Ahhh! It's Tax Season
Ok, so you can't run and you can't hide. The US is the only industrialized nation that taxes its overseas citizens. Time to do taxes.
Or is it? Expat articles pop up every year about this time, offering a way out. More and more expats are relinquishing US Citizenship for the relief of avoiding US taxes:
- "Why More U.S. Expatriates Are Turning In Their Passports" From TIME
- More (Wealthy) Americans Are Renouncing Citizenship New York Times
- Heart Act - What it Costs to Stop being American - (our own article) EasyExpat
Giving up American citizenship is a serious, irreversible step, but one that is worth it for some expats. It's estimated that 1,050 expats (out of somewhere between 4-6 million Americans abroad) gave up citizenship in 2011 with many listing the primary reason as US taxes.
The U.S. is unusual in that it does not offer double taxation agreements which would shelter its overseas citizens from taxation in both their country of citizenship and country of residence. In addition, the tax standards are becoming increasingly tougher, requiring expatriates to report any foreign bank accounts exceeding $10,000. These restrictions aim to curb attempts to hide undeclared assets in offshore banks, but they also make filing taxes much more difficult for the average American abroad.
Even more than the financial burden, some people see relinquishing U.S. citizenship as a simple step to ending the tax headache that come around every April. The process is simple: fill out some forms, pay an exit tax and - voila! - free of US taxes forever. But there is a less tangible cost in place. Once you have given up your passport, you will never again be an American citizen. This is a personal issue, one that deals with the very core of your identity. People who have renounced citizenship are also restricted to only 90 days a year within the United States. Another consequence is the impression you leave upon family and friends. Though the decision to renounce citizenship is usually made on a practical level, other people may feel personally affronted by the decision. What does that say about you? What does that say about America?
I am fascinated by these stories of renouncement. As an expat that has only been abroad for about 3 years, a decision to renounce my nationality would be far, far in the future - if ever. But I still remember when I first arrived in Germany. In Seattle, I had known that I was an American, but never felt it like I did living here. My citizenship has:
Made me frustrated at the auslaenderbehoerde (immigration office)
Worried me about the benefits I can bestow on my future children
Irritated me at the Turkish border with cantankerous Guards
Made me Insanely proud during Obama's speech at the Siegessaule in Berlin
and Confused me about what it means to me to be an American on an almost daily basis.
Yes, renouncement isn't an option for me at this point, but it's good to realize what our citizenship entails, both explicitly and intrinsically.
For now, hand me a pen. I've got to do my taxes.