Americans Renouncing Citizenship Hits New Record; Tax Bill Won't Change That

It subjects you to the punitively complex PFIC rules. These are largely a protectionist measure for the US financial system but you get caught up in them regardless.

To do your US taxes correctly as an ex-pat is really complex. If you just file a 1040 you’ve missed a number of forms to document your foreign holdings.

Many of the posters who brought up PFIC are probably referring to Investments they made before they became US Citizens. Even then you would only pay taxes on what your investment earned and that is after any write offs you might have.

Like OP said, this procedure is difficult for the very rich or people who are looking to evade taxes. Otherwise it is a simple procedure and doesn't affect the average person.

> so there's taxation without representation

What does that have to do with the constitution?

Or relinquish. There is a difference and people would be wise to know it.

Also, I'm sure that US would argue that those living outside of its official/continental borders are still well "represented" by its military and consular forces, and as such should pay up. In a sense, the taxes as fees are "insurance premiums." Personally, I wish the issue had been addressed better than it was during the recent tax "reform" debate, but I knew better. There is no interest in giving up revenues and access to data.

You show residency when you live in a location and register to vote. If you move overseas, you remain registered in the county/precinct where you were last a resident.

You then vote in elections. I've got my ballot for the November elections, ready whenever I am.

And as for taxes, If you live in a higher tax location, you're not going to pay anything to the US. If you earn under 100k, you aren't going to pay anything in the US. You do have to file a return tho, which is a pain.

Expats can vote in federal elections in the last state they were resident in (or born in). I'm not sure what jurisdiction they get to vote in if they've never lived in the US (i.e., foreign-born US citizens). Expats that lived in the US and intend to return to their former residence may also vote in state and local elections.

> The Foreign Accounts Taxation Compliance Act required all foreign banks to disclose the financial information of any American with assets over $50,000 sitting in banks outside of the US.

> Steep penalties add muscle to the law. If a foreign bank – not just in Canada, but anywhere – fails to report even a single US citizen as a customer to the IRS, the US Treasury department would withhold 30% of the banks’ US income as penalty.

I'm trying to think of equivalent items that one would do when opting out of citizenship that are equivalent to emptying out the health spending account when you quit a job to try and make your money back.

Put another way, the number of US citizens living outside the US is somewhere between the population of Iowa (the 30th most populous state) and New Jersey (11th), with the middle of that range being approximately Massachusetts (15th). It's more than the combined population of the 5 - 10 (median: 8) least populous states that elect 10-20% of the US senate.

Sadly, the political power of that constituency is seriously diluted. Voting is a pain in the ass, and if you have never lived in the US and your parents are from the wrong state you're shit out of luck; there's no way to even register to vote.

Of course, Puerto Rico (and other territories like Guam, American Samoa, VI, CNMI) are the real injustices - Puerto Rico would be the 29th most populous state, but even US citizens who move there from other parts of the US lose their rights to vote in federal elections. Because they're still resident in the US. Infuriating.

Sooner or later, the malapportionment of the US senate is going to tear the country apart. Again.

If I had eight figures to manage, no matter where I was actually resident, they'd probably figure out how to deal with the bureaucracies on both sides of the ocean...

Understanding PFICs enough to report them properly is bloody difficult. Once you know how to report those you have, you can do it yourself, but you most likely will not be reporting them to your best tax benefit, but instead in the way that is easiest to understand.

When I had to research them, after 6 or so years of not understanding I had to report them before realising a gain, it took me at least 2 weeks of research and that was with prior knowledge of some of the acronyms you come across. At that point I think I understand enough to report mine but who knows.

Iirc in my research I read a number of times that the IRS has been formally asked to clarify some parts but they haven't responded. And that PFICs are the purview of only a small handful of specialised IRS agents.