People from all over the world covet American citizenship and do everything they can to obtain it. Some people who actually possess U.S. citizenship, though, end up deciding it makes sense to renounce it. There are four common reasons American citizens decide to take that step.
1. Income Taxes
The United States is virtually unique among the world’s countries in assessing income taxes on its citizens regardless of where they are working. Among those who seek to learn about renouncing U.S. citizenship each year, concerns about this levy are quite often present and pressing.
American citizens can actually earn up to a certain amount of income in foreign countries without worrying about it being taxed. Even in such cases, though, they are required to report it to the Internal Revenue Service and to keep track of all the associated paperwork.
Whether because of needing to pay taxes on foreign income or the hassles associated with qualifying for an exemption, many Americans decide to renounce their citizenship for this reason. While there have been occasional proposals aimed at bringing the United States into alignment with the rest of the world, its tax on foreign income seems likely to remain in effect well into the future.
2. Foreign Account Tax Compliance Act
The U.S. is currently so committed to collecting taxes from expatriates that it has passed some notably intrusive legislation aimed at making its work easier. In 2010, the Foreign Account Tax Compliance Act, or FATCA, went into effect and transformed the financial affairs of many Americans living abroad for the worse.
FATCA imposes strict reporting requirements on foreign banks that allow American citizens to open accounts, with some of these being especially burdensome. As a result, many financial institutions worldwide now prefer not to do business with Americans even when they were formerly happy to accommodate them.
Dealing with FATCA can become such a hassle that it sometimes seems easier to simply renounce American citizenship. Even where FATCA is not the primary reason to give up citizenship, it will often be a contributing factor.
3. Simplifying Citizenship Arrangements
Some people are born with dual citizenship and later decide that one passport is enough. Many countries worldwide require those attempting to become citizens to renounce their existing allegiance at some point in the process.
Someone who decides that life in the United States is not for them can therefore easily end up feeling like giving up American citizenship makes sense. Even though people from so many other countries hope to obtain U.S. citizenship themselves, not everyone who actually has it will always value it to the same extent.
4. Cultural, Political, or Personal Reasons
Finally, some U.S. citizens simply decide at a certain point that their status no longer reflects their convictions, preferences, or ideals. While many worldwide see the United States as a shining beacon of freedom, others have less positive views of the country and its culture. Renouncing American citizenship can be a personally satisfying move even when financial or legal motivations are less pressing.
A Fairly Complex Process
Most people who decide to give up their American citizenship cite one or more of the reasons detailed above. While it is always possible to renounce U.S. citizenship, doing so requires working through a fairly involved, complicated process.
Fortunately, help with a renunciation of American citizenship is readily available to those who seek it. Whatever the reasons a person might have for starting the process, obtaining assistance with working through it will make things a lot simpler.