About a quarter of Americans living abroad are “seriously considering” or “planning” to renounce their citizenship, according to a new survey.
Driving the news: Harsh tax laws for Americans living abroad are the most common reason expats consider taking the plunge, according to the survey conducted by Greenback Expat Tax Services, which surveyed 3,200 Americans living in 121 countries.
State of play: Most nations of the world have a residency-based tax system.
- However, US citizens who reside in another country still owe income taxes to the IRS due to the US citizenship-based tax system. This can result in costly tax preparation or, in some cases, having to pay taxes to both countries, UKTN reports.
- Expats can face stiff penalties if they fail to declare foreign bank accounts or income.
Details: Of those weighing the waiver, 40% said filing taxes was too burdensome, the survey found.
- This was more than the following three reasons combined: concern about the current political climate (15%); married a non-US citizen abroad (12%); and disappointment with the US government (10%).
- A majority want to see citizenship-based taxation repealed and one in five want to see the tax return process simplified, according to the survey.
Between the lines : An overwhelming majority of respondents – 86% – said they felt their concerns were less likely to be addressed by the government than citizens living in the continental United States.
- Along with a quarter of people who said they were planning or seriously considering giving up their citizenship, two in five said they “wouldn’t rule it out”.
- One in three said they would never consider it.
Yes, but: In 2020, about 9 million Americans lived abroad, the State Department estimates.
- The number of people who have officially renounced their citizenship has risen from a record 6,705 that year to 2,426 in 2021, UKTN reports.