Expats giving up US citizenship

Well, at least it is incredibly easy to renounce the US citizenship compared to other countries. For example, I cannot get some sensitive positions that require clearance because of my other passport, but giving up my native citizenship is a very hard and cumbersome process.
 
Like Eisenhower said ...

In most cases, giving up Citizenship does not help. If you're income is below the foreign earned income credit (slightly less than 100k) you don't pay any US taxes anyway and if your income is above apx. 125k or your assets are apx. 2M or more you have to pay taxes up to 10 years after you have relinquished your US Citizenship (thanks to the case of Marc Rich - no joke - a close Clinton supporter).

I'm amazed how many people think 'it's fair' that expats pay taxes in the US. They forget that expats are not entitled to benefits that US residents have (e.g. Medicare, US Welfare and other government programs), they already pay taxes in the host country and in most cases it actually costs more for the US government to keep track than what they would earn. In my opinion, bureaucrats at the IRS are using all these laws to justify their very own existence. Like Eisenhower said: "Every bureaucracy is doing everything to protect itself!"
 
Dago Red said:
if your income is above apx. 125k or your assets are apx. 2M or more you have to pay taxes up to 10 years after you have relinquished your US Citizenship
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That doesn't sound right. How can the IRS impose and enforce its rules on a non US citizen?
 
Bobsmyth said:
That doesn't sound right. How can the IRS impose and enforce its rules on a non US citizen?
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Well, that's what it is. It is part of the expat agreement.

Now, whether you follow it or not is another matter. If the IRS had the power and the resources, they might come after you. So this will matter to the really big fish because IRS can put 1-2 officers after you since their "profit" is more. Not so for smaller fish ... but why would they expat due to taxes. The people they are chasing are the ones with 10-100 MUSD.
 
Dago Red said:
...and if your income is above apx. 125k or your assets are apx. 2M or more...
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No, the income threshold is a lot higher than that. You need to have a net worth of at least $2M or an annual tax bill of $139K or more. Which means your income would have to be something over $350K.
 
Bobsmyth said:
That doesn't sound right. How can the IRS impose and enforce its rules on a non US citizen?
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In most cases it can't be enforced. However, many individuals wealthy enough to be hit with the ongoing taxation will have substantial assets or income streams in the US, some of which cannot be easily disposed of without taking a big loss of value and/or future income. For example, a businessman who owns a commercial real estate building in New York. Or an author who makes royalties from book sales in the US. The IRS can seize those assets or income streams. The individuals can dispose of those assets or income streams before renunciation, but they may find it more profitable to NOT dispose of them despite the taxation.

The IRS can also get them arrested at the port of entry if they visit the US. Many of those wealthy individuals still have to visit the US for business reasons even if they disposed of all their US-based assets (e.g. somebody who runs an offshore business in India that provides service to US clients), so the individuals pay the tax rather than take the risk of being arrested.
 
... an annual tax bill of $139K or more ..
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Hm, are you sure the phrase "net income tax liability" - this is what the law says - means "tax bill" ?
I would read the corresponding sections in the law as "earned income", not as "tax bill". But than
again, I'm not a lawyer and so far, I stay in the US.

This whole 'going after expats' got started when Marc Rich claimed citizenship of Spain and gave up
US Citizenship, leaving a huuuuuuuuuuuge tax bill behind.
 
Dago Red said:
Hm, are you sure the phrase "net income tax liability" - this is what the law says - means "tax bill" ?
I would read the corresponding sections in the law as "earned income", not as "tax bill".
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It is definitely $139K in taxes, not $139K in income. An annual average of $139K in income tax for 5 years.

http://www.irs.gov/businesses/small/international/article/0,,id=97245,00.html
IRS said:
If you expatriated after June 16, 2008, new expatriation rules apply to you if any of the following statements apply.

* Your average annual net income tax for the 5 years ending before the date of expatriation or termination of residency is more than $139,000 (if you expatriated or terminated residency before January 1, 2009).
* Your net worth is $2 million or more on the date of your expatriation or termination of residency.
* You fail to certify on Form 8854 that you have complied with all U.S. federal tax obligations for the 5 years preceding the date of your expatriation or termination of residency.
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Dago Red said:
They forget that expats are not entitled to benefits that US residents have (e.g. Medicare, US Welfare and other government programs)
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I think you have medicate benefits as long as you have paid enough medicate tax.

The only issue is whether the doctors in foreign countries receive medicare or not.

More and more doctors outside USA now accept medicate payments. Some may be illegally like a doctor has an office in both NY and a foreign city. Even a patinet
see him in that foreign city, on paper it may look like it is in NY
 
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