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from the breaking-up-is-hard-to-do dept.
The USA has been making life difficult for Americans residing abroad; FATCA causes plenty of problems; but so does citizenship-based taxation. The IRS and Treasury department have made the reporting and taxation more onerous, and stepped up their collection efforts.
The result should be a surprise to no one: more and more Americans are handing in their US citizenship. Total numbers are unavailable (the lists published by the government include only a portion of the total), but undisputed is the fact that the numbers are increasing rapidly.
Having lots of citizens want to leave is...embarrassing. One solution could be to review the policies leading to people to hand in their citizenship. Another would be to make the fee unaffordable, especially for people living on second- or third-world incomes. It's obvious, of course, which route the USA has chosen: It now costs $2350 to hand in your US passport; more than 20 times the international average.
(Score: 3, Informative) by VLM on Wednesday December 03 2014, @01:47PM
It is weird that US ex-pats have to file a tax report.
We are also one of the few countries in the world who tax citizens based on total income, not where it was earned.
My understanding of this from working with international teams, is a Japanese citizen working in USA pays USA taxes on USA income but Japan doesn't care, what with the USA not being a part of Japan territory. The other way around, the USA wants its cut. There are various exceptions such that USA citizens often don't have to pay very much, often $0.
There is a huge racket in paying people $250 or whatever to fill out your tax forms in the USA, and overseas they charge about 10x as much because they can. So thats where you hear those stories about people paying a tax accountant $2500 to file forms with the USA paying the USA $0 or whatever.
(Score: 3, Insightful) by bradley13 on Wednesday December 03 2014, @03:02PM
They don't charge 10x as much internationally just because they can. The filing requirements really are pretty awful.
- You have to send information about all of your accounts, retirement funds, investments, etc. to the Treasury Department. You send the same information, of course in a different format, to the IRS. If those are jointly held accounts, this likely violates European privacy laws. Obey US law or obey the law where you live, choose one.
- You have all of the usual tax filing requirements, only you don't get 1099s and other IRS-ready statements from your employer, bank, etc. What exchange rates do you use - the rules are very unclear. Finally, there is a whole layer of special rules and forms just for the international taxpayer.
Sure, for Joe Average, the tax owed usually comes to $0.00. Unless your income is small enough that the standard deductions cover everything, getting to that bottom line is insanely difficult. Just to take a minor example: mortgage interest is deductible, right? Well, maybe. Depending on where you live, it will probably be capped. The cap changes based on your location and filing status; your filing status options depend on the nationality of your spouse. And on, and on, and on it goes...
I had always done my own taxes in the US, and I tried to do them here. Eventually, I just had to give up - the requirements had gotten insanely complex and there was no easy way to figure out what the changes were year-to-year. So the last few years before I renounced, I hired an IRS-certified tax preparer. Tax bills $0, tax preparation bills $4digits.
Everyone is somebody else's weirdo.
(Score: 2) by Whoever on Thursday December 04 2014, @04:25AM
As a naturalized US citizen with investments in my home country, I have the same issues. I pay an accountant $600/year to handle all of this.
Some years ago, I was an expat with a large multinational (based in the USA) and that company paid its accountants 10x (in todays terms) what I pay my accountant. Perhaps they had a fixed rate and there was a lot more work involved for some expats, but I doubt it. I think it's just that accountants working for large partnerships are able to overcharge their clients.