Wealthy people are renouncing American citizenship • Hacker News Board

Re: Wealthy people are renouncing American citizenship

#701

Post by claytongulick » Thu, Aug 05, 2021, 9:52 PM UTC

kogepathic wrote: post #481

jontas wrote: post #265

Earlier quoted context omitted.

The article is not drawing an arbitrary line: > The IRS publishes a quarterly list of the names of people who have renounced their citizenship or given up their green cards, but it only includes people with global assets over $2 million It may be an arbitrary line, but if so, it's the IRS drawing it.

> The IRS publishes a quarterly list of the names of people who have renounced their citizenship or given up their green cards, but it only includes people with global assets over $2 million This claim is total crap. The list includes all US citizens who renounce their citizenship, regardless of their net worth. [1] You also cannot renounce your citizenship for tax dodging [2]: > Persons who wish to renounce U.S. cit…

From [2]:

E. TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION

Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect on their U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information). In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed or may commit in the future which violate United States law, or escape the repayment of financial obligations, including child support payments, previously incurred in the United States or incurred as United States citizens abroad.

I read that as saying "If you owe the IRS money already, renouncing your citizenship isn't going to get you out of paying it".

>So plan to become rich after renouncing (and without the IRS noticing).

Do you have any other sources that corroborate this? I've certainly never heard of the IRS coming after someone for money they've earned after renouncing citizenship, except perhaps in complex cases involving international companies.

Re: Wealthy people are renouncing American citizenship

#702

Post by abroadsaver » Thu, Aug 05, 2021, 9:55 PM UTC

ElFitz wrote: post #665

pacomerh wrote: post #633

Earlier quoted context omitted.

I don't understand how the IRS can know what you do in foreign banks

Because they apparently require foreign banks to report it. Now, how do they actually enforce that supposed "obligation"? I do not know. But it doesn’t surprise me. The US has already enforced it’s laws on foreign companies' dealing abroad merely because they had used dollars in their transactions.

They haven’t enforced it yet (for the banks, for non-compliant Americans, they have). But they’ve signed treaties with many governments to allow this, and they threaten foreign banks with fines related to any US dealings.

Re: Wealthy people are renouncing American citizenship

#703

Post by emodendroket » Thu, Aug 05, 2021, 9:57 PM UTC

kingosticks wrote: post #686

emodendroket wrote: post #565

Earlier quoted context omitted.

Does the country where they live run the embassy too and I just never knew about it?

What's the embassy doing for me as an American citizen living abroad who uses none of their services (except passport renewal but that's only because of the other ridiculous rule that US citizens must travel there on a US passport). Why am I paying for it?

What's the fire department doing for me, a citizen of my town who has not experienced any fires? Why am I paying for it?

Re: Wealthy people are renouncing American citizenship

#704

Post by remir » Thu, Aug 05, 2021, 10:00 PM UTC

fourthwaveska wrote: post #44

By most western standards my family teeters on the line between middle and upper middle clas. We sold all of our US property last year; and now we are shopping for 4-6 unit buildings within 100km of Barcelona to get our Golden Visas. Our goal is to get citizenship and access to the EU then renouncing my US citizenship. It isnt about money, I am juwt ashamed to have an American passport and know my tax dollars are bei…

Please don't take this personnaly as I'm not targeting you specifically with my comment: but I don't know how I feel about wealthy foreigners coming to a place, buy property and extract rent from locals, who may not even be able to afford ownership in the first place.

Re: Wealthy people are renouncing American citizenship

#705

Post by 1270018080 » Thu, Aug 05, 2021, 10:04 PM UTC

MuirsGhost wrote: post #318

alephnan wrote: post #118

There's this idea floating around in this thread that people get rich, then get richer in and then leave to evade taxes. If optimizing for money really was people's intention, it's much more optimal to leave before you become mega rich. You can move to Singapore once you have $6 million to buy a visa-by-investment. There's no cap gains taxes there, so your money can compound unencumbered. Then again, not every ex-pat…

>it's much more optimal to leave before you become mega rich. It is almost as if the US provides some kind of useful, taxpayer funded, environment for becoming mega rich....

Buying political parties?

Re: Wealthy people are renouncing American citizenship

#706

Post by Symbiote » Thu, Aug 05, 2021, 10:05 PM UTC

emodendroket wrote: post #659

AdrianB1 wrote: post #650

Earlier quoted context omitted.

They should not pay taxes in full to get 1% of the benefits.

Why not? I could just as well say that someone making $50k in Arkansas shouldn't have to subsidize consular services for someone making a quarter million a year abroad. They're not really paying "full price" either given the large exemption.

Most people use their country's embassy approximately never.

Where they do need to use it (such as registering a birth) it's usually replacing use of a different government office, had they not lived abroad.

Re: Wealthy people are renouncing American citizenship

#707

Post by pedrosorio » Thu, Aug 05, 2021, 10:05 PM UTC

whoomp12342 wrote: post #504

ne0flex wrote: post #416

Being a Canadian, I started a tax-free savings account "TFSA" (similar to a US Roth IRA but with way less restrictions)when I turned 18 and was investing heavily in it. A few years later I would get a green card and move to the US and didn't touch the account afterwards except make a few rebalances here and there. My brokerage asked me to update my information and asked me if I was a "US" person to which I answered y…

its clear how your situation could be abused. i am not suggesting that you have done this, but that it creates an interesting loophole for the wealthy by harboring investements into other countries capital. Lets say you are a 0.1%er who happens to live in canada. Invest everything on canadas terms, then move to the USA. receive foodstamps, welfare checks and the likes for XX years. Go back to canadian citizenship and…

> you are a 0.1%er

> move to the USA. receive foodstamps, welfare checks and the likes for XX years

Does this seem like a good use of your time, as a 0.1%er? Collecting foodstamps?

Re: Wealthy people are renouncing American citizenship

#708

Post by junar » Thu, Aug 05, 2021, 10:06 PM UTC

hermannj314 wrote: post #536

tristor wrote: post #462

I was unwilling to renounce and stay abroad, for a variety of reasons, so I returned to the US and decided to stay. But for a good while I lived and traveled outside the US as a digital nomad and the tax implications are immense, especially if you are a member of any corporation or LLC, have any retirement accounts, or own any property. It's an absolute nightmare to correctly file taxes, has an astronomically high au…

I was an American citizen living in Luxembourg for 3 years around 2015. I agree - many banks did not want to let me open an account, and when BNP Paribas said they work with Americans it was a huge ordeal to open the account. However, as a salaried employee, I did not struggle with the taxes. The IRS form was very straightforward and after deductions I didnt owe any US taxes (I made just over the equivalent of $100k…

Did you file Form 2555 or Form 1116?

Were you also required to file FBAR or Form 8938?

About how much time did you spend on tax preparation yourself? If you used a paid preparer, how much did that cost you?

Re: Wealthy people are renouncing American citizenship

#709

Post by Izikiel43 » Thu, Aug 05, 2021, 10:10 PM UTC

fourthwaveska wrote: post #104

cpursley wrote: post #67

Earlier quoted context omitted.

Spanish tax and legal system is a nightmare. Have you looked at Portugal?

Yes, but my wife has spent the past four years learning Spanish and every time I suggest Portugal she gets a murderous look in her eyes. My preference is actually Denmark, but it is an order of magnitude more difficult to move there, and my wife hates the language :(

Portuguese is not that different from spanish.

Re: Wealthy people are renouncing American citizenship

#710

Post by abroadsaver » Thu, Aug 05, 2021, 10:11 PM UTC

emodendroket wrote: post #659

AdrianB1 wrote: post #650

Earlier quoted context omitted.

They should not pay taxes in full to get 1% of the benefits.

Why not? I could just as well say that someone making $50k in Arkansas shouldn't have to subsidize consular services for someone making a quarter million a year abroad. They're not really paying "full price" either given the large exemption.

The US has an interest in maintaining embassies and consulates independent of its expat population. And we often pay for whatever services we get there, so you aren’t subsidizing us.

Additionally a government should think about practicality and fairness before it implements policy. It is impractical and excessively burdensome to try and tax residents of countries that aren’t the US. Despite your stated beliefs elsewhere, it does not take very much income or bizarre situations to wander into dicey tax situations that are frightening for the expat. A small business (which is taxable in the US if you net more than about $430) can mean difficult filing in the US. I don’t earn all that much, and I’ve spent a lot of this summer working on my US taxes for no purpose other than to have them piled up somewhere, unless some IRS agent decides to make my life much more difficult.