Americans abroad renouncing US citizenship hits record - again

More Americans renounced their US citizenship in the first quarter of 2015 than any previous quarter in history, according to the IRS.

A record 1,335 Americans living overseas renounced their citizenship in the first three months of 2015, according to the Internal Revenue Service.

That number is 18 percent higher than the previous record, according to Bloomberg. In all of 2014, 3,415 individuals gave up their U.S. citizenship, the second straight year when renouncements hit a new record high.

The data only provided the names of Americans giving up their passports, and not their reasons for doing so. But the spike comes as the U.S. government is getting more aggressive about ensuring that Americans living abroad are unable to hide funds that should be taxed back home.

The 2010 Foreign Account Tax and Compliance Act (FATCA) required foreign banks to report on accounts held by U.S. citizens. Roughly 110 countries and 160,000 financial institutions have agreed to comply with the law, even as the U.S. stands apart from most other nations by taxing income its citizens make while living anywhere in the world.

The Obama administration touts FATCA as the “global standard” in battling tax evasion, but it has come under criticism from some, including many Americans living abroad who argue it is too burdensome.

Those living abroad see their income being double taxed - once by the host country and once by the IRS. It is manifestly unfair, but grew out of a government mindset that your income belongs to Uncle Sam and the IRS decides how much you can keep - regardless of where you live.

There is already a requirement for Americans to file a special form if their bank deposits exceed $10,000. That form still has to be filed on top of the new reporting procedures that forces foreign banks at gunpoint to report American's names and incomes. 

It's probably a good thing that there is more transparency in international banking, and Americans can't hide their funds in banks with strict secrecy policies. But Americans are beginning to vote with their feet and renounce their citizenship rather than put up with the onerous, burdensome filings when they live overseas.

 

 

More Americans renounced their US citizenship in the first quarter of 2015 than any previous quarter in history, according to the IRS.

A record 1,335 Americans living overseas renounced their citizenship in the first three months of 2015, according to the Internal Revenue Service.

That number is 18 percent higher than the previous record, according to Bloomberg. In all of 2014, 3,415 individuals gave up their U.S. citizenship, the second straight year when renouncements hit a new record high.

The data only provided the names of Americans giving up their passports, and not their reasons for doing so. But the spike comes as the U.S. government is getting more aggressive about ensuring that Americans living abroad are unable to hide funds that should be taxed back home.

The 2010 Foreign Account Tax and Compliance Act (FATCA) required foreign banks to report on accounts held by U.S. citizens. Roughly 110 countries and 160,000 financial institutions have agreed to comply with the law, even as the U.S. stands apart from most other nations by taxing income its citizens make while living anywhere in the world.

The Obama administration touts FATCA as the “global standard” in battling tax evasion, but it has come under criticism from some, including many Americans living abroad who argue it is too burdensome.

Those living abroad see their income being double taxed - once by the host country and once by the IRS. It is manifestly unfair, but grew out of a government mindset that your income belongs to Uncle Sam and the IRS decides how much you can keep - regardless of where you live.

There is already a requirement for Americans to file a special form if their bank deposits exceed $10,000. That form still has to be filed on top of the new reporting procedures that forces foreign banks at gunpoint to report American's names and incomes. 

It's probably a good thing that there is more transparency in international banking, and Americans can't hide their funds in banks with strict secrecy policies. But Americans are beginning to vote with their feet and renounce their citizenship rather than put up with the onerous, burdensome filings when they live overseas.