A quarter of Americans living in other countries want to give up US citizenship: what is the reason

While many fear tax season, Americans living abroad face an even greater annual burden — and it's so frustrating that some want to give up their American citizenship, reports CNBC.

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According to a Greenback Expat Tax Services survey, approximately one in four American expatriates are "seriously considering" or "planning" to give up their US citizenship.

According to a survey of 3200 American expats living in 121 countries, the burden of filing US tax returns is the number one reason expats want to renounce their US citizenship.

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“There are people who are doing what they think is quite normal, like saving for retirement or buying a house,” said David McKeegan, co-founder of Greenback Expat Tax Services. “But when you do it abroad, sometimes you can get yourself into a lot of trouble.”

Expats face strict tax reporting requirements

American expats must pay annual US income tax on worldwide income, including their wages, business profits, investment income, and more, which includes filing and paying taxes in two countries.

Although the US has adopted measures to prevent double taxation, such as the foreign income exclusion and tax credit, many expats still oppose double filing requirements due to the time and cost involved in preparing these returns. What's more, nearly 80% don't think they should pay US taxes while living abroad, the study says.

“Deliberate” reporting violations carry severe penalties

In addition, some Americans must report foreign accounts to the US Department of the Treasury annually through the Foreign Banking and Financial Accounts Report, or FBAR, or face severe sanctions.

You must file an FBAR if the total value of your accounts exceeds $10 at any time during the year, regardless of whether the accounts are generating income.
For example, if you have $5000 in a savings account and $4750 in an investment account, and the investment account jumps to $5025 even in one day, you must report those balances.

Penalties for non-submission of documents depend on whether it is an "intentional" or "unintentional" violation. However, there is a fee of $129 or 210% of your account balance for each year you don't have a form for willful violations.

"It's a whole headache for people when they get into trouble," McKeegan added.

American expats feel unheard in tax matters

While the number of Americans who renounced their US citizenship dropped sharply in 2021 — 2426 compared to a record 6705 in 2020 — the 2021 numbers may have been lower due to the closure of US embassies amid the Covid-19 pandemic.

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The US State Department estimated that there were approximately 2020 million US citizens living abroad in 9.
“What struck me about this latest survey is the number of people who think their problems are unlikely to be resolved,” McKeegan said.

Indeed, 86% of Americans living abroad surveyed believe that the US government is less likely to solve their problems, the study found.

As ForumDaily wrote earlier:

• More Americans want to renounce US citizenship, but The procedure takes years and is expensive..

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