Expats giving up passports because they no longer want to pay taxes

http://www.time.com/time/world/article/0,8599,1983238,00.html?xid=rss-topstories

Couldn't decide if it were news, expat life,  or here...  I hate these complicated topics 

In many US embassies in Europe it is currently taking up to a year to get the first appointment to renounce.

I can't imagine giving up my American citizenship and not being able to live in my own country! How odd.... And it must be expensive for those 2 in the article because they make a lot of money. For most (middle of the road) folks, their foreign income is exempted.

I can't imagine giving up my American citizenship and not being able to live in my own country! How odd.... And it must be expensive for those 2 in the article because they make a lot of money. For most (middle of the road) folks, their foreign income is exempted.

I was going to say...isn't there a threshold you have to surpass before you start getting taxed on foreign income?

http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html

I was going to say...isn't there a threshold you have to surpass before you start getting taxed on foreign income?

http://www.irs.gov/businesses/small/international/article/0,,id=97130,00.html

Yeah. Essentially, they are choosing money over their citizenship? Maybe there's more to it than the article states, but honestly, my family would have a nervous breakdown if I renounced my American passport/citizenship!

Yeah. Essentially, they are choosing money over their citizenship? Maybe there's more to it than the article states, but honestly, my family would have a nervous breakdown if I renounced my American passport/citizenship!

That threshold only applies to Federal taxes. State is another matter entirely. Most, if not all, states, AFAIK, do NOT have this exemption. So even for middle of the road folks, if you don't set aside savings every month, you can get nailed with a rather unpleasant state tax bill every year.

Oh, and I just did the conversion. That's really not a very high threshold, IMO. A UK yearly salary of £59,488, which is around what a tenure track comparable university professor would make in England, is not out of the realm of possibility for many expats living overseas.

Some of these expats might have large amounts of investment income, which wouldn't count as unearned income.

Also anyone with a more complicated situation, e.g. owning their own businesses, being trustees, etc., have an absolute nightmare trying to figure out what they have to file, and probably pay accountants a fortune every year. These are usually people who have been living abroad for decades and probably rarely even visit the US anyway, so the practicalities become more important than the sentimentality of nationality.

I doubt I would ever want to ditch my American passport. I don't like burning bridges, who knows what will happen in the future? And it's good to keep options open. However, as a Texan, I don't pay state taxes, and the possibility that I would ever earn more than the threshold or have more than $10,000 in the bank is probably slim to none, anyway. 

WHat this article doesn't say, as well, is that the many of people expatriating are not US born individuals.  They are individuals that have obtained citizenship or are green card holders. Many of them wouldn't have the same pull on the US anyway. 

WHat this article doesn't say, as well, is that the many of people expatriating are not US born individuals.  They are individuals that have obtained citizenship or are green card holders. Many of them wouldn't have the same pull on the US anyway. 

Very true

"According to government records, 502 expatriates renounced U.S. citizenship or permanent residency in the fourth quarter of 2009"

My own husband would have been included in the above statistic. He gave up his permanent residency at the end of the year, but as a born and bred British citizen there was no sentiment attached to that status.

WHat this article doesn't say, as well, is that the many of people expatriating are not US born individuals.  They are individuals that have obtained citizenship or are green card holders. Many of them wouldn't have the same pull on the US anyway. 

Yeah, I had that same thought. But from what I gather in this article, these guys were American-born.

That threshold only applies to Federal taxes. State is another matter entirely. Most, if not all, states, AFAIK, do NOT have this exemption. So even for middle of the road folks, if you don't set aside savings every month, you can get nailed with a rather unpleasant state tax bill every year.

State taxes are a different issue though.  First, a citizen could make sure that they are a resident of a state that has no state tax before they go to live abroad.  Alternatively, if a former resident of one of the states that has an income tax, they might be able to sever all ties with that state so again they would not have a state tax responsibility.  I believe the parameters are different in each state, but as long as you have no home in the state, no bank account, no drivers licence etc., I've read that it is doable.

State taxes are a different issue though.  First, a citizen could make sure that they are a resident of a state that has no state tax before they go to live abroad.  Alternatively, if a former resident of one of the states that has an income tax, they might be able to sever all ties with that state so again they would not have a state tax responsibility.  I believe the parameters are different in each state, but as long as you have no home in the state, no bank account, no drivers licence etc., I've read that it is doable.

In some states, severing ties is not enough.  There are some states known as domiciliary states, where the state considers you are resident until you relocate to another state -- other countries don't always count.

In reality some people don't know enough in advance to plan a state move, before their international move.  Nor do some have the time, expense, etc.

Does anyone know if NY is one of those states?