Record Number Of Americans Give Up Citizenship.

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#1 Posted by Master_Live (13594 posts) -

Record number of Americans give up citizenship

While Washington is focused on immigration, tax experts are focused on the opposite issue: a surge in Americans moving out.

Last year, a record 2,999 Americans gave up their citizenship or terminated their long-term U.S. residency, according to new data from the U.S. Treasury Department. That was more than three times the number in 2012, and greater than the combined totals for 2011 and 2012.

Many will look at these numbers and say they are proof that America's high taxes are chasing Americans overseas. After all, many of the expatiates who have been named are wealthy or high earners—like Facebook billionaire Eduardo Saverin or pop star Tina Turner.

But tax experts say it would be wrong to imply that the soaring number of expatriates are driven by wealthy Americans looking to avoid taxes.

"We do not believe that the primary reason for the increase in expatriations is for political purposes or for individuals to reduce taxes," said Andrew Mitchel, an international tax attorney who has studied the expatriate numbers closely in recent years, in his blog.

Instead, he said there are three other reasons for the recent increases in the number of expatriations.

  1. Increased awareness of new tax filing laws. Many people with U.S. passports who live permanently overseas have been unaware of the rules requiring all citizens to file tax returns. The UBS tax scandal and crackdown on Americans with overseas assets has made more people aware of the requirement. And they have simply given up their citizenship rather than comply.
  2. Growing compliance burden. A new law, known as the Foreign Account Tax Compliance Act, was enacted in 2010 and may soon require foreign financial institutions to report to the Internal Revenue Service accounts held by U.S. taxpayers. Mitchel said some banks are simply closing the accounts of U.S. clients as a result.
  3. Big penalties. The standard penalty for unintentionally failing to file a tax return is $10,000. But the penalty for intentionally failing to file is far more. Mitchel gives the example of an individual who has retired overseas with savings of $1 million in a foreign bank account. If they've intentionally failed to file for four years, the penalty could be $2 million.

So yes, the IRS is clearly on the minds of Americans giving up their citizenship. But it's not because taxes have gone up. It's because the requirement to file a return—no matter where you live or what you do—has become far more stringent.

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And that is that.

#2 Edited by themajormayor (25620 posts) -

Not surprised.

#3 Edited by lamprey263 (22418 posts) -

this is largely to do with Americans living abroad having to file federal taxes while they live overseas, there's very little reason to retain citizenship and being forced to filing and paying taxes if they don't plan on returning

this isn't the same as people fleeing to not pay taxes

#4 Edited by Master_Live (13594 posts) -

this is largely to do with Americans living abroad having to file federal taxes while they live overseas, there's very little reason to retain citizenship and being forced to filing and paying taxes if they don't plan on returning

this isn't the same as people fleeing to not pay taxes

Looks like you read the article.

#5 Posted by lamprey263 (22418 posts) -

@lamprey263 said:

this is largely to do with Americans living abroad having to file federal taxes while they live overseas, there's very little reason to retain citizenship and being forced to filing and paying taxes if they don't plan on returning

this isn't the same as people fleeing to not pay taxes

Looks like you read the article.

it's been brought up here before, just thought I'd reiterate since people might interpret this as people fleeing the country to avoid high taxes

#6 Edited by Ackad (3125 posts) -

this is largely to do with Americans living abroad having to file federal taxes while they live overseas, there's very little reason to retain citizenship and being forced to filing and paying taxes if they don't plan on returning

this isn't the same as people fleeing to not pay taxes

Wouldn't this, to some degree share a correlation to the lack of employment and the standard of living amongst the middle/poor class citizens? Random to state, but I feel there's more to it than just tax filing.

#7 Posted by lamprey263 (22418 posts) -

@Ackad said:
@lamprey263 said:

this is largely to do with Americans living abroad having to file federal taxes while they live overseas, there's very little reason to retain citizenship and being forced to filing and paying taxes if they don't plan on returning

this isn't the same as people fleeing to not pay taxes

Wouldn't this, to some degree share a correlation to the lack of employment and the standard of living amongst the middle/poor class citizens? Random to state, but I feel there's more to it than just tax filing.

I imagine that would have more to do with their reason to live abroad and not the reason to renounce their citizenship, but yeah those reasons are some of many reasons people choose to leave the country. Heck I've known some very well to do people who leave the country just because of reasons like better opportunity, or just the experience to live abroad even when it doesn't pay well, and some that just really love the culture. I've also known people to live in another country just because they fell in love and get married to someone in another country. But yeah, I can see standards of livings in other countries being attractive...

#8 Posted by plageus900 (911 posts) -

My wife and I are looking to move overseas at some point. Some places we've considered are the Netherlands and Switzerland.

#9 Posted by deeliman (2221 posts) -

@plageus900 Move to the Netherlands, we can be super best friends forever! <3

#10 Edited by plageus900 (911 posts) -

@deeliman said:

@plageus900 Move to the Netherlands, we can be super best friends forever! <3

:D !!!11

#11 Posted by theone86 (20555 posts) -

Addition by subtraction.

#13 Edited by Storm_Marine (10766 posts) -

3,000 isn't that many no matter the reasons.

#14 Edited by Barbariser (6698 posts) -

Do people really care about a group that is literally less than 0.001% of the population renouncing their citizenship because it's become more difficult for them to dodge taxes?

#15 Edited by gamerguru100 (10381 posts) -

3,000 isn't that many no matter the reasons.

I was thinking the same. A loss of 3,000 people in a country of 320 million people is negligible at best.

#16 Posted by dave123321 (33311 posts) -

Neat and interesting stuff

#17 Posted by lightleggy (15836 posts) -

Wait a sec...they actually charge you taxes even if you're not living in the US?

#18 Posted by The-Apostle (12104 posts) -

My wife and I are looking to move overseas at some point. Some places we've considered are the Netherlands and Switzerland.

My dad wants our family to move to Panama, where there are no income taxes. And his issue IS the high taxes. >_>

#19 Posted by Santesyu (4275 posts) -

Should be wealthy Americans going overseas which doesn't say much. If I was rich and wealthy why not? US tax is high compared to some countries out there though it is a crime to move out of the US for that sole reason but still people are greedy the rich even more so

#20 Posted by plageus900 (911 posts) -

@Santesyu said:

Should be wealthy Americans going overseas which doesn't say much. If I was rich and wealthy why not? US tax is high compared to some countries out there though it is a crime to move out of the US for that sole reason but still people are greedy the rich even more so

No it's not.

#21 Posted by Santesyu (4275 posts) -
#22 Edited by thegerg (14344 posts) -

@Santesyu said:

Should be wealthy Americans going overseas which doesn't say much. If I was rich and wealthy why not? US tax is high compared to some countries out there though it is a crime to move out of the US for that sole reason but still people are greedy the rich even more so

"though it is a crime to move out of the US for that sole reason"
You think it's a crime to move because you don't like taxes?

"still people are greedy the rich even more so"

On what do you base that claim?

#23 Edited by plageus900 (911 posts) -

@Santesyu said:

@plageus900: lol yes it is its called tax evasion

Moving overseas because you're unhappy with the tax system in the United States isn't the same as not paying your taxes.

#24 Edited by jun_aka_pekto (15724 posts) -

Does it really matter? How many immigrants to the US give up their native country's citizenship? I imagine it's a good number more than 3,000 even taking into account the chance for dual-citizenship.