Another record year for the USA baby!!!! There’s nothing we can’t do if we set our minds to it. In this case, that includes saying sayonara to the Land of the Free and the Home of the Brave. That’s right, in 2015, our fellow americans – oops that’s our former fellow americans, renounced their citizenship in greater numbers than ever before. CNN reports an increase of over 20% of former U.S. citizens who decided that being an American was too great an honor.
Why, you ask, would a sane person give up their citizenship? Well, the problem is that these United States takes a big portion of their income, even if they live overseas. That is, of course, in addition to the taxes they have to pay in the countries where they actually make the money. From the CNN story:
Eighteen times as many Americans renounced their citizenship or long-term residency in 2015 compared with 2008. Last year was the third record-breaking year in a row.
Unlike most other countries, the U.S. taxes its citizens on all income, no matter where it’s earned or where they live. For Americans living abroad, that results in a mountain of paperwork so complex that they are often forced to seek professional help, forking out high fees for accountants and lawyers.
The burden has gotten heavier in recent years with the Foreign Account Tax Compliance Act, which became law in 2010.
It requires individuals to report certain foreign assets and banks to disclose all foreign accounts held by Americans. That comes on top of another rule that requires Americans to disclose foreign bank holdings above $10,000.
As financial institutions grapple with FATCA, some overseas banks — both big and small — have ditched their U.S. clients, leaving some without even basic checking and savings accounts. That’s because banks that mistakenly fail to report any accounts held by Americans outside the U.S. can face steep penalties.
Here’s the kicker – these folks are subject to an Expatriation Tax. We’re not going let these ingrates just up and leave – oh no – like leaving New Jersey, if you want to go, you have to pay. People who make more than 147K per year must pony up to the taxman to be permitted to leave. These are the full rules from the IRS, but be prepared because in typical fashion, they are not written to be well understood.
The icing on the cake after all that is, if the government determined that you left because of the tax burden, then you can’t come back to visit. Indeed, along with those involved in international child abduction, participants in Nazi genocide, and terrorists, federal law says those who left for tax purposes must be prohibited from visiting.
To see renunciations ever increasing even in the face of such policies is to see how onerous and burdensome the continuing compliance with current regulations is. Prediction – 2016 will be another record breaking year.