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Tax filing is not a legal prerequisite to giving up U.S. citizenship, although there are various negative tax consequences if one fails to file U.S. taxes before giving up citizenship, or fails to file tax forms specific to ex-citizens in the year following relinquishment. [34]
People giving up US citizenship may be subject to an expatriation tax. Originally, under the Foreign Investors Tax Act of 1966, people determined to be giving up citizenship for the purpose of avoiding US taxation were subject to 10 years of continued taxation on their US-source income, to prevent ex-citizens from taking advantage of special ...
Still, renouncing citizenship is very rare; the ultrawealthy are more likely to acquire second citizenships or residencies in places like Portugal or Malta than give up their American passports ...
[142] [143] Since 2008, these provisions no longer apply; instead, ex-citizens who meet certain asset or tax liability thresholds pay a capital gains tax on a deemed sale of their U.S. and non-U.S. assets, including retirement accounts, regardless of their reasons for giving up citizenship. [144]
The United States does not want to surrender citizens that can provide continual tax income, and the barriers in place are designed to make renouncing citizenship a costly affair for years to come.
Americans who live overseas have been renouncing their US citizenship in record numbers over the past several years. In 2014, nearly 3,500 people bid a permanent adieu to the states, and the year ...
This action was in the larger context of widespread media attention to the issue of wealthy individuals who gave up citizenship to avoid United States taxes. As a result, several legislators proposed bills or amendments to end the confidentiality surrounding loss of citizenship, and to publish the names of ex-citizens. [ 6 ]
Getty Images More Americans are deciding that they'd rather give up their citizenship than pay more taxes. The Wall Street Journal reports that 2013 has already set a new record for "expatriations ...