This isn’t quite true. You pay the difference of whatever local tax would cover. And foreign earned income exclusion is massive…(https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion)… So even if you make 200k, you can exclude ~120k of it, and then the remaining 80k would have your local taxes deducted from it as well. You end up finding out that most people pay virtually nothing.
And if you don’t intend on returning to the USA at all, there’s not a lot of enforcement that can happen. The worst effect is that you can’t renew your passport at a consulate from what I’ve seen.
I’m a dual citizen so I end up researching these weird topics a lot…
How are you dealing with tax returns? I have a coworker who’s a dual citizen, and she tells me that she has to file through an accounting service that costs her an arm and a leg. If she weren’t close to retirement, she’d renounce her US citizenship.
I currently live in the US… so it’s not directly come up for me. But it’s something I’ve been looking into here and there because I am interested in buying property and working in my other country. Part of that is driven by my desire to interact with the majority of my family more.
My understanding is that there are firms that do it. It’s the same process as most other taxes though except you can claim a couple other forms and need to declare a few additional items. I tend to do my own taxes now and get by just fine, a couple extra forms I’d likely just hire a firm to do them 1 or 2 times and use that as reference for the future personally. Taxes in general is pretty easy for most people as long as you have a reference/guide and don’t do weird stuff IMO.
For renouncement I think you only have to show that you’ve filed taxes for the past 5 years… and as long as you’re not some uber wealthy person there isn’t an expat cost (I think it’s like 800k on all assets? or something like that). The fee was something like $2k as well. It’s not a crazy hard process to my understanding, but I could be missing a part.
Don’t forget that if you renounce they publish your name on a list of people who have renounced citizenship.
Absolutely ridiculous that we are even required to file, only the US and Eritrea run a system like this.
Add onto that the US requires forms even for people resident and working in the US (rather than the tax system of most developed nations where a majority of taxpayers have their taxes deducted from their wages and everything is calculated by that country’s tax authority), and you’ve got yourself a double shitshow.
Sure it might not be the most difficult thing to do but damn it is stupid.
As someone who has to file every year though I haven’t lived there for a quarter century, this is true. But I still pay $1000 a year and considerable time for US tax prep.
Just to add insult to injury: once she starts working, even if she never returns to the US… She will be required to file taxes.
This isn’t quite true. You pay the difference of whatever local tax would cover. And foreign earned income exclusion is massive…(https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion)… So even if you make 200k, you can exclude ~120k of it, and then the remaining 80k would have your local taxes deducted from it as well. You end up finding out that most people pay virtually nothing.
And if you don’t intend on returning to the USA at all, there’s not a lot of enforcement that can happen. The worst effect is that you can’t renew your passport at a consulate from what I’ve seen.
I’m a dual citizen so I end up researching these weird topics a lot…
How are you dealing with tax returns? I have a coworker who’s a dual citizen, and she tells me that she has to file through an accounting service that costs her an arm and a leg. If she weren’t close to retirement, she’d renounce her US citizenship.
I currently live in the US… so it’s not directly come up for me. But it’s something I’ve been looking into here and there because I am interested in buying property and working in my other country. Part of that is driven by my desire to interact with the majority of my family more.
My understanding is that there are firms that do it. It’s the same process as most other taxes though except you can claim a couple other forms and need to declare a few additional items. I tend to do my own taxes now and get by just fine, a couple extra forms I’d likely just hire a firm to do them 1 or 2 times and use that as reference for the future personally. Taxes in general is pretty easy for most people as long as you have a reference/guide and don’t do weird stuff IMO.
For renouncement I think you only have to show that you’ve filed taxes for the past 5 years… and as long as you’re not some uber wealthy person there isn’t an expat cost (I think it’s like 800k on all assets? or something like that). The fee was something like $2k as well. It’s not a crazy hard process to my understanding, but I could be missing a part.
Don’t forget that if you renounce they publish your name on a list of people who have renounced citizenship.
Absolutely ridiculous that we are even required to file, only the US and Eritrea run a system like this.
Add onto that the US requires forms even for people resident and working in the US (rather than the tax system of most developed nations where a majority of taxpayers have their taxes deducted from their wages and everything is calculated by that country’s tax authority), and you’ve got yourself a double shitshow.
Sure it might not be the most difficult thing to do but damn it is stupid.
As someone who has to file every year though I haven’t lived there for a quarter century, this is true. But I still pay $1000 a year and considerable time for US tax prep.