We’re avid readers at Safe Harbor LLP, and this came across our proverbial Internet desk:
More renounce US citizenship but deny sterotype
The government’s pursuit of tax evaders among Americans living abroad is indeed driving the jump in abandoned citizenship, experts say. But renouncers — whose ranks have swelled more than five-fold from a decade ago — often contradict the stereotype of the financial scoundrel. Many are from very ordinary economic circumstances.
Some call themselves “accidental Americans,” who recall little of life in the U.S., but long ago happened to be born in it. Others say they renounced because of politics, family or personal identity. Some say signing away citizenship was a huge relief. Others recall being sickened by the decision.
What’s Going on: International Taxes
We are heavy into International tax consulting at Safe Harbor LLP. After all, we live and work in perhaps the most International city of all, San Francisco, California. Many clients come to us asking about FBAR (Report of Foreign Bank and Financial accounts). The FBAR of course is part of the government’s general crack-down against those citizens and permanent residents who have unreported overseas assets. According to the IRS,
If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, exceeding certain thresholds, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing electronically a Financial Crimes Enforcement Network (FinCEN) Form 114, Report of Foreign Bank and Financial Accounts (FBAR).
The fact that many, overseas, are renouncing their US citizenship is one ramification of this crack-down, albeit a dramatic one. A less dramatic solution is to work with a San Francisco tax expert in FBAR and International tax issues and minimize your taxes in a legal and efficient way.