Renounce American Citizenship Because of Taxes?

While many people the world over want to come to the United States at any cost, there are US citizens abroad who want to renounce their citizenship. Currently, the hottest debate in the United States is about immigration reform. The main reason for this being the number of undocumented immigrants in the country and the continued influx of people entering without legal status. So, people want rules in place regarding immigration and want a solution regarding what is to be done with the already present undocumented people in the country.

Renounce American Citizenship Because of Taxes

When this is the scenario prevalent in the country, why is it that people who live abroad and have the benefit of being US citizens are looking to give up this envied status? The main reason for  this is the taxes they need to pay the US government even though they are not residing in the country.

US tax laws are such that they require Americans living abroad to file income taxes in the US for income they earn abroad. This means, such people have to pay two taxes, to the US and to the country they are residing in. And there are instances when an American selling a house in the United Kingdom will have to pay a tax on the income earned from it to the US government though the British government may not have such a requirement.

Over the years the number of US citizens abroad who are renouncing their citizenship has been increasing. Where it was 200 odd people renouncing US citizenship in 2008, the number has increased many times over to nearly 1,800 in 2011.

In London, there are several cases of US citizens wanting to renounce their citizenship though the process can be expensive. People earning all their income in UK have to pay taxes to the US government too and they don’t mind the one time expense of renouncing their citizenship instead of having to pay so much in taxes every year. The process may take time too, since it means the US citizen has to pay 5 years of tax returns and then apply for renunciation.

The US government has taken the concerns of the US citizens wanting to renounce their citizenship into account and have streamlined the process. They provide customer support and information on their website to help those who want to renounce their US citizenship.