Why Americans Abroad Are Giving Up Their Citizenship
By Barbara Stcherbatcheff
The number of Americans giving up their citizenship surged to 3,000 in 2013 – three times more than the previous year. And that figure is set to increase further as strict new rules affecting U.S. citizens living and working abroad swing into action next month.
Those rules – part of Fatca (the Foreign Account Tax Compliance Act) - compel foreign banks and other financial institutions to provide information to the Internal Revenue Service about Americans holding accounts. It is worded to catch as many non-compliant U.S. taxpayers as possible - those who might be stashing away money in foreign bank accounts.
But Americans complain that it is overcomplicating their tax returns, jeopardizing their jobs and, in some cases, making it impossible to obtain a simple bank account.
“U.S. citizens abroad are being treated more like criminals than ambassadors. And now thousands of Americans are forced to give up their passports with no or little tax return benefit to the U.S. Treasury,” says Elaine Knuth, an American author who has lived abroad for more than 20 years, most recently in Qatar.
The United States is the only industrialized country in the world to tax the income of its citizens based on nationality rather than residency. Citizens who earn below $97,600 annually can claim an exclusion, but the complexity of the tax laws means that most expats need the help of an accountant – a yearly expense that can easily run into the thousands even when no taxes are owed.
The extra red tape and regulatory burden of Fatca compliance is now hindering the careers of U.S. citizens abroad, says Virginia La Torre Jeker, a U.S. tax attorney in Dubai.
“I have clients telling me that their employers will no longer consider them for certain higher-level positions – for example, any that require signature authority over financial accounts or the establishment of foreign entities in the business which are held in nominee status by a corporate officer,” Jeker says. “Many are concerned they may lose their positions due to the Fatca factor.”
The 2013 IRS Tax Payer Advocate report to Congress characterized Fatca as a confiscatory, punishing legislation. For example, even when there is no intention of error, taxpayers face severe punishment. The standard penalty for unintentionally failing to file a tax return is $10,000. But the penalty for intentionally failing to file is far more.
Complete article:
http://www.newsweek.com/why-america...256447?utm_source=taboola&utm_medium=referral
By Barbara Stcherbatcheff
The number of Americans giving up their citizenship surged to 3,000 in 2013 – three times more than the previous year. And that figure is set to increase further as strict new rules affecting U.S. citizens living and working abroad swing into action next month.
Those rules – part of Fatca (the Foreign Account Tax Compliance Act) - compel foreign banks and other financial institutions to provide information to the Internal Revenue Service about Americans holding accounts. It is worded to catch as many non-compliant U.S. taxpayers as possible - those who might be stashing away money in foreign bank accounts.
But Americans complain that it is overcomplicating their tax returns, jeopardizing their jobs and, in some cases, making it impossible to obtain a simple bank account.
“U.S. citizens abroad are being treated more like criminals than ambassadors. And now thousands of Americans are forced to give up their passports with no or little tax return benefit to the U.S. Treasury,” says Elaine Knuth, an American author who has lived abroad for more than 20 years, most recently in Qatar.
The United States is the only industrialized country in the world to tax the income of its citizens based on nationality rather than residency. Citizens who earn below $97,600 annually can claim an exclusion, but the complexity of the tax laws means that most expats need the help of an accountant – a yearly expense that can easily run into the thousands even when no taxes are owed.
The extra red tape and regulatory burden of Fatca compliance is now hindering the careers of U.S. citizens abroad, says Virginia La Torre Jeker, a U.S. tax attorney in Dubai.
“I have clients telling me that their employers will no longer consider them for certain higher-level positions – for example, any that require signature authority over financial accounts or the establishment of foreign entities in the business which are held in nominee status by a corporate officer,” Jeker says. “Many are concerned they may lose their positions due to the Fatca factor.”
The 2013 IRS Tax Payer Advocate report to Congress characterized Fatca as a confiscatory, punishing legislation. For example, even when there is no intention of error, taxpayers face severe punishment. The standard penalty for unintentionally failing to file a tax return is $10,000. But the penalty for intentionally failing to file is far more.
Complete article:
http://www.newsweek.com/why-america...256447?utm_source=taboola&utm_medium=referral
