New York City, NY (PRWEB) May 29, 2012
When Facebook co-founder Eduardo Saverin renounced his US citizenship prior to his company’s IPO, it’s unlikely he realized how much attention his decision would receive from the media and from Congress. It was reported that eight times as many Americans renounced their US citizenship in 2011 as in 2008, which is a notably dramatic statistic. However, the actual number of US citizens is also notably small: 1,780 total in 2011 out of the estimated 3 to 6 million US citizens who live abroad – in other words, the percentage of American expats who renounced their citizenship increased from 0.008% to 0.059% between 2008 and 2011.
“Anecdotally, it would appear that the rate of people renouncing US citizenship is tied to increased government efforts to enforce US tax regulations on US citizens living abroad,” says Greenback President David McKeegan. “That is to say, increased awareness of the need to file US taxes and Foreign Bank Account Reports seems to have an impact on people’s decision to renounce citizenship, as the major increases have come after the 2009 voluntary disclosure program.”
It seems likely that some American expats, perhaps those with dual citizenship or those who had few ties to United States, started to find the compliance side of citizenship outweighed the benefits of being a US citizen. In an effort to discourage other expats from making the same choice, Senators Charles Schumer and Bob Casey have proposed the Ex-PATRIOT Act, which would – among other things – impose a 30% capital gains tax on those who give up their citizenship and bar them from ever stepping foot on US soil again. While the Ex-PATRIOT Act has not yet made its way through Congress, the professionals at Greenback Expat Tax Services urge Americans living overseas to carefully weigh the current benefits and consequences of renouncing US citizenship before taking any action.
On the plus side, it could potentially eliminate double taxation on income earned in a foreign country, reduce the stress and cost of preparing tax returns and FBAR forms, avoid the anti-terrorism reporting requirements that have led many foreign banks to refuse to provide services to US citizens. Also, social security payments will still be sent to former citizens.
On the negative side, all rights and privileges afforded to US citizens will no longer apply, a tourist visa will be required to visit the US, taxes will still be owed through the date on the Certificate of Loss of Nationality, and those who are considered “covered expatriates” due to having a high income will be responsible for an additional exit tax over and above their tax liability for that year. And it’s considered a forfeiture of military retirement benefits when a former member of the US military renounces their citizenship. Above all, it’s tremendously important to note that once an expat has formally renounced their US citizenship, the decision is permanent and irrevocable.
About Greenback Expat Tax Services
Greenback Expat Tax Services specializes in the preparation of US expat taxes for Americans living abroad. Greenback offers flat-fee pricing, a simple, hassle-free process, and CPAs with decades of experience in the field of expat tax preparation. For more information and to download a free guide to US expat taxes, visit http://www.greenbacktaxservices.com.