[1] - https://www.google.com/#q=site:https:%2F%2Fnews.ycombinator....
I'm not sure what the benefit to these repeated articles is.. Anti-tax fervor? Some country-specific PR?
Among other things, you will need special banking services in your new home country, because foreign banks do not necessarily make FACTA reports for all accounts. Some won't even open accounts for Americans.
There are still fairly few expats who go to the trouble to renounce their citizenship... so "good riddance" to them?
It's perhaps worth pointing out that these are people who've already left, some of them decades earlier, who hung onto their US citizenship possibly because it's been easier than the alternatives (I can tell you getting citizenship in, e.g., France, is non-trivial, particularly if you're not married to a citizen, but even so if you are).
But now, for this little slice of expats, keeping US citizenship has become the more onerous option, and so they have a pragmatic reason to drop their old citizenship in a country they no longer inhabit, anyway. What's to get worked up about, really?
That's not the point. It's about all the paperwork you have to do. I live in the US, but I am not sure I would want to become a US citizen for this reason.
I'm curious -- is there actual paperwork, or is it possible to do it electronically? If yes, why aren't there programs that do it for you? Would like to hear comments from a US expat.
I wonder if there's an opportunity in simplifying this. I'm guessing most expats would rather pay, say $50 for a company to do this paperwork on their behalf? Or do H&R / Intuit have that market cornered as well?
This cost me $300 last year when I spent the entire year in Italy and did not have much US income, plus a half a day to go see the accountant and make sure everything was squared away correctly.
Not worth giving up my citizenship for, but a big PITA nonetheless. The US is the only country in the world to do this BS.
Although annoying, it's also way down the list of annoyances and expenses involved in being an expat. I don't think "regular" expats like me are renouncing their citizenship over the hassle/expense of paying a CPA $200, especially because renouncing your citizenship is also a considerable hassle (and reduces your future employment options). I'm almost certain this is mainly much wealthier people.
I would say it's most likely people who don't have strong ties to America like people born in the US to foreign parents who moved back to their home countries.
I do know a few Denmark-U.S. dual citizens (by birth, never lived in the U.S.) who renounced their U.S. citizenship, but that was because of Danish rather than American laws. Until September 2015, Denmark had a public policy against dual citizenship, which among other things required children who were born as dual citizens to choose one when they turned 21, and renounce the other one. Since that requirement was just abolished, I would guess renunciations of U.S. (and Canadian) citizenship by Danes are now going to drop.
Every foreign bank account or financial instrument over some trivial amount ($500?) must be reported. Foreign banks must report your holdings and gains using forms more burdensome than the usual American ones. Good luck owning a company: if Americans have controlling interest in a foreign corporation, their books must be open to the US or the corporation's income will be included in your own. The last time I saw one, the form to describe your foreign corporate holdings had a Paperwork Reduction Act notice declaring it expects it will take 2 weeks to fill out.
I think the absolute simplest case would be a 1040 (not 1040-EZ), along with the extra form for the FEIE. The FEIE has a 'bona fide resident' determination section which is up for interpretation. Two examples are given in the instructions, but the IRS will not tell you if you count as a bona-fide resident in advance (I have tried to get a determination here, and they just won't make one). There is, thankfully, a 330/365 days out of the country exclusion; just carefully fill out the form that lists all of your travel days to any country for the year.
If you live abroad, your 16 year old kid is responsible for serious fines if they don't do this for their first McJob (in theory; I've never heard of it prosecuted that way).
This was all a few years ago; some details may be inaccurate. But it's a serious amount of work, and it's enough hassle that a lot of foreign banks and financial institutions simply won't do business with Americans (which is yet another hassle).
https://www.irs.gov/Businesses/Small-Businesses-%26-Self-Emp...
This used to be self reported on form TD F 90-22.1, which has been superseded by the new FinCEN Form 114:
https://www.treasury.gov/services/Pages/TD-F-90-22.1-Report-...
Note, there may be, and likely are, additional forms to be filed, but these are the ones that I recall for reporting foreign assets.
And, by the way, the whole system is bullshit. To give another example of how this hurts Americans abroad, the lack of banks willing to work with Americans means that some places it's technically illegal to obtain an apartment lease, though some sort of side deal can normally be worked out. For example, in Norway, the deposit money for an apartment must be held in a joint interest bearing account between the landlord and the tenant. This protects both parties and is generally a good idea. However, if a bank won't work with an American, these accounts become impossible. Yes, both parties can just ignore the law and that often happens, but it's another example of how these kind of banking and reporting laws hurt Americans in less known ways.
This article reports its publication date as:
February 8, 2016: 9:27 AM ET
You seem to be confusing it with this one:
http://www.wsj.com/articles/americans-pay-your-taxes-or-lose...
Edit: Naturally, this doesn't invalidate what you're saying, this is just a clarification.
2012 - https://news.ycombinator.com/item?id=3850929
2014 - https://news.ycombinator.com/item?id=8368174
2015 - https://news.ycombinator.com/item?id=10379308
But if you look at say, CNBC or Fortune, a nearly identical article is composed every year (or more) without fail.
https://www.google.com/#q=site:cnbc.com+taxes+renouncing+us+...
It's an exceptionally narrow topic that gets an outsized focus, maybe because it highlights a wider narrative? Otherwise I'm at a loss why anyone would care.
Given the huge amount of interest the digital nomad community generates on HN, the link is clear to me.
What are you basing that on? Hong Kong and Singapore (where Eduardo Saverin became a citizen to avoid paying 1 Billion USD in taxes from his Facebook windfall) have taxes in the %11 range.
Right... so these two points might be related, as the people renouncing might be the people who do owe additional tax. Personally, I would feel a bit put out if I'd permanently moved to another country and had Uncle Sam looking to take a piece of my income.
> Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect whatsoever on his or her U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information). In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations previously incurred in the United States or incurred as United States citizens abroad.
Even under US law after ten years you no longer have to pay income taxes.
And said 10 years would apply even without expatriation, so expatriating doesn't change anything their either.
Thus, there is no advantage to expatriating in order to avoid owed taxes.
Well, good. That makes us even.
>And said 10 years would apply even without expatriation, so expatriating doesn't change anything their either.
I don't believe that's true. There are plenty of news articles about people who are filing twenty or thirty years after leaving the US. Some of them dual citizens who'd never actually been here.
Your last comment is a non sequitur. You originally wrote "the people renouncing might be the people who do owe additional tax". My comments are all about that conjecture.
The people who continue to file income tax statements even decades after living in the US are not in the category of "people renouncing" or "owe additional tax".
US law is irrelevant. US law only applies in the US, whatever Congress thinks. If I'm not in the US and I'm not a US citizen, the US government can pound sand.
I'm always curious why Americans expect the US to have jurisdiction everywhere on the planet and yet don't expect other countries to make laws affecting them.
>Your last comment is a non sequitur. You originally wrote "the people renouncing might be the people who do owe additional tax". My comments are all about that conjecture.
Yes, people who owe additional tax. That's what I was talking about. People who are expected to pay taxes to the US government even though they don't live in the US and haven't for many years.
What is it you're talking about?
>The people who continue to file income tax statements even decades after living in the US are not in the category of "people renouncing" or "owe additional tax".
Yes, those are the people. Who else would you expect was doing this?
That's my point. Expatriation doesn't change anything concerning taxes you already owe.
> Who else would you expect was doing this?
Hmm. Perhaps I have confused your meaning.
I thought this whole time you mean people who owe taxes, don't want to pay taxes, and expatriate to try to avoid paying those taxes.
Do you mean people who will in the future need to pay taxes, and expatriate in order to avoid future obligations?
If so, then I was confused because these people don't yet owe anything.
FWIW, I file US taxes every year, having lived in Sweden for nearly 10 years. I've only once owed any taxes. The Foreign Earned Income Exclusion is, after all, $100,800 . Since that's well above the average income, I expect that many people who expatriate won't ever owe any future taxes.
>Do you mean people who will in the future need to pay taxes, and expatriate in order to avoid future obligations?
Yes, I mean the latter. If you rack of legal debts (of any sort) as a citizen, IMO you should pay. Part of the naturalization process in most countries is a check to see that you're not some kind of criminal and that you've tied up all the financial loose ends in the country of your birth. My problem is that Congress assumes jurisdiction over your actions and finances if you were ever a citizen.
It used to be widely recognized in international law that the laws of a country only applied on the soil of that country and on ships traveling in international waters under that country's flag. If you traveled to a different country you were under the jurisdiction of that country's laws. So as a citizen of the US, if I moved to Germany, say, even though I was a US citizen I could do things that are illegal in the US as long as they're legal in Germany. And I couldn't do things that were illegal in Germany even if they're legal in the US.
This all seems like common sense.
But it's changed in recent decades, as countries are punishing citizens for things they do elsewhere, e.g. Swedes, who are breaking Swedish law if they patronize a prostitute even in another country where it's perfectly legal. I think this kind of overlapping jurisdiction is a terrible idea, but whatever.
The idea you fall under a country's law even if you become a citizen of another country and renounce the citizenship of your birth is a bridge too far. As far as I know most countries won't extradite a citizen (even a naturalized citizen) for that sort of thing.
The US government presumes to tax your (new) income for ten years after you've renounced your citizenship, even if you had no outstanding tax debt at the time of renunciation. There's also a one-time 40% tax on assets held in the US, which I find less objectionable but still pretty damn objectionable.
I think you can see my confusion as you originally wrote:
"the people renouncing might be the people who do owe additional tax"
This is in the present tense, meaning people who currently owe taxes, which is different from those "who will in the future need to pay taxes".