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Why I gave up my US passport

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Re: Why I gave up my US passport

#81

Post by auctiontheory »

martey wrote: post #75
auctiontheory wrote: post #59

Earlier quoted context omitted.

As has already been stated many, many times, for most Americans living abroad who are not super-rich, the issue isn't the taxation - it's the complexity (and associated penalties) of the reporting requirements. Basically, the US government's attitude toward Americans living outside the US, much like the US attitude toward non-Americans wherever they live, is "F * You." Perhaps you think that this attitude is somehow…

> Perhaps you think that this attitude is somehow justified. I think it is a complex issue, and should not be dismissed as "not making any sense" or the government wanting to screw citizens living abroad over. As I have already stated, it is clear that the purpose behind the legislation is to prevent unreported income from being stored in foreign bank accounts. Like with many complex issues, I think the current solut…

I didn't say it was "stupid" - don't put words in my mouth. And I completely understand the bureaucratic purpose behind it.

The reality is that the truly rich (like Mitt Romney) have plenty of legal ways to shield their income, offshore or otherwise. So these regulations screw (the vast majority of) Americans aboard with relatively modest incomes, while they are ineffectual against the rich few with tax accountants on their permanent staff.

tl;dr - these rules create more harm than benefit.

Re: Why I gave up my US passport

#82

Post by philiphodgen »

victorf wrote: post #72
philiphodgen wrote: post #58

Earlier quoted context omitted.

At the moment the U.S. government is remarkably sane about this. People who renounce citizenship can re-enter the USA on tourist visas, get work visas (like an L-1), etc. They can even get green cards and re-acquire citizenship. "Sane" will continue until we have a critical mass of people like Senator Schumer in the Senate. Disclaimer: I am a lawyer. And I do lots and lots of expatriation cases.

But not if you explicitly renounce to avoid taxes, there's a checkbox for that in amongst the "have you ever committed acts of terror?" questions.

That checkbox is a legacy of the pre-2008 laws, which had different tax treatments depending on your motivation for renouncing citizenship.

Under the current laws, intent is irrelevant. If you meet certain criteria (net worth above $2 million, for most people) you pay tax. Our friends in Congress want to define people as meeting these criteria as having evil tax-avoidance motives. It ain't so, at the moment.

And of course NO ONE ever tells the Embassy official that the primary motive for renouncing citizenship is tax-driven. :-)

Seriously, though. I would say that at least half of the people I work with end up living in high income tax countries (Canada, various countries in Europe, Australia, New Zealand). They aren't leaving to cut their income tax bills. The tax-drive motivations are primarily (1) the craptastic paperwork and horrific penalties that Americans abroad face, and (2) the estate tax.

Re: Why I gave up my US passport

#83

Post by ryanhuff »

spodek wrote: post #35

I grew up loving the philosophy and values I learned about America -- Jefferson, Adams, Thoreau, King, Edison, Feynman, ... welcoming Einstein and so many others. Young as the country and its culture is, we've produced some greats. As I've matured and times have changed it's been impossible to miss other parts of America grade schools don't teach -- increasing division between rich and poor, decreasing social mobilit…

Don't you think that the division between rich and poor has historically been worse than it is today? I can't imagine that the early[edit] 1900's, characterized by horrendous labor practices that ultimately brought on the labor movement, were of a society with a more narrow division of rich and poor than of today. I have unsuccessfully looked for a reference to compare today's middle class to those of the early 1900s. Please share if you know of any.

Re: Why I gave up my US passport

#84

Post by philiphodgen »

LekkoscPiwa wrote: post #74
yapcguy wrote: post #19

Earlier quoted context omitted.

What may be driving some people is simply the fear of getting the paperwork wrong. The penalties listed on the forms are scary. You can't just do it in Turbotax for 50 bucks, you need a qualified tax professional to help you. Good luck finding one familiar with the latest US regulation when you're abroad. The fees will be in the thousands, every year, for the rest of your life. The financial toll and mental stress al…

I do it with Turbo Tax for 50 bucks. The thing is not to open an account outside of the US. If you follow that rule you are fine and your return won't be longer than US return. If you really, really need that account in a foreign bank simply don't advertise left & right you are an US citizen and open an account using your local (German, Canadian, whatever) driver's license. I have lived in Poland 3 years so far with…

The strategy of using your local ID (and hiding your U.S. status) will work for a little while longer. Google for the acronym "FATCA". Sooner or later your bank will ask you to certify that you have no U.S. connections.

No, the real key to keeping your paperwork simple is to keep the balance in all of your non-U.S. bank accounts below USD 10,000 at all times. The form is TD F 90-22.1.

Your U.S. tax return should be vastly more complicated than a resident's return if you want to avoid double taxation of your income. You will either be attaching Form 2555 (to exclude income from U.S. taxation) or Form 1116 (to claim credit for the taxes you pay in Poland) or both.

If you have a little investment account with some savings in it and you buy mutual funds, you will be filing Form 8621 for each mutual fund you buy.

If you are a startup entrepreneur and you own stock in your company, you will be filing Form 5471.

Seriously, it's a pain factory. I'm glad you have found a simple way of doing things, but for most people the annual cost of doing this paperwork is staggering.

Re: Why I gave up my US passport

#85

Post by mathrawka »

anologwintermut wrote: post #79
bentoner wrote: post #69

Earlier quoted context omitted.

That's really harsh. Someone living abroad could easily spend > 35 days/year in the US on business or visiting family.

Not really. The point of the requirement is to subsidize the health care you will get if they find you unconscious, naked in a ditch without ID and can't tell if you are wealthy enough to pay or not. Absent insurance, that privilege is paid for by the higher prices charged to people unlucky enough to need healthcare. Now, if you can't get plans that consider the fact that you are only in the US for < 100 days a year,…

As an American that lives abroad, whenever I visit the US I make sure I always have traveler's insurance for myself and all my dependents that are traveling with me. Last year I was in the US for a over 100 days, and my traveler's insurance was valid for every second.

It shouldn't matter how many days you are in the US or not, it should matter where you declare your tax home.

Re: Why I gave up my US passport

#86

Post by NamTaf »

bandushrew wrote: post #57
NamTaf wrote: post #54

Earlier quoted context omitted.

What benefit from paying income taxes, exactly? You're not living there, so you don't benefit from any of the social services that income tax funds. Just about every other country I can think of does not tax citizens abroad who do not earn money on their native soil. What makes you think the US system is right and all the others are wrong?

and yet you do not want to give up your citizenship, so clearly you feel you are benefiting from some of the social benefits that your income tax funds.

I'm not an American citizen, so please go ahead and take my perceived American citizenship away - I'm happy to give it up.

I hold dual citizenship but would expect not to pay taxes in nation B when I live and work in nation A. If I were to start working in B and stop working in A, I'd expect to pay tax in B as per B's tax laws, and cease paying taxes in A. If I earn an income in both, I expect to pay taxes on the portion of income in each nation, as per the tax laws of each nation.

Similarly, because I live and work in A, I do not get the social services that B offers - for example, if I were to become unemployed, I'd expect to only utilise nation A's unemployment benefits. If I fall ill, I don't expect to be able to (and cannot) pin the cost on nation B's national healthcare services.

The reason I don't choose to give up my dual citizenship is that I enjoy the ease-of-access to both nations, if and when I choose to move between them. That access does not cost the nation anything to retain.

Re: Why I gave up my US passport

#87

Post by jsaxton86 »

ryanhuff wrote: post #83
spodek wrote: post #35

I grew up loving the philosophy and values I learned about America -- Jefferson, Adams, Thoreau, King, Edison, Feynman, ... welcoming Einstein and so many others. Young as the country and its culture is, we've produced some greats. As I've matured and times have changed it's been impossible to miss other parts of America grade schools don't teach -- increasing division between rich and poor, decreasing social mobilit…

Don't you think that the division between rich and poor has historically been worse than it is today? I can't imagine that the early[edit] 1900's, characterized by horrendous labor practices that ultimately brought on the labor movement, were of a society with a more narrow division of rich and poor than of today. I have unsuccessfully looked for a reference to compare today's middle class to those of the early 1900s…

This isn't perfect, but it's a good start:

http://en.wikipedia.org/wiki/File:2008_Top1percentUSA.png

http://en.wikipedia.org/wiki/Income_inequality_in_the_United...

Re: Why I gave up my US passport

#88

Post by anologwintermut »

mathrawka wrote: post #85
anologwintermut wrote: post #79

Earlier quoted context omitted.

Not really. The point of the requirement is to subsidize the health care you will get if they find you unconscious, naked in a ditch without ID and can't tell if you are wealthy enough to pay or not. Absent insurance, that privilege is paid for by the higher prices charged to people unlucky enough to need healthcare. Now, if you can't get plans that consider the fact that you are only in the US for < 100 days a year,…

As an American that lives abroad, whenever I visit the US I make sure I always have traveler's insurance for myself and all my dependents that are traveling with me. Last year I was in the US for a over 100 days, and my traveler's insurance was valid for every second. It shouldn't matter how many days you are in the US or not, it should matter where you declare your tax home.

Or the travelers insurance should count as health insurance in terms of that mandate. Does it?

Re: Why I gave up my US passport

#89

Post by aptwebapps »

ryanhuff wrote: post #83
spodek wrote: post #35

I grew up loving the philosophy and values I learned about America -- Jefferson, Adams, Thoreau, King, Edison, Feynman, ... welcoming Einstein and so many others. Young as the country and its culture is, we've produced some greats. As I've matured and times have changed it's been impossible to miss other parts of America grade schools don't teach -- increasing division between rich and poor, decreasing social mobilit…

Don't you think that the division between rich and poor has historically been worse than it is today? I can't imagine that the early[edit] 1900's, characterized by horrendous labor practices that ultimately brought on the labor movement, were of a society with a more narrow division of rich and poor than of today. I have unsuccessfully looked for a reference to compare today's middle class to those of the early 1900s…

Usually when people talk about the growing income gap they're not looking back as far as the early 1900s. Like here:

http://www.motherjones.com/politics/2011/02/income-inequalit...

If you want to look further back, you can probably find the data somewhere here:

http://research.stlouisfed.org/fred2/

Re: Why I gave up my US passport

#90

Post by mathrawka »

anologwintermut wrote: post #88
mathrawka wrote: post #85

Earlier quoted context omitted.

As an American that lives abroad, whenever I visit the US I make sure I always have traveler's insurance for myself and all my dependents that are traveling with me. Last year I was in the US for a over 100 days, and my traveler's insurance was valid for every second. It shouldn't matter how many days you are in the US or not, it should matter where you declare your tax home.

Or the travelers insurance should count as health insurance in terms of that mandate. Does it?

Just a guess, but I don't think it will. The policy and all documents are not in English, and no reason for them to be either.

So if they make an exemption for travelers insurance, it will be hard for them to verify that it meets the criteria of the exemption.

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