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Old 02-10-2013, 01:32 PM   #121
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Originally Posted by Texas Proud View Post
One point is that not all US citizens give up their citizenship even if they never have plans to return, nor do they file tax returns...

But, seriously... if you do not have any financial ties to the US, what are they going to do if you do not file If you do have financial ties, then you might have more taxes withheld when payments are made to you than the taxes due... IIRC, there is a withholding requirement if you are not a citizen....
This is a good point, there are mandatory NRA withholding taxes on US source income paid abroad, but if the NRA is a UK resident the tax treaty eliminates that withholding tax on most income. You file a W-8BEN and you get any IRA etc payments with zero US tax withheld. You don't have to file any US taxes, just UK taxes.

There are also mandatory withholding on payments from IRAs, 401k etc made to US citizens living abroad and you can't use a treaty to eliminate those. So for a US citizen resident in the UK who gets US IRA income the result is 10% withholding in the US, then they must pay the UK income tax on 90% of that income (per HMRC rules), then they file a US 1040 and use UK tax as a foreign tax credit and also apply the 10% withholding to work out the refund. This all has to be done to account for the different tax years in the UK and the US too; the UK's runs from 6th April to 5th April the next year. Now if you also include SS, pensions and other income from the UK, things can quickly spiral out of control.
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Old 02-10-2013, 01:32 PM   #122
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I've been reading the latest comments with interest. I don't intend to take exception with any of them, we're all entitled to our opinions. I would like to offer some points which some may want to investigate further. I would like to supply some accurate statistics, but surprisingly, none exist. Anywhere.

You cannot go through either renunciation or relinquishment of US Citizenship unless you already have dual citizenship in another country. The US will not allow you to do it. In the case of relinquishment, there are very rare exceptions. You can hand back a Green Card, but in addition to notifying the DoS, you also have to complete a form for the IRS. If you don't file with the IRS you are still considered liable for US tax returns and financial reporting even though you, as a non-US person, no longer live in, or have any income/accounts in the US.

There are an estimated 1 million US Persons in Canada. No one knows the exact number. Many thought they had relinquished their US Citizenship in the 60s and 70s when they accepted Canadian Citizenship. At that time, dual citizenship for a US Person was not allowed. They have recently discovered that the DoS changed it's stance as regards those who relinquished at that time, and the IRS is now claiming for delinquent tax and information filing. The Canadian government will assist the IRS in collection of back taxes, but it refuses to assist on the collection of penalties due for not filing information returns.
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Old 02-10-2013, 01:40 PM   #123
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You cannot go through either renunciation or relinquishment of US Citizenship unless you already have dual citizenship in another country. The US will not allow you to do it. In the case of relinquishment, there are very rare exceptions. You can hand back a Green Card, but in addition to notifying the DoS, you also have to complete a form for the IRS. If you don't file with the IRS you are still considered liable for US tax returns and financial reporting even though you, as a non-US person, no longer live in, or have any income/accounts in the US.
This is an excellent point. To officially give up US citizenship you must file an 8854, declare all your accounts and pay tax on them if you are not up to date. The IRS won't let you go until you have done this. Giving up US citizenship might be a useful tactic to save on future taxes, but it isn't one that works to get out of past or present US taxation.
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Old 02-10-2013, 01:46 PM   #124
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Which is why I was disappointed not to find a breakdown of folks doing this. The Bloomsberg article above said the big increase was to do with Americans wanting to protect their offshore tax havens, but no hard data.
Nor does it mention wealthy individuals from other countries requesting US citizenship or residency.
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Old 02-10-2013, 01:51 PM   #125
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Nor does it mention wealthy individuals from other countries requesting US citizenship or residency.
Yes, the US is a tax haven for many, but US banks are not required to share information on dual citizen or foreign depositors that might have overseas tax obligations. This is why so many are annoyed at FATCA, the lack of reciprocity.
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Old 02-10-2013, 02:07 PM   #126
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To add to my previous post:

No one knows how many US Persons have given back their passport or Green Card. Different articles site a number of 1500 to 1800 for 2011. The number is the subject of much debate. Some say it's only those who had to file with the IRS through OVDI type programms. Some say it only includes those who went through renunciation but not relinquishment or Green Card holders. Many who have gone through renunciation have never seen their names appear in the Congressional Record, which is required. A recent FBI record (associated with the Brady Act, of all things) lists 3,220 renunciants (but not relinquishers) in October of 2012 alone. Their are no reliable numbers being given out.

Some reading:
The Bloomberg article is from last year. This article was published on 31 January, 2013.
No one's mentioned Tina Turner! Ms Turner probably fits into the category of wealthy. Although starting with Ms Turner, the TIME article goes on to discuss the very large majority of renunciants who could not be classed as wealthy. For an accurate current insight of 'a few' US expats feelings, read the comments.

Why Americans Working Abroad Are Ditching Their U.S. Citizenships | TIME.com

The following article is composed mainly of one man's current disgust with the results of US policy on banking as it effects the expat. It might not have been particuarly newsworthy but for the fact that the gentleman was a very active in US politics abroad.

EDITOR'S NOTEPAD » William Olenick
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Old 02-10-2013, 02:15 PM   #127
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Yes, the US is a tax haven for many, but US banks are not required to share information on dual citizen or foreign depositors that might have overseas tax obligations. This is why so many are annoyed at FATCA, the lack of reciprocity.
The heavy handed approach of the US lawmakers and IRS in bringing in FATCA and the significant burdens the act will soon place on many Americans who are not tax evaders, foreign governments and institutions, and then turned out the US herself was not anywhere near ready to do what she forces others to do, was what I was pointing out (comment 103)when I revived the discussion on this thread yesterday. I see the comments drifted to some Americans renunciation of US Citizenship. I did not intend to get into heavy political controversy, but understand in some sense, the drift in the discussion is not irrelevant, off-based, illogical or unexpected.
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Old 02-10-2013, 05:22 PM   #128
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Texas Proud.....my colleague who gave up his US citizenship was a citizen by virtue of his birth in the US. I suspect that this is the situation of most people who go this route.
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