The United States is one of only two countries in the world that has citizenship-based taxation. As a US citizen, you must file a tax return and typically pay extra taxes on top of the ones you already owe – known as double taxation. So far this rule has only affected the rich, specifically those who make $106,000 or more per year. The Foreign Account Tax Compliance Act (Fatca) hopes to expand the scope of those who can be taxed, making it difficult for many expatriates to retain their US citizenship. Thus, they have to make a difficult and emotional choice – to give up their citizenship or pay thousands of dollars in extra taxes.
Russell Newlove begins his article as follows:
How does it feel to give up your nationality, to renounce the country you were born in, potentially forfeiting the chance to ever return?
“It’s not going to be easy at all. It’s the last thing I ever thought of doing,” Jane tells me when I meet her in a Paris cafe.
Her voice cracks and her eyes well up. She is in the process of relinquishing her American nationality. Soon she’ll visit the US embassy formally to renounce her citizenship, she says, under duress.
“I’m very proud of being an American. It’s what I am when I look in the mirror.
“If it weren’t for Fatca [the Foreign Account Tax Compliance Act] and the decision by the bank, I’d never be doing this. Never ever. It’s just breaking me in half.”
She’s not alone. According to the US Treasury, a record 4,279 individuals renounced their US citizenship or long-term residency in 2015 – an increase of 20% on the previous year, which was itself a record-breaking year.
In 2010, just 1,006 gave up being US citizens, but since then the numbers have risen every year.
Read the full article here: Why Expat Americans are Giving Up their Passports by Russell Newlove – BBC
Posted by Pooja Shivaprasad, Associate Editor, Wealth Strategies Journal