Rising numbers of individuals during 2016 choose to renounced their U.S. citizenship and decided to terminate their long-term U.S. residency is so alarming that it reaches to a record high.
In 2015, it reached up to 4,279 Americans renounced their citizenship – up 26 percent from the previous year, according to the records released each quarter by the Internal Revenue Service (IRS) and in 2016, it appears that the U.K.’s Foreign Secretary Boris Alexander Johnson included on the list.
The heightening of offshore penalties over the past two decades could be a contributing factor in this rise and some say they do it for political reasons or because they cannot maintain dual citizenship.
Another contributing factor is the country’s rare citizenship-based taxation laws, which require US citizens abroad to file highly complicated annual tax returns and sometimes even pay taxes to the IRS. They must also pay taxes to their country of residence.
SKL Tax, a US and Canadian tax consultancy firm based in Vancouver, has received about a dozen renunciation inquiries this year with mention of Donald Trump, according to Max Reed, one of the firm’s cross-border tax lawyers.
According to John Richardson, a Canadian-based lawyer who coaches clients through the renunciation process. “they can’t afford the onerous cost [of tax compliance and taxation].”
Richardson said. “They don’t want to live in a state of terror, so that is why they renounce.”
These complications compel some Americans living abroad to cut their ties to the US altogether. – JCE.