More Americans are considering cutting their ties with the US — here's why

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SOURCE: CNBC

URL: https://www.cnbc.com/2018/06/27/more-americans-are-considering-cutting-their-ties-with-the-us-heres.html

by Lorie Konish


Admittedly, living abroad as an American has always made for a complicated tax situation.

That is because the United States is one of the only countries to tax based on citizenship, not residency.

And the U.S. government has tightened its rules in recent years to make it more difficult for Americans to evade taxes by hiding money offshore.

For Americans who reside in foreign countries, that can make it more difficult to find financial institutions who will let them open accounts.

Swanson experienced those restrictions first hand when he was denied a bank account.

“It wasn’t anything personal or even discriminatory as far as nationality,” Swanson said. “It was our own government that set up penalties for them to deal with us.”

Americans overseas often face a complex filing regimen.

Swanson received another shock when he found out he was behind on tax filing requirements he did not know about.

“It was in the tens of thousands of dollars to get caught up,” Swanson said.

He did not actually owe much in taxes because he had been living in Germany, a high-tax country, which offset what he owed to the U.S. Most of that money went to the cost of the paperwork and accounting fees.

Americans are renouncing citizenship at a steady rate, thanks to laws that were put in place earlier this decade.

In the first quarter of this year, 1,099 Americans gave up their citizenship, according to data from the Internal Revenue Service. More than 5,000 citizens living overseas gave up their U.S. passports in both 2017 and 2018

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