lot* snappier, heh.[/QUOTE] Australia won't let you renounce your citizenship unless you can prove you have citizenship in another country.
[QUOTE=download;47130918]Australia won't let you renounce your citizenship unless you can prove you have citizenship in another country.[/QUOTE] Interesting! That may be the case here in Argentina as well... I haven't really looked into it, it's just what I've heard about the matter.
[QUOTE=Used Car Salesman;47130910]Dude, you have to be pretty goddamn rich to even consider renouncing US citizenship. This is about tax evasion, not people being oh-so-burdened by having to pay an accountant to keep their shit in order. Maybe all the Fortune 500 CEOs will just get Cayman Islands citizenship so they can go be with all the unpaid taxes they smuggled out of the country.[/QUOTE] It's not about tax evasion. It's about undue taxes. An American citizen living in the United Kingdom has to pay income tax to both governments. That's ridiculous.
[QUOTE=Pretiacruento;47130791] Fun fact: Argentine citizenship is non-renounceable. Meaning that, if I ever wanted to get a citizenship from another country which required me to renounce my current citizenship... I'd have a bad time. :v: [/QUOTE] Nah, you wouldn't. Citizenship laws are usually explicitly understanding of such circumstances. For example, Norwegian nationality law contains this clause: [quote=Norwegian Nationality Law, Paragraph 10] § 10.Kravet om løsning fra annet statsborgerskap Dersom søkeren ikke automatisk taper annet statsborgerskap som følge av innvilgelse av norsk statsborgerskap, må søkeren være løst fra annet statsborgerskap før søknaden innvilges. Dersom søkeren ikke kan løses fra annet statsborgerskap før søknaden innvilges, må søkeren innen ett år fra innvilgelsen av norsk statsborgerskap dokumentere at vedkommende er løst fra annet statsborgerskap. Dersom søkeren ikke kan bli løst fra annet statsborgerskap før en viss alder er oppnådd, må søkeren innen ett år etter å ha oppnådd denne alderen dokumentere at vedkommende er løst fra annet statsborgerskap. [highlight]Det kan gjøres unntak fra kravet om løsning dersom løsning anses rettslig eller praktisk umulig eller av andre grunner fremstår som urimelig.[/highlight] Dersom løsning fra annet statsborgerskap dokumenteres innen utløpet av fristen etter første ledd, skal det skriftlig bekreftes at det norske statsborgerskapet er i behold. Dersom løsning fra annet statsborgerskap ikke dokumenteres innen utløpet av fristen, kommer reglene om tilbakekall i § 26 første ledd til anvendelse. [/quote] English translation of the highlighted sentence: [quote]Exceptions to the requirement of relinquishment can be made if relinquishment is considered legislatively or practically impossible or otherwise appears as unreasonable.[/quote] I'm pretty sure this kind of exemption is commonplace in nationality law that otherwise requires relinquishment of the other citizenship(s).
[QUOTE=Used Car Salesman;47130910]Dude, you have to be pretty goddamn rich to even consider renouncing US citizenship. This is about tax evasion, not people being oh-so-burdened by having to pay an accountant to keep their shit in order. Maybe all the Fortune 500 CEOs will just get Cayman Islands citizenship so they can go be with all the unpaid taxes they smuggled out of the country.[/QUOTE] The IRS is a huge pain in the ass for many "normal" people in the first place, and it's even bigger if you live and work outside of the US. I am an American citizen living in Sweden, so I pay about 35% of my income to the Swedish government, then the US gets to take at least another huge chunk of that, without consideration that I am already being taxed a ton? It's difficult enough as is. CEOs aren't giving up their citizenship to escape taxes, it's generally middle-class people who can not survive with the awful foreign tax requirements. The IRS has no "I don't care about this bracket" for FATCA, it applies to every US citizen, and it hurts the average middle-class person working abroad much more than the "fat cats" you would hope it hurts.
A funny/tragic side effect of this affects people who go to America to give birth so their kids can have American citizenships. It is all fun and games and they assume it is a huge benefit (which it's not really if you don't live in America/plan on living in America), but then their kids suddenly face double taxation. I guess it is their comeuppance.
[QUOTE=Used Car Salesman;47130910]Dude, you have to be pretty goddamn rich to even consider renouncing US citizenship. This is about tax evasion, not people being oh-so-burdened by having to pay an accountant to keep their shit in order. Maybe all the Fortune 500 CEOs will just get Cayman Islands citizenship so they can go be with all the unpaid taxes they smuggled out of the country.[/QUOTE] I saw an interview with a Swedish teacher who's parents went on a trip to America and stayed for 6 months and she was born there, then they moved back. She hasn't been in America since her birth and she now had to pay a hefty sum to the U.S in taxes (as well as paying Swedish tax)
[QUOTE=PolarEventide;47130872]The only two countries in the world that tax based on citizenship are the United States and Eritrea.[/QUOTE] At least in Eritrea, foreign income of nonresident citizens is taxed at a reduced rate. :v: [QUOTE=Fetret;47131366]A funny/tragic side effect of this affects people who go to America to give birth so their kids can have American citizenships. It is all fun and games and they assume it is a huge benefit (which it's not really if you don't live in America/plan on living in America), but then their kids suddenly face double taxation. I guess it is their comeuppance.[/QUOTE] Do some Europeans actually do that intentionally though? Unless you're from a neighbouring country that is worse-off (such as Central America), or you plan to stay forever in the US, you are gaining pretty much nothing. I could understand paying foreign taxes to the US if they actually provided me with anything, which they don't. When I was out of work in Sweden, despite never paying any official taxes and not even being a citizen (only residence), they gave me a couple hundred dollars a month just for going to Swedish language classes for 4 hours a day and told me to continue to search for work. Enough to survive on, and a good motivation to continue to learn the language. If I was in the US, and I lost my job, I could probably only get support from the government for a few months before they cut you off, unless you can certify a disability, or go through a ton of hoops from other support places. The US doesn't really care much about it's citizens ability to live. I doubt I want to live in the US again, and it's awful to have to pay taxes to a foreign country... so I might renounce my US citizenship even after I get Swedish citizenship, but then it's so much more painful to travel to the US.. why can't the IRS just make their taxation more fair?
[QUOTE=Pretiacruento;47130863]That's nothing - it's not really on topic, but have you read about the Feds cracking down on importing cars? If you own a Land Rover Defender in the US, [URL="http://jalopnik.com/why-are-the-feds-obsessed-with-seizing-these-peoples-ol-1672381729"]you're gonna have a bad time.[/URL] If you want to import a Nissan Silvia, [URL="http://jalopnik.com/how-an-imported-nissan-silvia-nearly-got-a-man-20-years-1684706334"]you'll end up facing 20 years in prison and a $250,000 fine.[/URL] That's fucking ridiculous.[/QUOTE] I heard about that shitty import law. Imagine being shat on for having a hobby and importing a sweet JDM ride
I bet the founders of the Boston tea party 300 years ago are rolling in their graves. Imagine unfairly taxing people who live in a foreign country just because they are registered at your country. I feel sorry for any American expats, or people naïve enough to want to be American citizens whilst not living there.
[QUOTE=PolarEventide;47130993]An American citizen living in the United Kingdom has to pay income tax to both governments. That's ridiculous.[/QUOTE] An American citizen living in the United Kingdom still can vote, has access to assistance through the US embassy, and will be eligible for Social Security if they come back to the US. I don't see why someone should be able to live in another country and pay nothing to the US while still having access to American benefits.
[QUOTE=catbarf;47132190]An American citizen living in the United Kingdom still can vote, has access to assistance through the US embassy, and will be eligible for Social Security if they come back to the US. I don't see why someone should be able to live in another country and pay nothing to the US while still having access to American benefits.[/QUOTE] Why would you want that when you have citizenship in another country you prefer instead of the US
[QUOTE=Van-man;47132265]Why would you want that when you have citizenship in another country you prefer instead of the US[/QUOTE] So if you don't want those benefits and are happy being a citizen in a different country you prefer, then why not just give up US citizenship like these people are doing?
[QUOTE=catbarf;47132299]So if you don't want those benefits and are happy being a citizen in a different country you prefer, then why not just give up US citizenship like these people are doing?[/QUOTE] When other countries permit you to have your citizenship without paying taxes because you don't own shit in the US?
[QUOTE=catbarf;47132190]An American citizen living in the United Kingdom still can vote, has access to assistance through the US embassy, and will be eligible for Social Security if they come back to the US. I don't see why someone should be able to live in another country and pay nothing to the US while still having access to American benefits.[/QUOTE] As a Canadian citizen I can move to another country, still vote, still get assistance through the embassy, and still be eligible for Employment Insurance benefits when I return, but I don't have to pay shit to Canada if I didn't earn the money there. I also don't have to pay shit to them bringing any money I earned back, I just have to declare it and prove where it came from. Literally every other country lets you do all that same shit without having to pay taxes on foreign earnings. America is the only country that forces you to pay taxes when you're not there.
[QUOTE=catbarf;47132190]An American citizen living in the United Kingdom still can vote, has access to assistance through the US embassy, and will be eligible for Social Security if they come back to the US. I don't see why someone should be able to live in another country and pay nothing to the US while still having access to American benefits.[/QUOTE] It is purely blind patriotism to expect expats to pay double-taxes, especially those who do not earn a lot abroad in the first place. How exactly is it justified to double-tax income that is earned entirely separate from the taxing country? No country in the world does that other than the US and Eritrea of all places. Just how can you think "throw away your citizenship if you don't want to be fucked over by double-taxation" is at all acceptable??? And that also does not work if you are not yet a citizen of that foreign country -- one generally has to be in a country for over 5 years (in the case of Sweden) before one can apply for citizenship there.
[QUOTE=DaCommie1;47132456]As a Canadian citizen I can move to another country, still vote, still get assistance through the embassy, and still be eligible for Employment Insurance benefits when I return, but I don't have to pay shit to Canada if I didn't earn the money there. I also don't have to pay shit to them bringing any money I earned back, I just have to declare it and prove where it came from. Literally every other country lets you do all that same shit without having to pay taxes on foreign earnings. America is the only country that forces you to pay taxes when you're not there.[/QUOTE] I know that America is one of only a few countries that requires taxation on foreign-earned income tax. I'm asking why this is unjustified. The fact that most countries don't isn't an argument for why it's good or bad. [QUOTE=HarryHy;47132503]It is purely blind patriotism to expect expats to pay double-taxes, especially those who do not earn a lot abroad in the first place.[/QUOTE] The US has [url=http://www.irs.gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties---A-to-Z]taxation treaties[/url] with quite a few countries to reduce double taxation, but you're right, there aren't agreements with every country and that's a problem. However, I also should point out that US tax law exempts anyone earning less than $97,600 in foreign income, and remains a very small percentage until the amount of income reaches the hundreds of thousands of dollars. For all that people talk about how it's awful that rich people live outside the US to avoid tax obligation, the tax code is specifically aimed at people not living in the US but still earning lots of money while retaining US citizenship. The confusion here is that even if you earn less than $97.6k, you still have to file taxes to declare it, and that can be inconvenient if you're not living in the US. [editline]13th February 2015[/editline] To expand on that, you can even reduce your tax obligation just by paying taxes to the country you're living in: [quote]Can I deduct foreign taxes paid? As a general rule, tax you owe the US on foreign income can be substantially reduced or even zero if you have already been taxed on said income in your country of residence. You can claim these paid taxes either as credits on your Federal return or claim each amount as an itemized deduction.[/quote] [url=https://americansabroad.org/issues/taxation/us-taxes-while-living-abroad-faq/]Have a read[/url]. The tax code is set up to tax people who are US citizens but hide their money out of the country, like the rich people exploiting tax havens that everyone complains about, not to suck every last penny from normal expatriates. The biggest inconvenience to most people who qualify for the Foreign Earned Income Exclusion is needing to file a return that says they owe nothing.
[QUOTE=Pretiacruento;47130863]That's nothing - it's not really on topic, but have you read about the Feds cracking down on importing cars? If you own a Land Rover Defender in the US, [URL="http://jalopnik.com/why-are-the-feds-obsessed-with-seizing-these-peoples-ol-1672381729"]you're gonna have a bad time.[/URL] If you want to import a Nissan Silvia, [URL="http://jalopnik.com/how-an-imported-nissan-silvia-nearly-got-a-man-20-years-1684706334"]you'll end up facing 20 years in prison and a $250,000 fine.[/URL] That's fucking ridiculous.[/QUOTE] Ah, America's corporate protectionism and welfare never ceases to stoop to new lows.
Like pointed above, the us tax code isn't nearly as draconian as it seems, foreign income can be deducted
[QUOTE=HarryHy;47131113]The IRS is a huge pain in the ass for many "normal" people in the first place, and it's even bigger if you live and work outside of the US. I am an American citizen living in Sweden, so I pay about 35% of my income to the Swedish government, then the US gets to take at least another huge chunk of that, without consideration that I am already being taxed a ton? It's difficult enough as is. CEOs aren't giving up their citizenship to escape taxes, it's generally middle-class people who can not survive with the awful foreign tax requirements. The IRS has no "I don't care about this bracket" for FATCA, it applies to every US citizen, and it hurts the average middle-class person working abroad much more than the "fat cats" you would hope it hurts.[/QUOTE] US and Sweden have a Double Tax Treaty: [quote] [B]Article 15 Dependent personal services[/B] 1.Subject to the provisions of Articles 16 (Directors' fees), 19 (Pensions and annuities) and 20 (Government service), salaries, wages and other similar remuneration derived by a resident of [the US] in respect of an [B]employment[/B] shall be taxable only in [the US] unless the employment is exercised in [Sweden]. If the employment is so exercised, such remuneration as is derived therefrom may be taxed in [Sweden]. 2.Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of [the US] in respect of an employment exercised in [Sweden] shall be taxable only in [the US] if: (a) the recipient is present in [Sweden] for a period or periods not exceeding in the aggregate 183 days in any consecutive twelve-month period; (b) etc. etc. [/quote] Also, you should probably take advice from an actual accountant, not some guy on FP - who would like to add takes no responsibility for any financial penalties imposed by the IRS as a result of the contents of this post.
[QUOTE=catbarf;47132564]I know that America is one of only a few countries that requires taxation on foreign-earned income tax. I'm asking why this is unjustified. The fact that most countries don't isn't an argument for why it's good or bad.[/QUOTE] Not to go back and forth, but how is it fair? None of the services you have listed are needed by me, sans being able to go to an embassy in some rare case. I do not have any presence whatsoever in the US. My income source, my life, my work, has not touched the US a single time in the entire fiscal year. I could agree with you if I worked at a US-owned business, had transactions with US-based customers, did any kind of work in the US, or even had my money ever converted to USD. But I haven't. It affects someone who has already been taxed by <the rightful country>, and whose funds should be way outside of the US's jurisdiction. And yes, there are deductibles, but it's not as simple as saying "I earn less than your listed amount, please don't tax me again". You can't fill out form 2555 at all if you have visited the US for more than a month (because it fails both the bona fide resident test and the physical presence test). Thus you're not eligible for the FEIE. And now you have to file a 8938, FBAR, etc. So if you go on a summer vacation to the US using European-style vacation times, you are now considered having earned all your money in the US -- even when you have only spent money while visiting the US. So, you want to file taxes while working in the US? It's quite simple under most cases. But when you live outside of the US, it becomes a huge issue. It is so much useless work and loopholes that the IRS bullies its foreign citizens with. It's not acceptable. No expat should have to hire an accountant familiar with the constantly changing US foreign tax law just to declare they earned less than $100k that year.
I wonder where these people are moving...
If you're an American paying a higher tax rate in another country you take a foreign tax credit against the US taxes. There's ways out of double taxation, if you don't take advantage of them, don't complain that you're being double taxed.
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