There has been a recent increase in the number of Americans who are willing to turn in their passports due to the implementation of a new tax law. It has also been stated that a sudden spurt in number may be attributed to the disclosure requirement which is required in the new law. People who are living abroad were also reported saying that they have become tired of complicated tax filing issues.
Compared to other countries, the United States of America taxes its entire citizen irrespective of their residential area or the income generating source. For emigrants filing taxes in two different countries becomes a cumbersome task. Plus filing for two countries also means double loads of paper work.
Kim Fedrick, who is currently residing in the United Kingdom, said that he spends an average of $600 -$700 for his tax filing work. He has left the country for over 13 years now and had given up his green card in the first half of this year. The second quarter of the year saw 1130 people giving up their green card due to the hassles of tax filing.
New Tax Law
The new tax law states that all the foreign institutions will have to report all assets which are owned by the Americans. This law, ‘The foreign Account Tax Compliance Act’ will now be implemented. This was approved by the congress in the year 2010, was stated as a measure to gain back the revenue which the government loses every year due to unpaid taxes. The law will also be binding on individuals that have overseas assets to file with an additional form.
Many People Left
Eugene Chow, an associate of Hong Kong Chow Associates stated that people who give up their citizenship are usually the ordinary people.
Melissa Vincenty, an immigration lawyer also recalled one of her client who gave up her citizenship nearing the age of retirement due to the hassles of tax filings. Moreover she had been an emigrant for the past 4 years, but wasn’t able to deal with any of that now. She also added that many citizens of the country are finding ways on how their other investments like retirement funds will be taxed.
She further added that giving up the U.S citizenship can be a practical option for many who are unable to manage their tax burdens.
Eduardo Saverin, one of the co –founders, who is now one of the wealthiest individual also gave up his citizenship and is presently living in Singapore. Eduardo expatriated from the United States last year officially.
It is also being stated that people who are not among the high society and earning much are also giving up their citizenship compared to the low tax rates in other countries.
Note of Caution for the People
For people who have not paid their taxes, giving the citizenship is not a wise idea as the government can go after people who were former citizens if they find evidence against them.
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