An increasing number of Americans living overseas are handing over their passports to foreign authorities and seeking permanent residence in their new homeland.
CNNMoney analysts recently examined government data and found a 20% increase in ex-pats occurred between 2014 and 2015. The publication says 4,279 people gave up their citizenship.
US citizens are ditching their citizenship because they are tired of dealing with an overly complicated tax system that generates mounds of paperwork when they file overseas.
“Eighteen times as many Americans renounced their citizenship or long-term residency in 2015 compared with 2008. Last year was the third record-breaking year in a row,” CNN reports.
The US taxes its citizens regardless of where their money is earned or where they live. The results of that taxation is a mountain of paperwork that can force US citizens to hire international tax specialists.
The burden of filing international taxes increased in recent years after the Foreign Account Tax Compliance Act became law in 2010.
That law requires Americans to disclose all foreign assets and banks they currently have open, on top of another law that requires Americans to disclose foreign bank holdings above $10,000.
The US government says the laws are required to help fight tax evasion, a fact that isn’t sitting well with more than 7.6 million Americans who are currently living abroad.
US efforts have backfired in some pretty big ways. Many foreign banks have ditched US clients, leaving some without even basic checking and savings accounts.
While citizens are giving up their US passports, that doesn’t mean they can avoid their past years tax bill. Giving up your citizenship to avoid paying taxes is illegal.