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US expats still queuing to renounce citizenship
| Published: | 3 Jul at 6 PM |
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Tagged: USA, Citizenship
The new Trump tax bill is yet another valid reason why Americans living overseas are continuing to renounce their citizenship.
Financially speaking, it’s never been easy to be an American expat due to the country’s hated rules on taxation of foreign income, higher tax bills, complex retirement savings laws and problems with keeping accounts in compliance with ever-changing IRS requirements. The introduction of the dreaded FATCA caused an increase in those renouncing their citizenship, and recent attempts to change the IRS’s focus from taxation based on citizenship to a more realistic taxation based on residency haven’t yet been recognised. One major problem nowadays is that, due to FATCA,
Americans overseas are finding it ever more difficult to open bank accounts as foreign banks don’t want to know due to the massive penalties for even minor, unintended mistakes. Last year and the year before, the total of renouncees was over 5,000 and, in the first quarter of 2018, another 1,099 followed suit. It’s no longer an inexpensive option to turn your back on the country of your birth, as once the realisation of an increase in leavers was recognised, the American government upped the charge for the renunciation service by 422 per cent to $2,350 from $450. Relinquishing an American passport was free at one time – it now costs the same as renunciation.
According to a recent report, the real killer is the FBAR report and its demand that US residents overseas must disclose details of every bank account they hold containing over $10,000. It doesn’t matter where in the world it’s held, every account must be declared. Penalties are applied if you don’t file and if you do file and there’s a small, unintentional mistake you’re penalised $10,000 or more. If the IRS believes you misfiled deliberately, the fine starts at £100,000. Little wonder, then, that more and more US citizens are dumping their home country in disgust, not just for the threat of the IRS but also for Trump's tax reform bill.
Financially speaking, it’s never been easy to be an American expat due to the country’s hated rules on taxation of foreign income, higher tax bills, complex retirement savings laws and problems with keeping accounts in compliance with ever-changing IRS requirements. The introduction of the dreaded FATCA caused an increase in those renouncing their citizenship, and recent attempts to change the IRS’s focus from taxation based on citizenship to a more realistic taxation based on residency haven’t yet been recognised. One major problem nowadays is that, due to FATCA,
Americans overseas are finding it ever more difficult to open bank accounts as foreign banks don’t want to know due to the massive penalties for even minor, unintended mistakes. Last year and the year before, the total of renouncees was over 5,000 and, in the first quarter of 2018, another 1,099 followed suit. It’s no longer an inexpensive option to turn your back on the country of your birth, as once the realisation of an increase in leavers was recognised, the American government upped the charge for the renunciation service by 422 per cent to $2,350 from $450. Relinquishing an American passport was free at one time – it now costs the same as renunciation.
According to a recent report, the real killer is the FBAR report and its demand that US residents overseas must disclose details of every bank account they hold containing over $10,000. It doesn’t matter where in the world it’s held, every account must be declared. Penalties are applied if you don’t file and if you do file and there’s a small, unintentional mistake you’re penalised $10,000 or more. If the IRS believes you misfiled deliberately, the fine starts at £100,000. Little wonder, then, that more and more US citizens are dumping their home country in disgust, not just for the threat of the IRS but also for Trump's tax reform bill.
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