To Consider Giving up US Citizenship?

[NotFunBeingAnAmericanInLondon]

Posting here for traffic.

Desperate to talk to other US citizens settled in Britain who doubt they will be returning to the US for personal reasons.

Am I the only one who's been here so long I didn't notice the FBAR thing? I don't file FATCAs, but I am never sure. What are we supposed to do if our British born, dual US citizen kids have CTFs? I have a SIPP with mutual funds in it, my accountants tell me not to even bother mentioning it now?! Apparently this is a time bomb for later.

Social Security and State Pension are supposed to be reciprocal, but I cannot get any information from anyone.

I used to file my own 1040 forms, but now that there are so many forms to file with the threat of prison if I mess up that I am truly cowed and pay someone else £400 a year to file for me. And I am a housewife with no income!

The state department has just raised the cost of expatriation from $450 to $2500 which worries me even more.

I wonder, should I just give up my citizenship now and make life much easier?It's a lot of worry and stress to carry around for emotional/nostaligic reasons.

So do you think, hypothetically, that he just shouldn't bother and then claim ignorance if he's ever caught out? (Hastily back filing and apologising all the while?) He says the only thing that worries him is if they one day decide they want some of his pension pot.

Who knew the US were so evil?!

I can't find anything of any use on the London embassy website, but the German one has a bit about the no claim form towards the bottom of this page (basically just says to contact the your embassy to find out how to get the form) germany.usembassy.gov/acs/citizenship/claim/

The US communicates information to us so well, don't they!

My DH renounced last year. It was a massive hassle but worth it. If you have any money in ISAs in the UK, you may have to pay US tax on them (as they're not taxed in the UK and so not covered by the US-UK double-taxation treaty). Similarly, you may have to pay tax on the sale of your primary home (not sure of the threshold).

What FATCA means is that UK banks now have an obligation to tell the US government about any US citizens banking with them. Your bank has to tell the US govt about any 'indicia' it has that you might be a US citizen, and most banks require your place of birth as part of their know-their-customer processes.

The process of renunciation was complicated and expensive (legal and accountants' fees) - even before the fee hike. DH spent c. £5000 on advisors even before any actual tax he had to pay - and his tax affairs were pretty simple (one UK-based job, a small amount of savings in ISAs, we are not millionaires... or tax evaders...!).

There's also an 'exit tax' at 40% of assets, when you expatriate, but at quite a high threshold (think its $2 million - or about the value of a 4 bedroom house in London....).

I did form 8854 myself. I lucked out in that I acquired UK citizenship at birth and so didn't have to do part of the form.

I filed six years of FBARs last year to become compliant. (later realized I'd done it slightly wrong, but never mind.) For the first time this year my son's CTF went over $10K equivalent so I filed an FBAR for him too. Yes I fear for my children being in the US tax system but they have US passports and social security numbers so there's no avoiding it unless they later renounce.

My fear is around an eventual sale of our house - the US wants its share of capital gains over $250K. Not difficult to breach if you own a house for 10 or even 5 years in London.

Banks are also being forced to flush out Americans. My mortgage provider recently sent me a form I have to fill out and submit documents on my status. Better than in Switzerland, where they just shut down Americans' accounts.

I'm just hoping that the US pulls back a little on punishing expats at some stage. Btw, ignorance is not an excuse.

this is a good story: online.wsj.com/articles/more-expatriate-americans-break-up-with-uncle-sam-to-escape-tax-rules-1402972439

Well you wouldn't be alone in giving it up, a record number of people have given up their US citizenship in the last year or two. Some people say that is why the fee to renounce citizenship has been increased so drastically, to discourage people from going that route.

He says he's found that the exit tax is $2350 now... Found on embassy website apparently! Although if you do any of the following there is no fee? Dh suggests planning an act of treason would be most fun, but might land him in prison!

honeysuckle If they go after part of his pension pot they'll go after it whether or not he has had the hassle of years and years of filing. Personally I'd keep under the radar for as long as I could- God knows what changes will be made over the coming years and if it were me I'd just keep any eye on it. I know lots of other people who think you should just get compliant!

It's all weighing risk isn't it- fricking nightmare!

I was born in the US and lived there until I was 10. My children don't qualify for citizenship because I am married to an "alien" and I only lived in the US for less than 2 years as an adult.

US citizens are obliged to use a US passport to enter the US.

If you were born in the UK and got US citizenship because of a US parent and you were also a UK citizen from birth and you live in the UK now, I believe you can renounce without the risk of the expatriation tax. There's a section on the London Embassy website about renunciation and the tax form is on there. Expatriation Tax comes into effect if you earn more than $150k per year or have more than $2 million in net assets or you haven't completed the last 5 years of tax returns.

That's the exit FEE honeysucklejasmine. Exit tax is something different. And potentially worse (depending on the value of your assets).

The $2,300 is a fee for processing the renunciation. It is not the expatriation tax or an exit tax.

And in case the IRS are reading... Dh says he will start filing taxes (genuinely), and he has no intention of committing treason, just joking!

Oh my god, why did I marry an American? Stress!

Will have to go see mil and find out about this 'filing' business.

Reading this with terror interest.

I note that on the London embassy doc about renunciation, if you renounce and it's believed to be principally to avoid paying US tax, they can carry on taxing you.

So it's not necessarily an escape.

Yes minipie, I wonder if they can see the distinction between wanting to avoid taxes versus wanting to paperwork.

For me, I'll always have a soft spot for America, but I've been here a long time. I am emotionally invested here. I see my future here. Put under pressure, I'd jump towards Britain, not the US.

glad I'm poor.... And off shore uk

For those who have renounced, had you filed 5 years of tax returns before renouncing? If not, did you have to do a big back filing exercise and how hard was it?

Leaving aside renunciation, can anyone point me to a simple guide as to when us/uk duals, who only earn and hold assets in the uk, will be liable for us tax? Seems like CGT on sale of residence may be US taxable, and maybe ISA interest?

DD was born in the U.S. 20 years ago. She left when she was 1 with a U.S. passport and her UK one. I always thought how fortunate she was to have a US passport but it looks like it might end up being a pain. She has about 20K savings. I'm going to have to look into this for her. Bum.

We were only there for a few years as expats.

Now I'm worried. If we travel to US with kids, dh thinks he would get hassled for using his UK passport, but sounds like our kids would not be entering unless they had a us passport!

It is illegal for a US citizen to enter the US on a non US passport. Even if you are a dual or triple national.

I think it's important to remember that there's a difference between non-compliance and tax evasion. The IRS is targeting tax evaders and the rest of us have just ended up as collateral damage. When I renounced I was very honest at my interview with the Consul General (going against the advice on all the expat forums/Isaac Brock Society etc). I told her I understood that I was collateral damage but that I had no interest in being so and tax compliance was just too difficult now. She said she understood completely and that most people are saying the same thing.

For compliance:

• There are no penalties for back filing 1040s assuming you don't owe any tax. For many expats, they won't. There is the double income allowance to cover (most) earned income and you have your personal exemption (currently just over $6000) which will cover most/all bank/ISA interest. If you make more than this in interest per year I'd look into gifting money to your DH

• In theory there are penalties for not filing FBARs. In practice, they are looking for tax evaders and if you say you were unaware when you do a mass filing, it is unlikely they will target you. Do not join any amnesty programme! They are designed for tax evaders and you will be fined!

• There are problems with pension funds. My personal view is that if you manage to stay out of the system until retirement you are unlikely to end up in it. Retirement is a real problem because of the difference between earned and unearned income but it's a risk you should weigh up.

• There are also big problems with stocks and shares ISAs, endowment funds, other investment funds etc. If I were going to be impacted, I'd be gifting money to my DH like mad.

• if you are self employed, it is more complicated. Obama instituted a change whereby expats (this time as collateral damage to US resident self employed citizens) need to pay edition all social security. You need to get a special form (I can't remember the name of it, but can dig mine out if anyone needs it) from HMRC to prove that you pay NI conts here. It's a very specialised form and it was a real hassle finding someone at HMRC who knew what I was talking about.

• Capital gains is potential a problem if you intend to sell up.

• Not to sound money obsessed, but there is a potential problem with inheritances. If you are likely to inherit from a US estate, be aware that there is a limit to the estate size that can be left to a non US citizen before punitive inheritance tax is applied. On the other hand, if you are a US citizen and your spouse isn't, they will be hit by that tax if you die first and your estate is over the limit (can't remember off the top of my head, but it was low enough to give me sleepless nights). You can get around much of this by gifting money to your spouse.

• FATCA is a freaking nightmare with more and more financial companies asking you to confirm that you are not a US person.

Having said all of the above, once I weighed it up, for me not being a US citizen had advantages that far outweighed the disadvantages.

So the key is for Dh to stay poor and gave me all his money! We'll have to be careful selling houses, but if we get to the point where we are earning $250k CG on a house, or anything, i'db surprised!

Thanks so much Taz!

For those who have renounced, had you filed 5 years of tax returns before renouncing? If not, did you have to do a big back filing exercise and how hard was it?

I did a mass back filing. It was easy enough- other than getting the self employed form from HMRC as mentioned above and the year I owed $76,000 through an annuity I inherited as part of my mother's estate. Working out the tax owed was easy enough but my bank had kittens when I said I needed a cheque for that size. If you think you will owe money I would open a dollar account with Citibank!

$76,000!!! Bet you wish they never found you!