Top reasons why Americans abroad want to renounce their U.S. citizenship.
May 12, 2022
Toronto, Ontario May 12, 2022 (Issuewire.com) - While the annual tax season can be stressful for filers, the burden is even greater for Americans overseas.
About 9 million U.S. citizens live abroad, the U.S. Department of State estimates.
Nearly a quarter of U.S. expats are "seriously considering" or "planning" to renounce U.S. citizenship according to 1040 Abroad.
For those looking to renounce citizenship, more than four in 10 said it was because of U.S. tax filing requirements.
Tax filing requirements for expats
U.S. expats pay U.S. income tax each year. They would report worldwide income such as wages, benefits, rental income, business profits, etc.
U.S. citizens and resident aliens must file their taxes and pay their debts, no matter where they live. The rule means expats may have to file and pay taxes in two places.
Despite the IRS providing mechanisms, including foreign income exemptions and tax credits, many expats are still overwhelmed by reporting requirements.
"It can get very complicated very quickly," said Olivier Wagner, founder of 1040 Abroad.
In fact, about two-thirds of U.S. citizens living overseas believe they don't need to file U.S. taxes.
Additional reporting
Once the foreign account balance exceeds $10,000, the expat must file a foreign bank report and financial account, known as FBAR, with the Treasury Department.
Some expats may also be required to disclose foreign financial accounts, such as savings and investments.
For example, let's say someone has $5,000 in savings and $4,975 in investments. If their investments increase to $5,025 at any time during the year, they will need to report their accounts.
The so-called FBAR deadline is April 15, but those who miss it are automatically extended to October 15.
In addition to FBAR, some foreign nationals with accounts over a certain limit may be required to file Form 8938, which is designed to deter tax evaders with overseas accounts.
The threshold for Form 8938 is over $200,000 for a single filer at the end of the year (over $400,000 for married couples filing together) or $300,000 for balances during the year (over $600,000 for couples filing together).
Disappointed with Uncle Sam
In addition to the greater reporting burden, many expats are frustrated with the U.S. government.
In the long run, the coronavirus pandemic may prompt some to stay abroad, with 60% of them disagreeing with the U.S. government's approach. Deal with the crisis, review findings.
In addition, 1040 Abroad found that almost 9 out of 10 expats felt that the government did not represent them fairly.
In the end, many expats just want to live a normal financial life, Olivier Wagner said.
"I think it's safe to say that the vast majority of Americans living abroad are what we consider middle class," he said. "We're not talking about billionaires living on yachts."
Source :1040 Abroad
This article was originally published by IssueWire. Read the original article here.
Recommended
YOUR NEWS, OUR NETWORK.
Do you have Great News you want to tell the world?
Be it updates about your business or your community, you can make sure that it’s heard by submitting your story to our network reaching hundreds of news sites across 6 verticals.
More News
Counter-terror police arrest 'car bomb plot' suspects near RAF base that launched Iran strikes after member of public calls 999
The men were arrested on suspicion of offences under the Explosives Act at the US air base in Gloucestershire, police said.
TikTok and Meta ran hundreds of ads for illegal tobacco, vapes
The ads, many of which have since been pulled, helped to fuel a mammoth black market that has spawned firebombings and crime around the country.
Woman sentenced to 12 years in prison for attempted murder after violent attack on Wendy's co-worker
An Illinois woman pled guilty to attempted first-degree murder, a class X felony, and sentenced to 12 years in prison after she stabbed her coworker at a Wendy's.
Elizabeth Holmes says she's 'fighting to prove my innocence' as she shares prison selfie with boyfriend
Elizabeth Holmes says she is 'fighting to prove my innocence' and return to her children after more than three years behind bars.
Outback pub ordered to pay back cash it made while flouting pandemic-era liquor restrictions
The pub was originally busted selling over the legal limit when an off-duty senior sergeant came into the bottle shop.
Andy Burnham speaks out as Avanti West Coast to be nationalised
Avanti West Coast is being brought back under public ownership - have your say
Australia’s biggest gold miner rejects ‘opportunistic’ $38b takeover offer
South Africa’s Gold Fields offered to buy Northern Star Resources in a potential blockbuster deal, but was knocked back.
Sure you're not thinking about a snap election, Andy? Another megapoll shows Labour recovering as Reform surge recedes
Another megapoll has suggested the party's position has significantly improved as the gathering in Liverpool begins.
Beau Lamarre-Condon trial updates: 'Is your wife alive?' One day after he was allegedly shot dead with his boyfriend, Jesse Baird's Instagram sent a message to Luke Davies's friend
Follow Daily Mail's live coverage of Beau Lamarre-Condon's murder trial.
Australia’s most stubborn icon, the Chiko Roll, turns 75 (with some chicks in its armour)
It’s outlasted Fantales and Sunny Boys, and it’s the same age as Daryl Somers. A tempting PhD topic, perhaps.
A 175-year-old golden rule in markets is starting to break
Gold has effectively always cost much more than silver, and nickel more than copper. But the age of electricity is starting to wreak havoc on accepted wisdom.
New details emerge after woman's body found in Brisbane rubbish bin: 'Not suspicious'
Waste workers reportedly discovered the woman's body inside a bin at the Lambert Street complex in Kangaroo Point at about 11.50am on Friday.