A new research published by Bambirdge Accountants on August 9 shows that a record number of people are giving up their US citizenship.
Giving up being American
There are more than 5,800 Americans have given up their US citizenship in the first six months of 2020, compared to the 2,072 Americans who renounced their citizenship in 2019, according to Bambridge Accountants, which is a New York-based firm that is specializing in US expat tax, UK expats, actors and other creatives in the US and the UK.
The firm stated that it examined public data that was published by the US government every quarter, of the names of all Americans who decided to renounce their US citizenship.
Alistair Bambridge, a partner at Bambridge Accountants, said that these numbers show people who already left the country and just decided that they had enough of everything, that is why they decided not to renew their citizenship.
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Alistair Bambridge continued that what they have seen is people are over everything happening with the current administration, with President Trump, how the coronavirus pandemic is being handled by the US government and the political policies in the country at the moment.
While there are many who renounced their citizenship complained of being unhappy with the current political climate in the United States, another reason for their decision is taxes, according to Bambridge.
US citizens who are living abroad are still required to file tax returns every year, report their foreign bank accounts, pensions, and investments.
While these citizens were still able to claim the $1,200 stimulus checks and the $500 for each child, for numerous citizens, the yearly US tax reporting was overwhelming to do.
Americans who want to give up their citizenship are required to pay $2,350 and to appear in person at the US embassy in their country if they are not in America.
Bambridge predicts that despite the risks that come with giving up a US citizenship, the trend will only continue to increase.
A lot of people are still waiting for the November election to see what is going to happen to the country. If President Trump wins again, there will be another wave of people who will renounce their citizenship.
Complex rules
Americans who live in another country need to file a Report of Foreign Bank and Financial Accounts or FBAR. The form discloses any accounts that Americans have that hold an aggregate of more than $10,000. You will face penalties if you fail to file an FBAR.
The penalty for not filing starts at $10,000 but if the act is deemed willful then it is a $100,000 penalty or 50% of the balance of the account, whichever is greater.
The Foreign Account Tax Compliance Act also requires foreign institutions to disclose the holdings U.S citizens have. Americans also need to declare their foreign mutual funds if they have any, as well as pension products and insurance that they own.
The holdings are viewed as PFICs or passive foreign investment companies by the IRS. These are just some of the offset taxes that Americans living overseas may face.
