Filing US Taxes

I might be inclined to vote in a US election if I could vote for Gil. He'd be no worse in looking out for my interests than the successful Senator I voted for the last time.

Go to YouTube, and look for:     Honest Political Ads - Gil Fulbright for Senate

Unfortunately, he's not real.

I don't see it as 'I'm paying taxes so I deserve X, Y, and Z as an expat.'  I see it as the responsibility of being a US citizen.  A US citizen is obligated to complete tax returns after earning a certain amount of money.  This obligation does not go away simply because you move out of the US.  Nor does it go away if you don't use Medicare/Medicaid, unemployment, welfare, or any other social services provided by the US government.  It's just part and parcel of being a US citizen.  If you don't like the obligations that come along with being a US citizen, you can renounce, as many people have done. It seems pretty straightforward to me. I don't understand why expat citizens in particular should gain some discrete benefit from filing US tax returns from overseas.

US taxation of UK resident US citizens does not make sense economically. Because of tax credits and exclusions, they get very little tax revenue from UK sources. On the cost side, they have have to process all the forms, answer all the questions and do all the enforcement. Sometimes they even have to pay us credits of various kinds. We US taxpayers have to spend endless hours filling in forms and keeping up to speed on US tax law. Large amounts are spent on specialist accountants. Our financial lives are constrained by PFICs, FBARs etc. and now the threat of losing our accounts. Now UK banks have spent £1billion on implementing FATCA. Add to that the huge amount of ill will towards the US caused by their policies.

The costs imposed are far higher than the revenues - it's economic idiocy. They could maintain their current policy of citizenship taxation but for high tax countries like the UK, all they need is verification that we are UK taxpayers.

US taxation of UK resident US citizens does not make sense economically. Because of tax credits and exclusions, they get very little tax revenue from UK sources. On the cost side, they have have to process all the forms, answer all the questions and do all the enforcement. Sometimes they even have to pay us credits of various kinds. We US taxpayers have to spend endless hours filling in forms and keeping up to speed on US tax law. Large amounts are spent on specialist accountants. Our financial lives are constrained by PFICs, FBARs etc. and now the threat of losing our accounts. Now UK banks have spent £1billion on implementing FATCA. Add to that the huge amount of ill will towards the US caused by their policies.

The costs imposed are far higher than the revenues - it's economic idiocy. They could maintain their current policy of citizenship taxation but for high tax countries like the UK, all they need is verification that we are UK taxpayers.

I agree completely. It's madness. No, the right to vote does not outweigh this in my mind.

They could maintain their current policy of citizenship taxation but for high tax countries like the UK, all they need is verification that we are UK taxpayers.

Isn't that the point of filing a tax return? And for the reputation of the UK being a high tax country, it's also a high-tax haven for many people to hide their money.


I woke up cranky this morning so apologies for coming off rantish.

Citizenship has its responsibilities and its rights. For US citizens one of their responsibilities is to report their worldwide income. Since the majority of Americans who live overseas pay nothing to the US treasury, I don’t see what the big deal is in reporting my income and filing taxes.

To me, it’s just another instance of people going out of their way to get worked up over something that really doesn’t affect them in a significant way.

Listen, I’m not a rah rah American type. I’m deeply cynical. I understand why some Americans would want to give up their citizenship. It’s a personal decision that I wouldn’t question.

But filing a piece of paper every year with the IRS or the Treasury, that doesn’t seem to be that much of a burden to me and you do get something for it, and not just the right to vote:

The right to live and work unfettered in the largest economy in the world, in a country that spans a continent, filled with varied people and languages, with a choice of varied climates and terrains and with some of the most exciting cities and towns in the world.

I agree with everything that geeta mentioned above. For all this grumbling about the burdens of US tax policy, i.e., the responsibilities, why is it that rights of US citizenship are disregarded? If filing taxes is so onerous, renounce.

The arguments against so far put the terms of citizenship purely in transactional terms, like you are buying the rights of being a citizen, or services provided by the government simply by paying taxes. This is absolute rubbish. A citizen living in the US who pays nothing, has absolutely the same rights (and responsibilities) as someone who does pays.

I don’t care about the Marines rescuing me or carrying a US passport necessarily or what the US government can do for me personally. What is important to me are options. If for whatever reason I can’t stay in the UK and need to move somewhere else, at least I have a choice to go back to the US, with my partner who is not a US citizenship by the way.

And, being cynical, more darkly, if there comes a time that I am no longer welcomed in the UK or Europe (and being a UK citizen, I may not be welcomed in Europe for much longer). I want to know I have a place to go to. This is one of the reasons I became a British citizen as well.

Think being forced from, or attacked in the place that you live could never happen?  I’m sure many German citizens, who happened to be Jewish circa 1933 probably felt the same thing.

US taxation of UK resident US citizens does not make sense economically. Because of tax credits and exclusions, they get very little tax revenue from UK sources. On the cost side, they have have to process all the forms, answer all the questions and do all the enforcement. Sometimes they even have to pay us credits of various kinds. We US taxpayers have to spend endless hours filling in forms and keeping up to speed on US tax law. Large amounts are spent on specialist accountants. Our financial lives are constrained by PFICs, FBARs etc. and now the threat of losing our accounts. Now UK banks have spent £1billion on implementing FATCA. Add to that the huge amount of ill will towards the US caused by their policies.

The costs imposed are far higher than the revenues - it's economic idiocy. They could maintain their current policy of citizenship taxation but for high tax countries like the UK, all they need is verification that we are UK taxpayers.

Eh, I don't think it's really that onerous. As jayvee said, if it's that difficult, you can always renounce. And as far as the cost to the US, I suppose they feel it is worth it for the most egregious offenders. Every day, millions of people go through a heck of a lot of security screening airports to fly on a plane. 99% of them aren't doing anything wrong, but the security hassles are still something we deal with for the greater goal.

I agree the US should really reconsider how they deal with expat citizen taxpayers. But personally I would not renounce over something like this. To me it is a non-issue. If I made enough where I could be liable to pay tax, I would be making enough to afford an accountant.

Some excellent comments thus far. Unbeknown to all of you, you've restored my faith in the American ability to debate an issue rationally and without prejudice. It's not allowed to happen on some sites.

US tax reporting for the US citizen expat is currently a given, so debating compliance is a moot point.

In respect to some of the thoughts raised, separate issues become apparent.

Tax and information reporting as fulfilling the responsibilities of citizenship is the first. It's the satisfaction of complying with US expectations and the observance of ones civic duty. Understood.

An issue running parallel to civic duty is the subject of tax evasion. Happily filing a tax return is one thing; filing to defend oneself from accusations of tax evasion and criminal actions simply because one has a local bank account where they live is quite different. Answering a question regarding US citizenship on an application form isn't done because one is exceptional; it's done because one is under suspicion of being dishonest, because American expats are suspect of being dishonest by the US Government. OK, we can live with that, but it is annoying.

The above raises a further question: does a modern, enlightened US Govt. really find it logical to tax its citizens abroad on income earned abroad?

The taxation of expats originated during the US Civil War as a penalty for those who failed to support the Union. My previous comment about "sending in the US Marines" wasn't flippant. US expats are taxed on worldwide income today as a result of a Supreme Court decision (in the 40's?? Weller will correct me) stating US expats are under the protection of the US Govt. when abroad and therefore should pay for that protection. That's the sole reason we file a 1040 today. A cost/benefit analysis by an efficient organisation would abandon expat taxation without a second thought.

So, why not challenge expat taxation in Congress? Any guesses about the reaction of todays politically divided resident US population to a proposal to abandon the taxation of foreign earnings of a middleclass group of US citizens? Would you, as a politician, dare suggest this? (And I think the current actions of both the Republican and Democrat parties abroad is a large amount of BS for self serving political gains.) 

The comments raised other issues.

Is it a responsible, civic minded community who asks one smaller group of the population to renounce their birth right simply because they are struggling to complete tax and information filing obligations; or would it be more civic minded to seek a solution without exiling them? Is it responsible governance to create even more laws, rules, and regulations to protect the interests of local financial industries when the results are guaranteed to create difficulties for the members of the community abroad, knowingly forcing some to renounce?

The really sticky question: if Country A can dictate legislation which requires Country B to change their laws in respect to the citizens of Country A who are residents and perhaps citizens of Country B, does allowing emigration (or even dual citizenship) from Country A in the best interest of Country B?

(This post is either a rant, or the confused ramblings of a stubborn expat who refuses to renounce in order to make life easier for the US Congress.)   

Only one privilege of relevance to US citizens overseas: The right to enter, live and work in the USA. That's it - can't think of anything else.

That and voting.... they're enough for me!

The taxation of expats originated during the US Civil War as a penalty for those who failed to support the Union. My previous comment about "sending in the US Marines" wasn't flippant. US expats are taxed on worldwide income today as a result of a Supreme Court decision (in the 40's?? Weller will correct me) stating US expats are under the protection of the US Govt. when abroad and therefore should pay for that protection. 

Given that "the Marines" couldn't be bothered to rescue the US Ambassador to Libya (and others), this is "protection" is worthless.

And, by the way, if it should happen that the US actually bothers to help get citizens back to the USA (or, more likely drops them off over the nearest international border of convenience), those citizens are billed for costs. According to http://travel.state.gov/content/passports/english/emergencies/crisis-support.html [nofollow]

Departure assistance is expensive.  U.S. law 22 U.S.C. 2671(b) (2) (A) requires that any departure assistance be provided "on a reimbursable basis to the maximum extent practicable.”  This means that evacuation costs are ultimately your responsibility; you will be asked to sign a form promising to repay the U.S. government.  We charge you the equivalent of a full coach commercial fare on a comparable mode of transportation at the time that commercial travel ceases to be a viable option.  You will be taken to a nearby safe location, where you will need to make your own onward travel arrangements.  Typically, you will not have an opportunity to select the destination to which we will take you; it will be to the nearest safe location (only in rare circumstances will that be to the United States).  If you are destitute, and private resources are not available to cover the cost of onward travel, you may be eligible for emergency financial assistance.