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Tags: fatca | americans | citizenship | passport

Forbes.com: More Americans Renouncing Citizenship, Not Over Trump but FATCA Tax Law

Forbes.com: More Americans Renouncing Citizenship, Not Over Trump but FATCA Tax Law

By    |   Sunday, 13 November 2016 07:53 PM

 

 

The number of individuals who renounced their U.S. citizenship for the third quarter of 2016 was the second-highest in history at 1,380, U.S. Treasury Department reported.

And Forbes.com recently reported that the Foreign Account Tax Compliance Act, which was enacted in 2010, and took years to implement, is “having an impact, perhaps bigger than these expat numbers reveal.”


FATCA is designed to ferret out individuals who have unreported offshore bank accounts and other assets. The controversial law requires financial institutions to share information about Americans' accounts worth more than $50,000.

Forbes explained that there are now 18 times as many renouncers as in 2008, with Americans renouncing citizenship up 560% from their Bush administration high.

The reasons for renouncing can be family, tax and legal complications. Some renounce because of global tax reporting and FATCA. America charges $2,350 to hand in your passport, a fee that is more than twenty times the average of other high-income countries. The U.S. government has collected over $12.6 million in fees since the fall of 2014, after hiking its fee to renounce citizenship by 422%.

“FATCA has been painstakingly implemented worldwide by President Obama’s Treasury Department. It now spans the globe with an unparalleled network of reporting. America requires foreign banks and governments to hand over secret bank data about depositors. Non-U.S. banks and financial institutions around the world must reveal American account details or risk big penalties,” Forbes explained.

“America’s global income tax compliance and disclosure laws can be a burden, especially for U.S. persons living abroad. Like pariahs, they may be shunned because of their American status by banks abroad. Foreign banks are sufficiently worried about keeping the IRS happy that many do not want American account holders. Americans living and working in foreign countries must generally report and pay tax where they live. But they must also continue to file taxes in the U.S., where reporting is based on their worldwide income,” Forbes explained.

“The exit when you make it can be expensive too. If you have a net worth greater than $2 million, or have average annual net income tax for the 5 previous years of $160,000 or more, you can pay an exit tax. It is a capital gain tax, calculated as if you sold your property when you left. A long-term resident giving up a Green Card can be required to pay the exit tax too. Sometimes, planning and valuations can reduce or eliminate the tax, but taxed or not, many are headed for the exits.”

 

FATCA and tax rules generally have been fingered in the growing number of Americans abroad who renounce their citizenship. In a 2015 survey, 86 percent of respondents felt the law needs to be reworked. Both parties' representatives abroad agree on that, though there are differences on how they propose to accomplish it, Bloomberg News has reported.

(Newsmax wire services contributed to this report).

© 2022 Newsmax Finance. All rights reserved.


StreetTalk
The number of individuals who renounced their U.S. citizenship for the third quarter of 2016 was the second-highest in history at 1,380, U.S. Treasury Department reported.
fatca, americans, citizenship, passport
481
2016-53-13
Sunday, 13 November 2016 07:53 PM
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