The Number Of Americans Prepping To Renounce Their Citizenship Will Make You…
The U.S. tax burden is making some Americans living abroad seriously consider renouncing their U.S. citizenship.
A new survey found that about a quarter of Americans living abroad are “seriously considering” or “planning” to renounce their citizenship.
According to the survey conducted by Greenback Expat Tax Service, burdensome tax laws for Americans living abroad are the most common reason expats are considering the step, which polled 3,200 Americans living in 121 countries.
Here’s what David McKeegan, the co-founder of Greenback Expat Tax Services, said in a statement:
“You have people doing what seems to them like very normal things, like saving for retirement, or buying a home, but when you do it overseas, sometimes you can get yourself into a whole lot of trouble.”
The U.S. has attempted to ease the tax burden of Americans abroad by putting in measures to avoid double taxation, according to Greenback.
However, American expats must pay annual U.S. income taxes on worldwide earnings, including their salaries, business profits, investment income, and more, which involves filing returns and paying taxes in two countries.
Greenback further explained:
“Because the majority of the world’s nations use a system of residence-based taxation, most US expats are required to pay taxes in their host country. Despite this, most also have to pay taxes to the US government on the same income due to the US’s practice of citizenship-based taxation.”
“The US also has rules in place that require Americans to report on foreign financial accounts. The rules were designed to safeguard against tax cheats hiding money in offshore accounts. However, these regulations disproportionately impact expats since they are more likely to have overseas accounts.”
The Daily Wire noted that the survey found that millions of Americans living abroad were unfamiliar with America’s financial reporting requirements, which could put them at risk of falling into trouble with the IRS.
An overwhelming majority of respondents — 86% — said they felt their concerns were less likely to be addressed by the government than citizens living in the continental U.S.
As of 2020, there were up to nine million Americans living abroad, according to U.S. State Department estimates. CNBC noted that just under 2,500 people revoked their U.S. citizenship in 2021, much fewer than the record-breaking year in 2020 that saw nearly 7,000 Americans decide to renounce their citizenship, the outlet added.