Complicated Tax Laws Have Many Citizens Giving Up Their US CitizenshipOffshore Account Update
Posted on September 28, 2018 | Share
If you are an American living abroad, you may have noticed in recent years that you have become subject to many complex reporting requirements and burdensome tax rules. You may have also discovered that it has become more difficult to get banks or financial institutions in the country where you live to continue to do business with you.
All of this is caused by increasingly complicated U.S. tax laws that have been passed in an effort to stop taxpayers from hiding money in offshore bank accounts. Unfortunately, the new laws have been prompting many U.S. citizens to give up their citizenship, according to CNBC.
Because of the growing number of IRS regulations, it is important for anyone with a foreign account, anyone living abroad, or anyone considering giving up citizenship to talk with a Boston international tax attorney. An attorney can provide the help that you need to make sure you're in full compliance with tax law and can assist you in determining the best way to approach your tax issues.
More Americans are Giving Up Citizenship Thanks to Tax Rules
According to CNBC, a total of 1,099 people have given up citizenship in the first quarter of 2018. And, in both 2016 and 2017, more than 5,000 people decided that they no longer wishes to be citizens of the United States.
Many of the people giving up their citizenship felt they had no choice to do so for a number of important reasons related to new tax laws.
For example, one of the big issues is that Americans with foreign bank accounts are generally required to file an annual Report of Foreign Bank and Financial Account. Filing this form can require accounting help and it can be a burdensome process. Many people are not even aware of the fact they have to file the form. Unfortunately, not filing it can trigger big penalties. One US citizen that CNBC interviewed who is living abroad indicated he was forced to spend tens of thousands of dollars on paperwork costs, accounting fees, and other expenses associated with reporting requirements even though he owed very little in U.S. taxes.
Another issue is that the U.S. imposes reporting requirements on banks that do business with American citizens. This means that someone who is living in a foreign country may have a difficult time getting a bank where he or she lives to allow him to open an account because the bank may not want to be put into a position where it must submit paperwork to the IRS. This also happened to the person who CNBC interviewed about the issue.
Because the tax laws are so strict and are likely only to become worse as the U.S. continues to crack down on foreign accounts, any U.S. citizen living abroad should be certain to consult with a Boston international tax attorney in order to ensure compliance with IRS rules and to explore options for minimizing tax and compliance costs. For a consultation, contact Kevin E. Thorn, Managing Partner, at firstname.lastname@example.org or (617) 692-2989 today.