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Comment by LekkoscPiwa | Hacker News Reader

Some of the stuff the people in the article write is just plain stupid. If I could get US citizenship for my newly born daughter (born in Poland) after being in the US total just 5 years, why she couldn't get it done, is beyond me. People who have lived in EU complaining about US burocracy and pointing it as a reason for giving up on an US citizenship are beyond me too. US taxation system is a walk in a park compared with EU. All the people from the article seem to be carefully selected socialists big time who just couldn't wait to give up on the US citizenship no matter what. And for one each of them there are literally thousands foreigners who would rather live in the USA, including Germans, Canadians, etc.

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What may be driving some people is simply the fear of getting the paperwork wrong. The penalties listed on the forms are scary.

You can't just do it in Turbotax for 50 bucks, you need a qualified tax professional to help you. Good luck finding one familiar with the latest US regulation when you're abroad. The fees will be in the thousands, every year, for the rest of your life.

The financial toll and mental stress all adds up and I guess at some point people just give up. It's a shame that the burden of paperwork results in people giving up their citizenship.

I do it with Turbo Tax for 50 bucks. The thing is not to open an account outside of the US. If you follow that rule you are fine and your return won't be longer than US return. If you really, really need that account in a foreign bank simply don't advertise left & right you are an US citizen and open an account using your local (German, Canadian, whatever) driver's license. I have lived in Poland 3 years so far with US citizenships it costs nothing. And the benefits outweight any issues that might be there in any case.

The strategy of using your local ID (and hiding your U.S. status) will work for a little while longer. Google for the acronym "FATCA". Sooner or later your bank will ask you to certify that you have no U.S. connections.

No, the real key to keeping your paperwork simple is to keep the balance in all of your non-U.S. bank accounts below USD 10,000 at all times. The form is TD F 90-22.1.

Your U.S. tax return should be vastly more complicated than a resident's return if you want to avoid double taxation of your income. You will either be attaching Form 2555 (to exclude income from U.S. taxation) or Form 1116 (to claim credit for the taxes you pay in Poland) or both.

If you have a little investment account with some savings in it and you buy mutual funds, you will be filing Form 8621 for each mutual fund you buy.

If you are a startup entrepreneur and you own stock in your company, you will be filing Form 5471.

Seriously, it's a pain factory. I'm glad you have found a simple way of doing things, but for most people the annual cost of doing this paperwork is staggering.

Worth adding that most expats probably want to live a 'normal' life in their adopted country.

That means using local bank accounts / credit cards, getting a mortgage, etc.

Being resident and working probably means the state will automatically open social security and pensions in your name.

Also, expats still have to do the tax return for their adopted country, and the tax year may not be based on a calendar year so they can't just re-use the same figures!

> Google for the acronym "FATCA". Sooner or later your bank will ask you to certify that you have no U.S. connections.

Trust me. In Poland. It won't. Why? Because I'm a native here and nobody knows that I have US citizenship too. It's like saying that in your US bank branch you will be asked if you have no Polish connections. No, they won't. They want their business. And on top of that there is no way for them to know.

Well, all my income comes from the US too. The only time I worked about 6 months for Polish branch of Intel in Poland, it was easy like piece of cake. I did it with Turbo Tax.

I just can't take seriously anyone claiming that somehow US taxation is worse than that of the EU and the same goes with dealing with burocracy in general. It is MUCH worse in the EU. Just had to pay 1,000 EUR of fine on a border for 'smuggling' a MacBook I bought on a trip to the US. And that's on top of the VAT and other taxes. So, not really sure what all that BS is all about. Because when you compare EU to the US, EU leaves its population just with enough money to pay for day-2-day living expenses and not much more. HORRIBLE!

Yes, the article wasn't exactly clear but pretty much all of the stories (well, I only read a few) refer obliquely to one thing: you are subject to taxation by the United States even while you're a resident abroad, and paying taxes abroad.

It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California. Nobody else (worldwide) does this. It doesn't make any sense.

This is a primary motivation people have for renouncing U.S. citizenship.

> It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California.

This is an imperfect analogy (since there is not really a concept of "citizenship" for individual US states), but note that claiming residency in one state while living in another will often require you to pay taxes in both.

> Nobody else (worldwide) does this. It doesn't make any sense.

I think it is pretty clear its purpose is to prevent US citizens from deciding to live abroad in order to pay less income tax. The legislation that requires US citizens to report foreign bank accounts (which some of the people in the BBC article mention) is called the "Foreign Account Tax Compliance Act" [1] is supposed to prevent all citizens from committing tax evasion by hiding funds in foreign bank accounts.

I think there are multiple reasons why you or others could argue that these rules are counterproductive [2] or otherwise detrimental to the interests of the United States, but I do not think they can be dismissed out of hand.

[1]: http://www.irs.gov/Businesses/Corporations/Foreign-Account-T...

[2]: https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance...

Of course they can be dismissed. What you're not getting is that these people have to pay full taxes in the place they're actually living. A place you're not living has no business collecting further taxes from you.

> What you're not getting is that these people have to pay full taxes in the place they're actually living.

In that case, they can claim a "Foreign Earned Income Exclusion" [1] which reduces or eliminates their American tax liability for up to $97,600 of income that they are "paying full taxes" on.

> A place you're not living has no business collecting further taxes from you.

As other comments have noted, just because you are not living in the United States does not mean that you are not materially benefiting from citizenship. Despite living abroad, you can still vote, travel to and from the United States, and take advantage of US diplomatic representation in case of arrest.

[1]: http://www.irs.gov/Individuals/International-Taxpayers/Forei...

As has already been stated many, many times, for most Americans living abroad who are not super-rich, the issue isn't the taxation - it's the complexity (and associated penalties) of the reporting requirements.

Basically, the US government's attitude toward Americans living outside the US, much like the US attitude toward non-Americans wherever they live, is "F* You."

Perhaps you think that this attitude is somehow justified. As a US citizen myself, I think that it is detrimental to long-term US interests.

> Perhaps you think that this attitude is somehow justified.

I think it is a complex issue, and should not be dismissed as "not making any sense" or the government wanting to screw citizens living abroad over. As I have already stated, it is clear that the purpose behind the legislation is to prevent unreported income from being stored in foreign bank accounts.

Like with many complex issues, I think the current solution is imperfect and could be improved. Stating that it is stupid is not constructive.

I didn't say it was "stupid" - don't put words in my mouth. And I completely understand the bureaucratic purpose behind it.

The reality is that the truly rich (like Mitt Romney) have plenty of legal ways to shield their income, offshore or otherwise. So these regulations screw (the vast majority of) Americans aboard with relatively modest incomes, while they are ineffectual against the rich few with tax accountants on their permanent staff.

tl;dr - these rules create more harm than benefit.

> there is not really a concept of "citizenship" for individual US states

Yes there is. The Fourteenth Amendment clearly states:

All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.

US citizen, living in Switzerland. I don't want to give up my citizenship and I don't mind to pay some tax to the US. I did get a great education and attitude growing up there, but the risk of making a mistake could be ruinous to my family (French wife, two kids born here). It's fair that if you make a mistake, you pay a penalty, but with the current rules, it turns into a crime. Very scary because it's so complicated.

I’ve seen this said several times—the right way to say it is that the U.S. and Eritrea are the only countries that tax non-resident citizens’ income regardless of the source of that income. There are often tax treaties in place with Western countries that reduce that value to zero based on taxes paid to the country of residence.

Canada will tax non-resident citizens if they have certain ties to Canada (http://www.cra-arc.gc.ca/tx/nnrsdnts/cmmn/rsdncy-eng.html), but only on income generated in Canada.

The issue is not the complexity of the taxation system, but the fact that only the US and Somalia tax based on citizenship. http://en.wikipedia.org/wiki/File:Individual_taxation_system...

That's Eritrea

http://en.wikipedia.org/wiki/International_taxation

Sure, they are the only ones, but does that mean it's morally or logically wrong? Theoretically a government spends a certain amount of money on each individual as they live, become educated, and work in the US. If they decide to leave the US to work abroad, they shouldn't get any tax revenue back from you? They do allow you to deduct taxes paid to your residence country.

Taxing is mainly to pay for the facilities that the Government is providing you currently. That is the reason why vast majority of the countries (99% ?) are taxing based on physical presence. So if you are out of the country for most of the time during the last year, then you don't pay tax.

US is immigration based. 60% of New York City population wasn't even born in the USA. Wouldn't you think that in this circumstance a substantial number of them could avoid taxation by living more than 6 months abroad even though their income would be generated in the US? I'm a dual Polish/US citizen. Easy scenario: remote work in US for $100k+ a year while residing all that time in Poland. That's why they have it. There is no other country in the world that's that rich and is based on immigration, so people would have incentive to game the system. That's why the system is built that way that you have to _declare_ your income even when abroad. If somebody can't do this because of $3k lost, that's just shows for them not for the US.

That's a problem, but it doesn't have anything to do with citizenship. Rather with residency vs. place of work. It's a problem every European country faces (work in France, live in Germany for example) and still none of them motivate their citizens to abandon their citizenship when they live abroad. I am a German living in the US and I have no downside of being a German citizen. As a green card holder the only thing that I cannot do is vote. It would be nice to become a US citizen one day, but given the huge downside of the tax burden if I ever decide to ant to live somewhere else for a while is a big deterrent for me.

> It's a problem every European country faces (work in France, live in Germany for example) and still none of them motivate their citizens to abandon their citizenship when they live abroad.

What I'm saying is that it is practical and pragmatic for the US to have this law. It's not for Germany. Why? Because the number of immigrants in the US is extremely high.

Was US to implement the same law Germany has then 60% of New Yorkers would be able to avoid paying income tax in the US. Not that all of them would do that, but just saying. US has this special circumstance of having a big chunk of their population with 2 passports. Not 10% like in Germany, but 60% like in New York. Then you have to enact a law to discourage people from taking advantage of their 2nd citizenship in terms of taxes, or nobody would pay, they would just stay over 6 months in their mother countries whenever that's convienenient (i.e. reaching retirement age).

What part of the US tax system is easy compared to the EU, seriously because I come from the UK and being in the US is the first time in my life I have had to even file a tax return.

The US system seems to guarantee you need an accountant.

Yeah. The Canadian tax system is simple enough that I could do it on paper. I mostly use an on-line system because it helps me balance the deductions my wife and I have for best tax benefits.

Ever heard of Turbo Tax? If I can do it in 2 hours each and every year a day before the deadline being US citizen in Poland, yeah you need a lot of bad faith to have issues.

Ok somewhat fair, but again (and I admit I do not come from Poland, and can only use the UK, French and German tax systems as anecdotal evidence) I didn't need tax software before I came to the US.

In the UK I do my taxes in 0 minutes most years, maybe in 10 minutes if I get a small return through the post.

Fwiw (I didn't use turbotax but some other online software) when I did my last US tax return; it was wrong and I had letters come through adjusting the calculations.

> All the people from the article seem to be carefully selected socialists big time who just couldn't wait to give up on the US citizenship no matter what

"survivor" bias? Maybe those are the only kind of people who want to give up their U.S. citizenship?

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