ER in the UK

[Nords]

It really sucks to have US citizenship sometimes.

Were you forced to become a U.S. citizen? Is it possible that the benefits of U.S. citizenship outweigh the occasional tax/investment hassle?

Or would it be better to renounce U.S. citizenship in favor of eventually regaining your "tax emancipation"?

 

[bpp]

I think these laws were designed to stop large
scale tax evasion, but they also make it difficult for working US expatriates to invest.

Yup, I agree.

I actually don't see why non-resident citizens should be taxed in the first place, since we don't receive any government services. But for some reason I wasn't consulted.

Bpp

 

[nun]

Were you forced to become a U.S. citizen? Is it possible that the benefits of U.S. citizenship outweigh the occasional tax/investment hassle?

Or would it be better to renounce U.S. citizenship in favor of eventually regaining your "tax emancipation"?

Not exactly forced, but it was recomended for my job and after 12 years living here I thought I should vote too. So I got US citizenship, however, when they asked me to renounce my UK citizenship to gain a security clearance I refused and eventually resigned.
The thing is that even as a long term resident [Green card holder] the IRS requires you
file for 10 years after you leave the country. If I were to give up my US citizenship for tax
reasons I'd still be taxed as a US citizen for 10 years. Also as I have 401ks etc having lived in the US for 18 years and I wouldn't want to make access to them or SS difficult.

Don't get me wrong, I've had a great 18 years in the States and love many aspects of the
place, but having US citizenship isn't really a big thing for me and right now its
proving to be a royal pain in the neck as I want to return home. But as the US is the only
country to tax by citizenship rather than residency it turmns out to be complicated.

 

[bpp]

If I were to give up my US citizenship for tax reasons I'd still be taxed as a US citizen for 10 years.

Not necessarily. I think that if, at the time of expatriation, you have a net worth below something like $2 million, and file the correct forms, you are basically released at that point. The rules have been changing on this recently, so it might be worth looking into it again if you are seriously considering this option. (Not that I think that one should have to surrender citizenship for tax reasons...)

Also as I have 401ks etc having lived in the US for 18 years and I wouldn't want to make access to them or SS difficult.

I don't think you need citizenship for these. I know a retired Japanese lady, who used to live and work in the US but never became a citizen, and she receives US Social Security payments sent to her here in Japan.

Bpp

 

[nun]

Not necessarily. I think that if, at the time of expatriation, you have a net worth below something like $2 million, and file the correct forms, you are basically released at that point. The rules have been changing on this recently, so it might be worth looking into it again if you are seriously considering this option. (Not that I think that one should have to surrender citizenship for tax reasons...)

I don't think you need citizenship for these. I know a retired Japanese lady, who used to live and work in the US but never became a citizen, and she receives US Social Security payments sent to her here in Japan.

Bpp

Very interesting, however, I get the feeling that if I were to renounce my US citizenship it might cause some other problems down the road. I'm sure there are strategies to cover my situation and I'm going to look at it with an international tax expert.

 

[bpp]

I'm sure there are strategies to cover my situation and I'm going to look at it with an international tax expert.

If you learn anything interesting, can you let me know? (Of course, if you prefer not to, because you are paying for the consultation, I understand.)

Bpp

 

[nun]

I'll pass on any gems I learn.

 

[Maximillion]

nun, in crazy Socialist Britain, will you be eligible for any kind of Pension from the UK Government, even though you have just moved back?

 

[nun]

nun, in crazy Socialist Britain, will you be eligible for any kind of Pension from the UK Government, even though you have just moved back?

With Tony Blair in power the UK is far from being socialist anymore..., but the answer to your
question is yes. As I have faithfully kept paying the National Insurance, UK equivalent of FICA, for the past 18 years I will get a UK state pension when I retire. Its actually a great deal, as a UK expatriate I get to pay a reduced rate, this year's bill was $170. As I also have 18 years of FICA I'll get SS too.

 

[Maximillion]

nun, good for you, smart thinking.

 

[nun]

By the way, I just remembered something else that may be relevant to your situation. Back when I was starting to invest, I tried to open an account with Fidelity Japan, and they refused on the grounds that I am a US citizen, citing an SEC rule. This ticked me off enough to send an e-mail query to the SEC, who responded that since I don't live in the US, they would not necessarily consider me a "US person" for their purposes (note that this is different from the IRS's definition of "US person" -- the SEC is basically just saying here that they don't feel obligated to protect me), and that they would have no problem with me opening an account at Fidelity Japan. I relayed this to Fidelity Japan, and their response was, basically, "we don't care, the laws change all the time, and we have made the corporate decision that US citizens are too much of a hassle to deal with."

Of course, Fidelity in the US also refused to let me open an account, on the grounds that I am not a US resident. Joseph Heller would be proud.

Anyway, I don't know if Fidelity in the UK has the same policy as Fidelity Japan, but if they do, you might be out of luck anyway. You might want to ask them about this in advance.

Bpp

Bpp, I just got this from Fidelity UK

As per regulatory reasons (United States Securities Act 1933), it is not possible for clients residing in US to invest into Fidelity UK funds. Therefore, it will not be possible to classify the UK registered funds as Qualified Elected Fund with IRS.

I understand that if you are a US/UK dual citizen and a resident for tax purposes in UK,
you can invest into our funds if you hold a verifiable UK registered address. However, if you are currently residing in US, we will not be able to accept any investments from you.

 

[bpp]

Hi nun,

Sounds like you are in luck then. They seem to be a bit more reasonable than their counterparts over here.

Bpp

 

[nun]

Hi nun,

Sounds like you are in luck then. They seem to be a bit more reasonable than their counterparts over here.

Bpp

Yes, in the fact that I can get an account. However, buying Fidelity UK funds would be a bad US tax thing to do and a mess to report to the IRS. I might be able to buy them inside a pension scheme like the UK Stakeholder pension as these are covered by the UK Us tax treaty, although I'm still looking into this. I'll let you know what happens.