The main reason Americans overseas want to take off their US citizenship
Greg Blomberg | EyeEm | Getty Images
Requirements for filing expat taxes
American expats pay annual US income taxes on worldwide earnings such as salaries, interest, rental income, corporate profits, and more.
U.S. citizens and foreign residents are required to file taxes and pay their debts regardless of where they live. These rules mean expats may have to file and pay taxes in two places.
While the IRS is taking steps to avoid double taxation, including a foreign income exclusion and a tax credit, many expats still feel burdened by the filing requirements.
“It can get really complicated very quickly,” said David McKeegan, co-founder of Greenback Expat Tax Services.
According to Greenback’s survey, 69% do not feel they need to file US taxes abroad.
Some expats may also be required to disclose foreign financial accounts such as savings and investments.
Once the balances on overseas accounts exceed $ 10,000, expats must file the overseas bank and financial accounts report known as FBAR with the Treasury Department.
For example, let’s say someone has $ 5,000 in savings and $ 4,975 in investments. If at any point in the year their investments rise to $ 5,025, they must report their accounts.
The so-called FBAR deadline was April 15, but for those who missed it there is an automatic extension to October 15.
In addition to the FBAR, some expats with accounts above a certain limit may be required to file Form 8938 in an attempt to curb overseas account tax evasion.
Thresholds for Form 8938 are over $ 200,000 at year-end for single applicants (more than $ 400,000 for married couples filing together) or hit a balance of $ 300,000 during the year (over $ 600,000 for spouses).
I feel disappointed in Uncle Sam
In addition to the pressures of increased coverage, many expats were dismayed by the US government.
The pandemic may have motivated some to stay abroad for the long term. 60% disapproved of how the US government handled the pandemic.
In addition, 85% of expats feel they are not being fairly represented by the government, Greenback said.
Ultimately, many expats just want to lead normal financial lives, McKeegan said.
“I think it’s safe to say that the vast majority of overseas Americans are what we consider the middle class,” he said. “We’re not talking about multi-billionaires who live on yachts.”
2021 US Expat Opinion Survey
Greenback Expat Tax Services