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Did Anyone Renounce Their US Citizenship?

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Did Anyone Renounce Their US Citizenship?

Postby Dragon » November 29th, 2012, 4:12 am

The reason I'm asking is because the US is only one of two countries in the world that taxes its citizens overseas. It's truly retarded that I might have to end up paying double taxes to two countries if I get a formal job overseas. It might be a better idea to look into passive/online income instead if I ever decide to move permanently. Does anyone have this problem? I know most of you guys are in the US so will likely encounter this problem in the future if you haven't already.

The only solution is to renounce one's citizenship, but I wanna keep it as I think it's a valuable "insurance policy" to have just in case anything happens. That and most of my family is located in the US.
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Re: Did Anyone Renounce Their US Citizenship?

Postby Teal Lantern » November 29th, 2012, 4:32 am

Dragon wrote:The reason I'm asking is because the US is only one of two countries in the world that taxes its citizens overseas. It's truly retarded that I might have to end up paying double taxes to two countries if I get a formal job overseas. It might be a better idea to look into passive/online income instead if I ever decide to move permanently. Does anyone have this problem? I know most of you guys are in the US so will likely encounter this problem in the future if you haven't already.

The only solution is to renounce one's citizenship, but I wanna keep it as I think it's a valuable "insurance policy" to have just in case anything happens. That and most of my family is located in the US.


You would have to file two sets of returns. One for the host country and one for the USSA.
That's not the same as paying DOUBLE taxes. Yikes! Treaties are in place to keep that from happening.

There is also an exemption (the amount changes) for how much of your income you'd have to pay USSA taxes on.
Worst case -- you make enough money that you pay local taxes and even after exemptions, you still have to pay (some) USSA tax.
It's not double though.
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Postby abcdavid01 » November 29th, 2012, 5:42 am

Still worth it to go passive. That's why I'm changing my business from drop ship to affiliate model using similar products.
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Re: Did Anyone Renounce Their US Citizenship?

Postby Dragon » November 29th, 2012, 6:21 am

Teal Lantern wrote:
Dragon wrote:The reason I'm asking is because the US is only one of two countries in the world that taxes its citizens overseas. It's truly retarded that I might have to end up paying double taxes to two countries if I get a formal job overseas. It might be a better idea to look into passive/online income instead if I ever decide to move permanently. Does anyone have this problem? I know most of you guys are in the US so will likely encounter this problem in the future if you haven't already.

The only solution is to renounce one's citizenship, but I wanna keep it as I think it's a valuable "insurance policy" to have just in case anything happens. That and most of my family is located in the US.


You would have to file two sets of returns. One for the host country and one for the USSA.
That's not the same as paying DOUBLE taxes. Yikes! Treaties are in place to keep that from happening.

There is also an exemption (the amount changes) for how much of your income you'd have to pay USSA taxes on.
Worst case -- you make enough money that you pay local taxes and even after exemptions, you still have to pay (some) USSA tax.
It's not double though.


Thanks for the info. I guess I have to check international agreement stuff between the US and the particular country I'm looking at. Thanks.
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Postby skateboardstephen » November 29th, 2012, 9:36 pm

I haven`t faced this problem yet but will next year i guess.I don`t plan on renouncing my citizenship either for the same reasons.
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Postby ladislav » November 29th, 2012, 10:29 pm

Renouncing is for three types of people:

1) Political dissidents
2) People who are comfortably established in other 1st world countries and who find that being a local citizen is better
3) The very well paid to super rich making some $250,000 a year up into millions. And even then, not in all cases. Some know of tax shelters but because they have so much money, they just want a passport from some more neutral country.
All of us will only have to pay money on foreign income if it is over $90,000+ and on excess money, not on the whole sum. If you are taxed by another country, you get a credit for it. But you either choose foreign tax exclusion or foreign income exclusion.

Average Americans do not renounce just like that. Still a good passport.
Last edited by ladislav on November 30th, 2012, 1:50 am, edited 1 time in total.
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Re: Did Anyone Renounce Their US Citizenship?

Postby Teal Lantern » November 29th, 2012, 11:42 pm

Dragon wrote:Thanks for the info. I guess I have to check international agreement stuff between the US and the particular country I'm looking at. Thanks.


For taxes, if you don't mind visiting govt sites, you can find the most up to date info on the Infer- oops Internal Revenue site.
State Dept is a good resource, too, for country specific, non-tax matters.
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Postby manly5000 » November 30th, 2012, 4:15 am

Okay let's say I relocate to some country across the pond and teach English... meet a nice girl, settle down and start a family. Let's say I bust my hump and manage to make about 2 grand US gross per month. Will I be expected to pay any income tax to the US? Will I be required to file a return?
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Postby Teal Lantern » November 30th, 2012, 4:27 am

manly5000 wrote:Okay let's say I relocate to some country across the pond and teach English... meet a nice girl, settle down and start a family. Let's say I bust my hump and manage to make about 2 grand US gross per month. Will I be expected to pay any income tax to the US? Will I be required to file a return?


You are required to file.
www.irs.gov/Individuals/International-T ... ens-Abroad

You may have an offset against US taxes.
www.irs.gov/Individuals/International-T ... Tax-Credit

Also know that you are required to report any overseas bank/brokerage accounts, too. :wink:
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Postby Rock » November 30th, 2012, 5:17 am

ladislav wrote:Renouncing is for three types of people:

1) Political dissidents
2) People who are comfortably established in other 1st world countries and who find that being a local citizen is better
3) The very well paid to super rich making some $250,000 a year up into millions. And even then, not in all cases. Some know of tax shelters but because they have so much money, they just want a passport from some more neutral country.
All of us will only have to pay money on foreign income if it is over $90,000+ and on excess money, not on the whole sum. If you are taxed by another country, you get a credit for it. But you either choose foreign tax exclusion or foreign income exclusion.

Average Americans do not renounce just like that. Still a good passport.


There is another category of people who might be interested in renouncing US citizenship - those who are able to secure a passport sufficient for their travel needs (typically medium income to first world) AND who have a substantial asset base which generates most to all of their income.

Why? Because unlike almost all other countries, the US taxes its expats on all their incomes - earned and investment. Moreover, that US$90K plus exemption only applies to earned income, not capital gains, dividends, or interest on investments. So virtually all money you earn on your assets, no matter where you hold them - USA, country of residence, or third country - is taxed. But after you renounce, USA will no longer tax you and your country of residence, depending on which of course, will likely not tax you on any of your investment incomes.

So net effect on US citizen living on investments and who has secured a decent second citizenship AFTER RENOUNCEMENT is a major reduction in annual tax bill - effective rate of say 10-30% of income (depending on how much) to virtually 0, year after year! That's a big incentive for some people. As an added bonus, you will no longer be required to disclose your financial accounts to the US Treasury each year or risk being punished for committing a major felony.

As a side note to Ladislav, next time you amass a large sum of cash - say $50-100K, why not invest in high yield income producing condo in Metro Manila and lock in some income instead of living high for 2-3 years and being forced to go back to square one?
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Re: Did Anyone Renounce Their US Citizenship?

Postby Jester » November 30th, 2012, 5:36 am

Dragon wrote:The reason I'm asking is because the US is only one of two countries in the world that taxes its citizens overseas. It's truly retarded that I might have to end up paying double taxes to two countries if I get a formal job overseas. It might be a better idea to look into passive/online income instead if I ever decide to move permanently. Does anyone have this problem? I know most of you guys are in the US so will likely encounter this problem in the future if you haven't already.

The only solution is to renounce one's citizenship, but I wanna keep it as I think it's a valuable "insurance policy" to have just in case anything happens. That and most of my family is located in the US.


You have it backwards. Job or self-employment pays local tax only. (Plus some social security tax usually, this varies by country and treaty.)

Internet-earned income pays nothing at all in many second-tier countries in Latin America and Asia. And of course no U.S. income tax.

Investment income (dividends, long-term capital gains, trading profits, etc.) pays U.S. income tax no matter where you live. (Unless and until you renounce.)
Last edited by Jester on November 30th, 2012, 6:03 am, edited 1 time in total.
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Postby Jester » November 30th, 2012, 5:52 am

abcdavid01 wrote:Still worth it to go passive. That's why I'm changing my business from drop ship to affiliate model using similar products.


I think you mean that you are avoiding the 30% withholding tax that is gradually going into place on U.S.-source income paid to nonresident non-US persons.

This is NOT what passive income means when discussing taxation. What you mean to say (I think) is that you are making sure you have no U.S.-source income. This is NOT important until you renounce U.S. citizenship. Then - it is very important.

PS Care to tell us more about what you were doing, and what you are doing now?
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Postby Jester » November 30th, 2012, 5:58 am

Teal Lantern wrote:
manly5000 wrote:Okay let's say I relocate to some country across the pond and teach English... meet a nice girl, settle down and start a family. Let's say I bust my hump and manage to make about 2 grand US gross per month. Will I be expected to pay any income tax to the US? Will I be required to file a return?


You are required to file.
www.irs.gov/Individuals/International-T ... ens-Abroad

You may have an offset against US taxes.
www.irs.gov/Individuals/International-T ... Tax-Credit

Also know that you are required to report any overseas bank/brokerage accounts, too. :wink:


Yes all true...

...but if you earn under 91,500
AND keep your butt out of the U.S. 11+ months a year
AND file on time
-- then you don't need to use the tax credit. Because you have no U.S. tax due. You have exempt income - exempt from U.S. But you do have to file a 1040 plus the exemption. ON TIME.

Lots of CPA's specialize in doing this for expats.
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