American citizens living overseas are more common than certain people might think. Some Americans choose to reside abroad for work purposes, recreational travel purposes, or to otherwise fulfill certain goals.
However, even when Americans live overseas, they are not exempt from having to pay US taxes. Coincidentally, Americans who reside in other nations are likewise responsible for paying taxes in those nations as well.
Over the years, there’s been some debate as to whether or not Americans who don’t actively live in the country should still face a US tax bill. However, for the time being, this is the law.
Apparently, this is so burdensome to some US citizens living overseas that a sizable minority may very well forfeit their American citizenship.
A Shocking New Statistic
Data from the Greenback Expat Tax Services shows that one-fourth of Americans living in other countries are very much open to relinquishing their status as US citizens. Ultimately, the factor driving this is the tax burdens imposed upon American expats.
In addition to paying US taxes, Americans residing abroad are also mandated to report foreign banking and other financial accounts to the US government.
This is further compounded by the issue that many US citizens living overseas aren’t completely up to speed with America’s regulations on financial reporting requirements for expats.
"The burden of filing U.S. taxes is the top reason expats want to ditch U.S. citizenship, according to the survey, which polled 3,200 American expats living in 121 countries" https://t.co/CAjvLxVdCY pic.twitter.com/sIUAmZvzA0
— Scott Lincicome (@scottlincicome) June 19, 2022
This, therefore, opens the door to US citizens with abroad residences running into issues with the IRS.
All in all, many Americans who don’t live in the states seem to be deciding their original citizenship just isn’t worth it. As it turns out, having to pay taxes in two countries, report financial accounts overseas, and jump through additional hoops tends to be frowned upon.
At this time, at least nine million US citizens are reported as living overseas. Even if only one-quarter of them followed through with plans to renounce US citizenship, it would still leave a considerable mark.
Tax Increases to Come?
The current White House has repeatedly thrown its support behind policies that would increase taxes on Americans. Therefore, the likelihood of US citizens overseas being hit with even higher US taxes is certainly very real.
All I’m asking is for the largest corporations and the wealthiest Americans to begin to pay their fair share in taxes.
I made this commitment from the beginning. Nothing’s changed.
No one making less than $400,000 will pay a single penny more in federal taxes.
— Joe Biden (@JoeBiden) June 17, 2022
This could very well motivate some people who were on the fence about relinquishing their American citizenship to actually go through with it. The Biden administration’s push for higher taxes comes despite surging costs across the country.