More American Expatriates Give Up Citizenship

[Lucas]

More American Expatriates Give Up Citizenship

WASHINGTON — Amid mounting frustration over taxation and banking problems, small but growing numbers of overseas Americans are taking the weighty step of renouncing their citizenship.

“What we have seen is a substantial change in mentality among the overseas community in the past two years,” said Jackie Bugnion, director of American Citizens Abroad, an advocacy group based in Geneva. “Before, no one would dare mention to other Americans that they were even thinking of renouncing their U.S. nationality. Now, it is an openly discussed issue.”

....more (New York Times)

Now, expats’ representatives fear renunciations will become more common.

“It is a sad outcome,” Ms. Bugnion said, “but I personally feel that we are now seeing only the tip of the iceberg.”

 

[mini]

We did this topic last week:
http://baexpats.org/expat-life/9033-more-americans-sever-u-s-ties-irs-gets-tougher.html

 

[gouchobob]

509 people in the last quarter of 2009 renounced out of 5.2 expats abroad doesn't exactly sound like a rush to the exits, also this is primarily over tax issues, not political reasons as I am sure some here may try to imply.

 

[mini]

509 people in the last quarter of 2009 renounced out of 5.2 expats abroad doesn't exactly sound like a rush to the exits, also this is primarily over tax issues, not political reasons as I am sure some here may try to imply.

Yes. And I'm sure some of those people have little connection to the US.

I have two friends who are US citizens because they were born there when their parents were on temporary assignment in NY or one couple was getting their masters. Both have never filed a US tax return, have no connection to the US and have considered renouncing their US citizenship but have not as of yet. I imagine one day they will.

 

[Lucas]

The Times described the process of renouncing citizenship as “relatively simple” but Relis points out that this ignores the scrutiny Americans face when they want to renounce their citizenship, “the IRS will assume that if a U.S. citizen wants to renounce their citizenship, that the only purpose for doing so is for tax evasion, therefore many clients opt to remain citizens.” Because of the complications, many Americans living abroad are genuinely unaware that they are not in compliance with the Tax Code.

The latest attempt to increase taxes on American expatriates is in the text of the “Tax Fairness and Simplification Act” introduced by Democrat Senator Ron Wyden and Republican Senator Judd Gregg. The bill would entirely remove the “foreign earned income exclusion” one of the few parts of the law that mitigates for double taxation.

Some may think that attacks on double taxation are just a conservative knee-jerk reaction to an attempt to raise taxes. As Jonathan Chait wrote on tax day:

Let me give you a hint, pouting rich people: We’re not falling for your bluff. None of you is really going to quit your job and deny the world your precious genius because the Democrats raised your top tax bracket to 39.6%. That’s because earning more than a quarter million dollars a year and having to pay a slightly higher tax rate than the average person is not actually such a horrible fate.

Yet in the case of expatriates, the empirical evidence suggests this is exactly what is happening! We can also assume that the majority of expatriates who do not renounce their citizenship are either eventually returning to the states, or trying to avoid the IRS.

....more -Taxing America’s Expats Away-


Renouncing U.S. citizenship is a drastic measure which cannot be revoked. Once citizenship has been renounced that individual cannot become a U.S. citizen again without going through the same process that a foreign born person must go through in order to obtain citizenship.

...more - EXPLOSION IN NUMBER OF U.S. EXPATS RENOUNCING CITIZENSHIP -

 

[gunt86]

I have two friends who are US citizens ... Both have never filed a US tax return, have no connection to the US and have considered renouncing their US citizenship but have not as of yet.

I suggest you inform your two friends that failure to file a tax return is a highly punishable offense for a US citizen. They could end up losing huge amounts of money and even jail time. All US Citizens are required to file a US tax return with the IRS every year. There is no debate about this. Doesn't matter if you made zero money in the year, you must file.

 

[mini]

I suggest you inform your two friends that failure to file a tax return is a highly punishable offense for a US citizen. They could end up losing huge amounts of money and even jail time. All US Citizens are required to file a US tax return with the IRS every year. There is no debate about this. Doesn't matter if you made zero money in the year, you must file.

I'm not their keeper. They are grown up who can make ups their own decisions. The point beginning these two people will eventually give up their US citizenship & be one of those statistics. But they only lived in the US for a year or few months as infants. The connection is practically nonexistent.

Renouncing U.S. citizenship is a drastic measure which cannot be revoked. Once citizenship has been renounced that individual cannot become a U.S. citizen again without going through the same process that a foreign born person must go through in order to obtain citizenship.

So they can become US citizens again? I'm confused by this paragraph.

 

[Lucas]

Yep they can...but

"those individuals cannot become a U.S. citizen again without going through the same process that a foreign born person must go through in order to obtain citizenship"

...that's the catch.

 

[mini]

Yep they can...but

"those individuals cannot become a U.S. citizen again without going through the same process that a foreign born person must go through in order to obtain citizenship"

...that's the catch.

I don't know if that's a "catch" really. It seems quite reasonable. You are now a foreigner. However, the door is still open.

Don't forget that if you are not a citizen of another country already you can not give up your US citizenship. I'm sure that's true for many countries.

 

[Lucas]

I mean that's the catch not to give up your citizenship, if you do you will be penalized for doing so.

In order to give up U.S. citizenship, a person must obtain or have citizenship in another country. The person surrenders their passport or green card during an interview with a consular officer in their new home country. He or she must also submit a form, including a list of assets, to the IRS to complete the process.