More Americans are forfeiting their citizenships after the government as tightened up its tax laws in recent years. Approximately 3,000 Americans have given up their citizenships during the first half of this year alone.
In the second quarter this year, 1,700 Americans have forfeited their citizenships. The total number for this entire year is up to 3,000. This is similar to 2013 when the figure was 2,999.
The widely spread notion is that many Americans are giving up their citizenships because of the stricter tax laws. The United States remains as one of the few countries which require citizens residing abroad to report their income.
To prevent tax evasion, Foreign Account Tax Compliance Act (FATCA) and Report of Foreign Bank and Financial Accounts (FBAR) are enforced strictly.
FATCA requires those with assets of $50,000 or higher, while FBAR requires those with more than $10,000 in their bank accounts to report their finances to the government. Unreported finances could prompt punishments, including additional tax and fine.
“Taxpayers must realize that simply giving up the citizenship does not mean they can dodge reporting their finances as there’s something called the Expatriation Tax,” said a tax expert.
By Sungcheol Jin