
Taxes Prompt More Americans to Renounce Citizenship - stfu
http://www.cnbc.com/id/47064295
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aethr
I experience this first-hand myself. I am a dual citizen of US and Australian
citizenship, living in Melbourne, Australia.

Under the tax treaty between Australia and the US, I can declare tax paid to
Australia (where I work) and I receive an exemption from paying that amount of
tax to the US. With Australia's income tax almost universally higher, this
means that I will probably never need to actually pay tax to the US.

However, I still have to _file_ tax in both countries every year. This is made
more difficult by the fact that the tax year in Australia runs from July to
June, with the US running 6 months offset. This makes the paperwork time
consuming and difficult to perform, and there are very few accountants in
Australia versed in US tax practices, so I can't even go out and hire a
professional who can manage both my Australian and US tax lodging.

Although I was born and raised in the US and in many ways still think of the
US as my homeland, I am on the verge of giving up my US citizenship for
exactly this reason.

~~~
jcampbell1
Don't do it. Learn how to use turbo tax online. It costs $50, and takes about
2 hours. I don't know about your personal situation, but you are likely very
far from owing any US taxes.

You don't need an accountant. Just do it to the best of your ability. It is
pretty simple. Income, AUS taxes paid, foreign account list. TurboTax will
tell say you owe nothing, then click the e-file button.

Don't trash a US passport over $50 and 2 hours. Once you do it once, it will
take about 30 minutes the next year.

~~~
terinjokes
I thought that most of these online solutions bail very early if you don't
live in the US.

~~~
jbarham
FWIW I used H&R Block At Home to file my US tax return after I relocated to
Australia and it worked fine. Note that e.g. American teachers at
international schools have to file US tax returns so there are accountants out
there who understand the issues.

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DanielBMarkham
We have a truly insane taxation system.

In a related story, InfoWars goes on their usual over-hyped tirade over the
non-travel law being proposed. Even accounting for the usual hype, it is a
serious problem to civil liberties. [http://www.infowars.com/irs-travel-ban-
revoking-citizenship-...](http://www.infowars.com/irs-travel-ban-revoking-
citizenship-by-stealth/) (I tried submitting this story but it looks like the
domain is on the auto-delete list)

I really can't believe the system has gotten as bad as it has.

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philiphodgen
I was the tax lawyer interviewed for this article. I have helped dozens of
people terminate their citizenship or green cards. Ask me anything.

~~~
peeters
Being Canadian, this strikes close to home. It seems like the crackdown was
directed mostly at the rich to target tax evasion, but it has had the ~1
million American citizens in Canada trembling. Many of these people have not
lived in the States at any point in their life (often born into dual
citizenship), and all of a sudden they're being threatened with penalties for
not filing taxes in the U.S.

My last impression from the U.S. Ambassador was that there would be reasonable
reprieve for dual U.S.-Canadian citizens. Has that happened?

~~~
philiphodgen
No reprieve yet and it appears that the IRS still wants to take 25% of your
RRSP if you didn't file the right price of paper with the IRS. I'm meeting
with the IRS in Washington on May 7 to propose an easy remedial system. We
shall see.

But yeah. The IRS went hunting for whales and caught minnows.

------
jbarham
Quite apart from Americans denouncing their citizenship, this absurd tax
policy is surely a strong disincentive for many ambitious and successful
global entrepreneurs from considering taking out US citizenship or applying
for a green card, since many of the same penalties apply.

In my case as a Canadian, I worked as a software engineer for 4+ years on work
visas in California before relocating to Australia in late 2010. My wife is an
Aussie so I have permanent residency in Australia.

Although I turned off my US job site profiles, I still get emailed regularly
by US recruiters asking if I'd be willing to move back to the US. My answer is
always no. The opportunity cost of living under the restrictions of work visas
in the US and playing the green card queue lottery in a potentially lousy job
before your time runs out is just too high.

------
wheels
Another annoyance: with the latest batch of reporting regulations for accounts
of US citizens, many foreign banks won't let US citizens open up investment
accounts since it's not worth it to them to deal with the reporting.
(Presumably they make exceptions for large accounts, but e.g. in Germany,
where I live, most online brokerages don't allow such.)

~~~
philiphodgen
This is increasingly common.

You know the saying "The Internet interprets censorship as damage and routes
around it"? Substitute the US tax system for internet.

Our politicians and bureaucrats do not understand that it is a very big world.
We risk declaring ourselves irrelevant. A large chunk of the world may simply
shrug and say "meh who needs you." Exhibit A: China loosened its currency
today. You KNOW they are going to pimp it as a reserve currency preferable to
the USD.

~~~
HSO
Isn't it funny, when the Chinese don't loosen their currency, it's called
mercantilism; when they do, they "pimp [the CNY] as a reserve currency". A
case of damned if they do, damned if they don't?

~~~
philiphodgen
Yeah it is a no-win. Not only for the Chinese government but for all of us--
critics will be with us. The Chinese government is taking an action to create
its own future. Let's see what happens.

I was a boy living in Africa at the tail end of the Empire. I still remember
watching the pound sterling slowly drift into irrelevance.

------
beagle3
I estimate I spend two full work weeks a year on doing my nontrivial US taxes
(and that's on top of paying a professional to actually do that -- that's just
the "homework" he leaves me with, which he cannot do himself because he
doesn't know the country's internal tax codes and language)[1]. This is an
additional 4% tax on my time that is counted nowhere. And the tax
professional's fees are not actually deductible because I'm in AMT regime. My
effective tax rates turns out to be 10% or so above my official bracket all
things considered -- in the sense that I cannot avoid paying those 10% (even
if they do not go to the government's coffers -- they come out of mine)

I have income coming in from another country, which makes things complicated.
I have to file there as well; I think it amounts to about 5 hours collected
over a year to file (and that includes reporting my US based income to that
country).

The federal US tax code is 73,000 pages. If you're an average person (you
don't have fisheries or hundreds of the other special cases and exemptions),
then only 5,000 pages or so are relevant to you (not the same 5,000 to every
person - of course). And those 5,000 pages change ever so slightly every year.

If you've been doing your taxes by yourself, it is almost guaranteed that you
are either overpaying or did something wrong (or both). Even if you are using
a professional, the chances are extremely likely you are overpaying and/or
wrong.

And if you are living in the US, you have state tax codes on top of that.
Living in NJ and working in NY? You have two tax codes to work with and
reconcile.

This is a complementary insane and broken part of the system to what's
discussed in other responses to this posts.

In most european countries, if you are a salaried worker, you don't ever file
anything with the IRS equivalent unless you have a nontrivial, uncommon
situation (e.g., working for two employers at the same time _and_ you do not
want them to know about each other; or income from abroad).

[1] No, I haven't been able to find someone who is qualified enough in both
jurisdictions. My situation is complicated, though far from unique -- and no,
as the "other way around" shows, a reasonable tax code can make filing trivial
even if the situation is not.

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taligent
This is one dumb article.

Firstly it's only 1800 people. And secondly of course more people are going to
renounce citizenship when the economy is bad versus 2008/9/10 when it was
notably better.

~~~
loverobots
the econ turns instantly horrible when you live in, say, South Korea and find
out that you may owe a fortune to the IRS, just because your dad was /is a US
citizen.

~~~
nknight
If I remember right, there are actually rules about that specific type of
situation. If you've never lived in, had any substantial economic links to, or
done anything that could be seen as claiming US citizenship, I believe you can
renounce your citizenship and received a formal waiver of any tax liability.

