US citizenship renunciations still growing

US citizenship renunciations still growing

US citizenship renunciations still growing

Citizenship renunciations by US expats living overseas were up by another 26 per cent in 2016, with another 1,313 leaving in the first three months of this year.

The renunciation trend, centered amongst long-term US expatriates living, retiring or working overseas, is continuing at a fast pace, but totals may be even higher as many renouncees don’t tell the IRS they’re going. In 2015, the total number of Americans giving up on their country was 4,279, 58 per cent more than in 2014, and the 2016 figure at 5,411 is an increase over the previous year of 26 per cent. From the beginning of 2017 to the end of March, another 1,313 put their money where their mouths were and left.

It seems more US expats every year are realising they don’t ever want to return to a country in chaos and are taking the only way out by giving up their passports. It’s an expensive decision, even more so since the US government increased the fee for citizenship renunciation from $450 to a massive $2,350. It’s a choice between a rock and a hard place unless you’re seriously wealthy – either pay the IRS the dreaded citizen-based annual taxation bill or pay a ridiculously high fee to get out of it for ever.

Interestingly, those who do it the right way by handing in their passports or green cards, getting the US State Department paperwork as proof they’ve left and settled their affairs with the IRS can at least congratulate themselves for their honesty. Those who don’t tell the taxman they’re off can rest assured they’ll stand a chance of being caught one day as the IRS’s three to six years’ statute of limitations doesn’t even begin. It’s a sobering thought that, possibly several decades on, you’ll be hit with a massive tax bill and fines totally unrelated to your long-ago earnings.

Worse yet, to exit at all you must have proof of five years of tax compliance. It’s a damned if you do and damned if you don’t scenario possibly unique to the USA, but the hardships caused by FATCA can be the final straw.

Commentators are expecting an even larger rise in the number of passports handed back after almost a year of the Trump presidency, but the vast majority will still be leaving due to the double-tax regulations and the fact they’re having huge problems even attempting to open bank accounts in their new countries of residence. Since the introduction of FATCA, the vast majority of banks overseas are so scared for their own positions they’d rather refuse American money outright.

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