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

I have to say, I can understand the thinking behind this.  Imagine if you live in the UK and make £100,000/yr.  Not only are you in the highest UK tax band (is it 40% or 50%?  Either way, a lot) but you also have to pay US taxes based on your UK (pre-tax) income.  By the time you emerge from all of that you'd barely be making £30,000, so what is the point of all those earnings?  Plus, really, what right does the US have to tax income that's generated overseas?  Paying taxes in the country where you live is one thing, but paying them to what is essentially a third party is unfair.  And, since there's no one in Congress representing the interests of Americans living abroad, then really it's taxation without representation, and therefore un-American. 

actually,  even in this high tax bracket you don't pay that much to US because the USG gives you credit for the taxes already paid in the UK , for most of your salary.  it is a  pain to write the check for any amount when you don't live there, but it doesn't amount to a huge amount even for high earners.  the UK tax burden is much more onerous in and of itself.

BT, your children keep their US citizenship no matter what, the adult residency requirement is for them to pass on US citizenship to THEIR children.

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.

This sums me up perfectly. I'm sick to death of US politicians spouting on about freedoms that Americans have, yet, I don't have the freedom of being a British citizen running a British company with British customers without telling the US government about it? Or the freedom to not be in debt (not yet, but one day!) and have more than £6000 in the bank without telling them about that either OR face draconian penalties?

I will be ditching my US citizenship. I will never, ever live there again as long as a Republican walks the earth, anyway. The only reason I even visit is because my father is still alive. Once he passes, I'm burning my passport and sending the ashes to whomever is in the White House.

I appreciate the sentiments but bashing US expats seems to be a bipartisan thing. Whether it's Senator Grassley(R) or Levin(D) or President Bush(R) or Obama(D), they've all got their punches in.

Once he passes, I'm burning my passport and sending the ashes to whomever is in the White House.

Very dramatic, but the only way to revoke your US citizenship is:

http://travel.state.gov/law/citizenship/citizenship_776.html

Very dramatic, but the only way to revoke your US citizenship is:

http://travel.state.gov/law/citizenship/citizenship_776.html

Absolutley and in England & Wales you'd have to go the US Embassy in London in Person to do it.
http://london.usembassy.gov/cons_new/acs/passports/renunciation.html

Absolutley and in England & Wales you'd have to go the US Embassy in London in Person to do it.
http://london.usembassy.gov/cons_new/acs/passports/renunciation.html

And...there is a very long wait of many months to get an appointment to renounce - and for some folks there would be a US tax charge on renouncing.

I appreciate the sentiments but bashing US expats seems to be a bipartisan thing. Whether it's Senator Grassley(R) or Levin(D) or President Bush(R) or Obama(D), they've all got their punches in.

Oh, I know, I was just having a rant. In fact, it seems that a band of Reps are actively trying to help US expats, according to the ACA anyway.

I also know how to renounce; believe me, I've checked.

Still, it's not a proper rant if you let facts ruin it.

I have a choice of being domiciled in NY or MD.  Right now I'm in NY, but thought I would transfer to MD during my last month here.  If I'm understanding it correctly, I should stay domiciled in NY?

How much can you earn in the UK  before the US taxes you?

Depends on whether you're a regular old employee or actually want to run your own business.

If the former, with foreign income exclusion and housing allowance and so forth, quite a lot.

If, however, you want to run a British business on British soil, selling to British customers, I'd think twice. Even if you don't end up owing any money, you still have the additional hassle of filing with the US gov (on top of everything you have to do in the UK) and likely paying a US/UK tax expert a fortune to do it for you.

You might also want to think carefullly before amassing any wealth above £6k because the US govt wants to know about that, too.

Wherever you choose to domicile, make sure it's somewhere with no state taxes as they are exempt from the foreign income exclusion.

Basically, Joe the Plumber gets shafted if he doesn't live on US soil and I'm sick of it.

I'm a bit confused as to how much of a hassle being self-employed in the UK is (in terms of taxes for the US). Could you point out if I'm getting it at all right here?
1) You must register as a sole trader here in the UK and sort out those taxes.
2) You must file additional paperwork in the US with regards to the SS (and worker's comp?) you "would" have had to pay, but with the tax treaties, NI cancels this out so you don't normally have to pay? (In this case I'm talking about a small part time job that makes less than £10 grand a year). It's a pain in the butt to do the math, but not impossible, I would think right? (I should say that I get help from my dad with my taxes as he used to be a tax/business lawyer). At this point, my total SS owed would be less than fifty bucks anyway, so if it's too much of a hassle, should I just pay it?
3) the "£6000" pound thing is the FBAR right? That's just a form (I hope as I just filled it out and sent it in!) As far as I know it doesn't require anything further does it?

1. Yes. Note. Sole trader is NOT a limited company, which, in itself opens you up for a storm of paperwork and tax liability.

2. And you need to write to HMRC asking for a certificate to say you pay UK NI insurance and thus, in effect, opt out of US s/s which you have to send with your 1040 every year.

3. Yes, as I understand it, at the moment, though I don't have to complete one as my total assets are not worth more than that as I have a £140k overdraft, but (a) I hope I will one day not be in debt up to my ass and (b) just because they don't do anything with the information NOW doesn't mean they won't later.


I don't want to be American if this is how I'm to be treated. IT'S NONE OF THEIR BUSINESS WHAT I HAVE IN THE BANK! It's insulting enough being treated like sh*t by the TSA. My father won't even leave the US for fear of their treatment.


So, in the meantime, I file my tax returns on my income and don't own a company and don't have total assets over $10k, just to live an easy life. It's not about tax avoidance (I don't have anything to tax!) but running a business is hard enough in the UK without having to worry about filling in a US tax form wrong (or, even worse, not filling one in at all) and landing yourself in court.

Many here will think their little blue book is valuable enough to be treated like sh*t by their elected officials. I don't.

I agree, Grumpy. I'm at the point where I believe that when my father passes on, I'll probably turn in the passport unless the rules change. I don't plan on living in the US again, and the only benefit it gives to me at the moment is the ability to run back and be by my father's side should he need me. That being said, I don't have the cash to run back to be by his side, so I guess that's a moot point.

That's a horrible position to be in and I really can empathize

If you’re just a regular old employee but you have more than $10k in savings, where would that put you?  Also, how does it work with joint accounts?