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Why I gave up my US passport

bbc.co.uk

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Re: Why I gave up my US passport

#41

Post by logicallee »

martey wrote: post #40
logicallee wrote: post #15

Earlier quoted context omitted.

Yes, the article wasn't exactly clear but pretty much all of the stories (well, I only read a few) refer obliquely to one thing: you are subject to taxation by the United States even while you're a resident abroad, and paying taxes abroad. It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California. Nobody else (worldwide) does this. It doesn't make any se…

> It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California. This is an imperfect analogy (since there is not really a concept of "citizenship" for individual US states), but note that claiming residency in one state while living in another will often require you to pay taxes in both. > Nobody else (worldwide) does this. It doesn't make any sense. I thin…

Of course they can be dismissed. What you're not getting is that these people have to pay full taxes in the place they're actually living. A place you're not living has no business collecting further taxes from you.

Re: Why I gave up my US passport

#42

Post by logicallee »

jmreardon wrote: post #24
logicallee wrote: post #17

Earlier quoted context omitted.

can you link a citation to the 'exception' you mention?

Sure: http://www.law.cornell.edu/cfr/text/8/101.3 The relevant portion is: "A person born in the United States to a foreign diplomatic officer accredited to the United States, as a matter of international law, is not subject to the jurisdiction of the United States. That person is not a United States citizen under the Fourteenth Amendment to the Constitution. Such a person may be considered a lawful permanent residen…

Thanks! Interesting...

Re: Why I gave up my US passport

#43

Post by arbuge »

It is hard to fathom the complexities you face when overseas as a US citizen due to the US tax code, which is basically the only code of a major developed country to tax its citizens wherever they may live worldwide, regardless of their source of income.

There is a system of tax exemptions and credits within the code to offset the double taxation this would imply when living in a jurisdiction which imposes its own income taxes, as most countries in fact do. The difficulties arise in reconciling the US tax liabilities with those owed to the foreign country, calculating the applicable credits, etc. In practice this requires expensive tax professionals in most cases - and they get really expensive if you're an entrepreneur with an overseas corporation, which is pretty much a nightmare to deal with on several levels - different accounting standards, controlled foreign corporation tax reporting, paying estimated taxes when having no clue what the result of a complex tax calculation process will be, etc.

Besides income taxes, there are also bank account reporting requirements (TDF 90-22.1 form) which have made many people's lives difficult. The penalties for not reporting any foreign bank account are draconian even if you live overseas and need an account where you live (you will). Even worse, foreign banks are reluctant to deal with US citizens because of the reporting they in turn are required to do on their behalf, resulting in frequent difficulties opening and maintaining bank accounts overseas if you are a US citizen.

Finally, as a US citizen overseas you are still entitled to social security payments from the US government, but get no benefit from your contributions to Medicare, which only covers you within the USA proper. For that matter you also get no benefit from most of the residual income taxes you pay to the USA that you can't offset with tax exemptions/credits. It's not like those taxes will be used for any of the infrastructure etc. you use overseas.

Re: Why I gave up my US passport

#44

Post by bane »

sliverstorm wrote: post #28
nly wrote: post #8

Earlier quoted context omitted.

Happen-stance of birth? What are the rules there about citizenship by birth? In the UK one of your parents has to be a citizen, or have been "legally settled" (allowed to stay indefinitely).

If you are born on American soil, you are an American citizen.

This includes foreign military bases.

Re: Why I gave up my US passport

#45

Post by bowyakka »

LekkoscPiwa wrote: post #6

Some of the stuff the people in the article write is just plain stupid. If I could get US citizenship for my newly born daughter (born in Poland) after being in the US total just 5 years, why she couldn't get it done, is beyond me. People who have lived in EU complaining about US burocracy and pointing it as a reason for giving up on an US citizenship are beyond me too. US taxation system is a walk in a park compared…

What part of the US tax system is easy compared to the EU, seriously because I come from the UK and being in the US is the first time in my life I have had to even file a tax return.

The US system seems to guarantee you need an accountant.

Re: Why I gave up my US passport

#46

Post by CHsurfer »

logicallee wrote: post #15
LekkoscPiwa wrote: post #6

Some of the stuff the people in the article write is just plain stupid. If I could get US citizenship for my newly born daughter (born in Poland) after being in the US total just 5 years, why she couldn't get it done, is beyond me. People who have lived in EU complaining about US burocracy and pointing it as a reason for giving up on an US citizenship are beyond me too. US taxation system is a walk in a park compared…

Yes, the article wasn't exactly clear but pretty much all of the stories (well, I only read a few) refer obliquely to one thing: you are subject to taxation by the United States even while you're a resident abroad, and paying taxes abroad. It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California. Nobody else (worldwide) does this. It doesn't make any se…

US citizen, living in Switzerland. I don't want to give up my citizenship and I don't mind to pay some tax to the US. I did get a great education and attitude growing up there, but the risk of making a mistake could be ruinous to my family (French wife, two kids born here). It's fair that if you make a mistake, you pay a penalty, but with the current rules, it turns into a crime. Very scary because it's so complicated.

Re: Why I gave up my US passport

#47

Post by fpgeek »

clueless123 wrote: post #20

I wonder what is going to happen to all those US citizens living abroad with the new health insurance requirements.. Will they be forced to pay even they can't benefit from the services ? ( Specially if they are already covered by their host country healthcare system. )

Overseas Americans who eventually return to the US do receive one benefit from the ACA: the ban on excluding coverage of preexisting conditions.

That means the most for those whose coverage in their host country wouldn't have met the HIPAA requirements for creditable coverage, of course. However, even those whose coverage would have satisfied the HIPAA requirements do get to avoid at least one round of confusing paperwork.

Re: Why I gave up my US passport

#48

Post by nmridul »

joonix wrote: post #33
ajmurmann wrote: post #12

Earlier quoted context omitted.

The issue is not the complexity of the taxation system, but the fact that only the US and Somalia tax based on citizenship. http://en.wikipedia.org/wiki/File:Individual_taxation_system...

Sure, they are the only ones, but does that mean it's morally or logically wrong? Theoretically a government spends a certain amount of money on each individual as they live, become educated, and work in the US. If they decide to leave the US to work abroad, they shouldn't get any tax revenue back from you? They do allow you to deduct taxes paid to your residence country.

Taxing is mainly to pay for the facilities that the Government is providing you currently. That is the reason why vast majority of the countries (99% ?) are taxing based on physical presence. So if you are out of the country for most of the time during the last year, then you don't pay tax.

Re: Why I gave up my US passport

#50

Post by martey »

logicallee wrote: post #41
martey wrote: post #40

Earlier quoted context omitted.

> It is as though your 'home state' continued to tax you (or make you file paperwork) long after you've moved to California. This is an imperfect analogy (since there is not really a concept of "citizenship" for individual US states), but note that claiming residency in one state while living in another will often require you to pay taxes in both. > Nobody else (worldwide) does this. It doesn't make any sense. I thin…

Of course they can be dismissed. What you're not getting is that these people have to pay full taxes in the place they're actually living. A place you're not living has no business collecting further taxes from you.

> What you're not getting is that these people have to pay full taxes in the place they're actually living.

In that case, they can claim a "Foreign Earned Income Exclusion" [1] which reduces or eliminates their American tax liability for up to $97,600 of income that they are "paying full taxes" on.

> A place you're not living has no business collecting further taxes from you.

As other comments have noted, just because you are not living in the United States does not mean that you are not materially benefiting from citizenship. Despite living abroad, you can still vote, travel to and from the United States, and take advantage of US diplomatic representation in case of arrest.

[1]: http://www.irs.gov/Individuals/International-Taxpayers/Forei...

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