Americans abroad find citizenship too taxing to keep

[dnoblett]

Americans have always enjoyed the privilege of living abroad without losing citizenship. Think Hemingway and Fitzgerald decamping to write in Europe after World War I, or Gen. MacArthur spending decades in Asia around World War II. Expatriates remain Americans, and have generally been welcomed back to our shores with open arms.

But today there are at least 3,000 fewer Americans than there ought to be. That’s how many people live overseas and voluntarily gave up their citizenship in 2013 alone. And they won’t be coming back—at least not as Americans.

Their decision to become foreigners is being driven, in many cases, by changes to domestic laws. The United States is one of only two countries that attempt to tax money citizens earn while working overseas (Eritrea is the other). And two laws aimed at bringing tax revenue back into the U.S.—the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR)—are actually driving Americans away.

FBAR focuses on citizens, demanding that anyone with $10,000 or more in a foreign bank inform the IRS about that account. FATCA is even more invasive, because it attempts to compel foreign companies to cooperate with the IRS. Instead, many companies are simply deciding to dump their American customers.

Congress passed FATCA in 2010 to make it harder for Americans with foreign accounts to illegally evade U.S. taxes. Unfortunately, the unintended consequence of FATCA has been a painful burden inflicted on innocent law-abiding U.S. citizens residing abroad whom the law is forcing to make life-changing decisions.


From USA Today:

LONDON — If you don't want something, giving it back is often an option. That's precisely what some Americans, frustrated at what they see as onerous U.S. tax filing obligations for Americans living overseas, are doing with their citizenship.

"I felt like I had gotten a divorce," says Donna-Lane Nelson, a 71-year-old Geneva-based editor and writer who renounced her U.S. citizenship in 2011 in favor of a Swiss passport, in part because of what she felt were the increasingly arduous and punishing tax reporting requirements from U.S. authorities.

"I was doubled taxed on my U.S. and Swiss pensions, the cost of having a professional go through the complicated U.S. tax forms, living under the threat if this or that wasn't properly filed there would be huge fines — U.S. nationality just became a complete burden because of banks not wanting my business, and as an expat not being allowed to have a U.S. account," Nelson says.

There are around 6 million Americans living and working abroad, and the Internal Revenue Service estimates that international taxpayers owe $40 billion to $123 billion in unpaid taxes.

This summer, in an attempt to start redressing this sizable hole in the nation's coffers, the first stage of the Foreign Account Tax Compliance Act, or FATCA, will formally come into effect. The Report of Foreign Bank and Financial Accounts, or FBAR, is already operational. FBAR requires Americans — whether they live in Boise or Bangkok — with foreign accounts that have $10,000 or more held in them to notify the IRS annually of that year's highest balance.

Passed by Congress in 2010, FATCA is designed — using a controversial dragnet-like method — to catch those Americans thought to be evading taxes by hiding their wealth in foreign bank accounts. The way FATCA does this is by requiring that all non-U.S. financial institutions pass along detailed information about American account holders, or potentially face steep penalties.

But casting such a wide net is producing unintended consequences for some Americans who faithfully pay their taxes from afar.
"I have always filed my U.S. taxes just as I am supposed to," says Brian Dublin, 47, an American businessman now based in Zug, Switzerland, who has lived overseas for many years, including stints in Russia.

"However, as a result of FATCA, in the past year I have been kicked out of a Swiss bank that said, 'Hey, we love you, but we won't work with Americans.' I have also been kicked out of a Swiss pension fund. They told me they don't want any Americans in the fund. They don't want to work on behalf of the IRS," he says.

"And on top of that, I spend many hours and many dollars each year filing U.S. taxes when I sometimes turn out to have zero liability for that year because I have paid a lot of tax somewhere else," Dublin adds.

Dublin, a New York City native, says he will be eligible for Swiss nationality in the next few years and that if the situation has not dramatically changed he will give serious consideration to renouncing his U.S. citizenship.

"I am a pragmatic patriot. I love my country. I love to visit it. But at this point in time all my American passport gets me is a shorter line when I fly into John F. Kennedy International Airport. For me, it's also an issue of taxation without representation. I can vote in presidential elections, sure, but I effectively have no voice. As it is, I am paying taxes for no other reason than my patriotism."

Many Americans, now ex-, have already voted with their feet.

About 3,000 Americans decided to call it quits on their citizenship in 2013 — according to data posted online at the Federal Register, a government publication that posts notices and documents of federal activity — and analyzed by CNNMoney. While that is not a large number itself, it's a 221% rise from the 993 people who relinquished passports in 2012. In 2008, as the first financial crisis was in full swing but well before the issue of overseas taxpayer negligence was freshly established on the agenda of the IRS, just 231 people said thanks but no thanks to Uncle Sam.

A poll conducted by the de Vere Group, a financial consultancy, late last year revealed that 68% of American expatriates have considered giving up their U.S. citizenship as a result of FATCA.

MORE:

http://www.usatoday.com/story/news/world/2014/03/08/usa-citizens-relinquish-passports-tax-filing/5859371/

http://blog.heritage.org/2014/04/23/thousands-americans-gave-citizenship-status-last-year/

The United States has always been the exceptional nation, the land of opportunity, even if some Americans chose to pursue opportunities abroad. We’ve been able to lure the best of the best from all around the world to become Americans and help build our economy. However, if the federal government continues to pile on burdensome regulations, that may not always be the case.

[credzba]

Each year I live in America costs me:

 

15,000 in taxes I would not have to pay if I lived outside America all year (and remained a citizen, 10's of thousands more if I gave up my citizenship)

4,000 - Insurance of all types (in China you rarely pay insurance)

15,000 in property taxes

car insurance/gasoline/maintenance (I don't use a car in China)

probably other expenses I have not considered.

 

You might say "THEN WHY ARE YOU HERE?"

my wife likes her job !

[NUWORLD]

Each year I live in America costs me:

 

15,000 in taxes I would not have to pay if I lived outside America all year (and remained a citizen, 10's of thousands more if I gave up my citizenship)

4,000 - Insurance of all types (in China you rarely pay insurance)

15,000 in property taxes

car insurance/gasoline/maintenance (I don't use a car in China)

probably other expenses I have not considered.

 

You might say "THEN WHY ARE YOU HERE?"

my wife likes her job !

 

 

Same!! Wife likes her job.

So I'm stuck for awhile.

 

Though my numbers a bit higher than yours.

 

The day will come when we say Latter and jump back over the pond.