Why 1 in 4 expats "seriously consider" or "intend" to renounce their citizenship in the United States.
According to a recent survey , about 1 in 4 American expats are "seriously considering" or "planning" to renounce their citizenship.
The hassle of paying American taxes is the main reason many expats wish to renounce their citizenship.
The survey, which interviewed 3,200 American expats residing in 121 countries, found that the hardship of filing US taxes is the main reason why expats desire to give up their US citizenship.
Expats must comply with strict tax filing regulations.
American citizens living abroad are required to file and pay taxes in two different nations each year on all of their international income, including salary, business profits, investment income, and more.
Despite the fact that the United States has policies to prevent double taxation, such as the foreign income exclusion and tax credit, many expats continue to object to the dual filing requirements because of the time and money required to prepare those reports. The survey also reveals that over 80% of respondents think it is unfair to be required to pay US taxes while residing abroad.
Penalties for "willful" reporting infractions are severe.
Additionally, some Americans may be subject to harsh fines if they fail to submit their yearly Report of Foreign Bank and Financial Accounts, or FBAR, to the U.S. Department of Treasury.
Regardless of whether the cumulative value of your accounts exceeds $10,000 at any point in the year, you are required to file the FBAR.
You must declare those balances, for instance, if you have $5,000 in a savings account and $4,750 in an investment account, and the investment account rises to $5,025 for even a single day.
If the failure to file was "willful" or "nonwillful," different penalties apply. For each year that a form is absent, there is a penalty for willful violations of the greater of $129,210 or 50% of your account amount.
2,426 Americans gave up their citizenship in 2021 compared to a record-breaking 6,705 in 2020, a significant decline, but the 2021 figures may have been lower due to U.S. embassy closures caused by the Covid-19 outbreak.
According to projections from the U.S. Department of State, there will be around 9 million Americans residing overseas in 2020.
According a recent survey, 86 percent of respondents believe that the American government is less likely to handle their problems than those of residents living in the country.