The number of US expats giving up their American citizenship has risen, according to recent research. The Federal Register revealed that the total number rose from 189 in the second quarter of 2012 to 1,131 over the same period in 2013. Stricter tax laws are thought to be the reason behind this, with their introduction on July 1st 2014.
The Foreign Accounts Tax Compliance Act (FACTA) will come into place in less than 12 months, forcing financial institutions across the world to inform the IRS of US citizens on their books. For all US citizens with more than $50,000 they are required to inform the IRS of their salaries and assets or face having dividends and interest rates withheld. Many believe that this is a ploy to regain unpaid taxes, with an estimated $1 billion that are not paid each year.
A problem that this poses for US expats relinquishing their citizenship is that they can only return for a limited number of days, a mere 29 days per year. Although they are no longer required to obey US tax rules, being able to return to the US for less than 30 days each year poses a number of challenges. If an expat owns property in the US then they will need to return throughout the year to maintain their property and if any unexpected problems arise then this may require them to stay for longer than 29 days.
There is a similar issue for former US citizens who still have family, pensions or any other financial commitments in America. These points should all be key considerations for any US expats considering relinquishing their citizenship. Arguably there is also a psychological impact to adopting a foreign country as your official homeland, which could have positive or negative implications.