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.

OP, I have a very good tax accountant in London if you'd like me to send you his details. I found him after using some very well known accountants who advertise that they specialise in US tax law but didn't have a clue and charged me £1500 for the privilege. My acct usually costs £400.

Oh I know! The worst part was that my mother's financial adviser had assured me that I wouldn't owe tax silly man and this was back when I was still very naive on it. I blindly listened to his advice and promptly used the payout to pay off our mortgage. It paid out over a year in advance of anything else from the estate so we were left madly scrambling around trying to put together the $76,000 to pay the bill on time!

That taught me a big big lesson to research everything and realise that expat taxes are so complicated that few people know what they are talking about!

The US tax policy is aimed at people who live in low tax places, like Monaco, and is aimed at collecting the US rate of tax from them. The UK generally has higher taxes than the US and there is tax treaty between the two countries to avoid people being double taxed. If you just have an ordinary job and earn less than $96K then the forms for one year are easy and could be done in an hour and you would owe no tax (except you need to do 3 years of 1040 tax forms and 6 years of FBARs for the initial compliance).

I thought the rate for death tax to kick in was $5 million, but I could be wrong.

It had never occurred to me to do US tax returns and it was on a thread like this that I found out. Compliance was a pain, but I pay more than enough UK tax to cover any US tax liabilities and there is a Foreign Tax Credits form, which covers this.

Oh my god. I'm grateful to benefit from your advice but what a horrible thing to go through! Losing your mother and then financial worries

Yes, Taz it sounds very difficult and stressful. But, I also appreciate you sharing your experiences.

The exit interview sounds nerve wracking. I'd want to be honest and upfront, my default position, but worried because of all the advice to say nothing about the strain of compliance.

I thought the rate for death tax to kick in was $5 million, but I could be wrong.

It is - where the deceased and the beneficiary are both US citizens!

I've been reading about all this bank stuff and am just not worrying about it.

I don't have even close to the minimum amounts to require anyone to report anything to the IRS. I have never even paid US Taxes in the 15 years I've been in the UK, as I've never made that threshold either.

If I had enough money, I'd be worried!

But I also would never give up my US citizenship as there are signs on the wall that 'my kind' may not be welcome for long. If all else fails, I can jump back to the US for the price of a plane ticket with my dual citizen son and my husband can follow after.

LoveMySon09, you don't have to file if you don't earn enough. It's more if you are building up a pension that causes a problem in the long run. Why would people here in Britain not welcome "your kind?"

I'm Jewish and an immigrant. Not a great combination across Europe right now.

My dad was a CPA before he retired and he said better to file wth $0 than find out in 10 years that you should have done so! Takes me about 30 minutes to do, so no big deal.

I think your dad was right LoveMySon. I wish that's what I had done! It's what I do now, even though I don't think I meet the requirements to file every year, I just do it anyway.

I am not Jewish, but I grew up in an area with lots of Jewish families, they were always so warm and welcoming. The part of London I live in now has plenty of Jewish families, too. Around here it all seems so normal. I am obviously in a happy bubble here.

I spent 6 years working in tax for an international accountancy firms in both the UK and US. It's a few years ago now so my knowledge is a bit out if date so I'm not going to offer any specific advice to the posters on here. However if anyone wants advice I can highly recommend Liz Zitzow at British American Tax. She's an American based in London who specialises in cross border planning and I have sent clients to her since I stopped working in that area myself. You can Google her.

I do have a story which may be of interest though. I had a client who came to the UK from the US as a student in the mid 1970s. She stayed in the UK and never filed a US tax return. In the mid 1990's a relative in the US died and (unexpectedly) left her an oil well. She couldn't claim her inheritance until we had filed US tax returns going back 10 years. She was a doctor so on a pretty decent salary and there was some tax to pay but it was more a pain for her to try and dig out financial info from 10 years previously. Those of you who have US spouses and ILS in the US from whom they may be due to inherit may wish to take advice on this aspect.

What worries me most is planning for old age.

Just trying to do something responsible like save in a pension seems to be far from straight forward. The US/UK are supposed to have reciprocal tax agreements, but you cannot get agreement between tax professionals about what you should do with your pension. It seems that old-fashioned defined benefits pensions are OK, but defined contribution, the type almost all of us have, if we have anything, are a source of deep confusion. No two people give the same answer.

Pensions are a complete nightmare. What we ended up doing was maxing out contributions to DH's pension and I didn't start to contribute to one until I renounced (I'm self employed and earn pennies so can only do the max £3600 incl govt cont but still!). An awful lot of this takes great trust in your spouse because unfortunately the easiest way to deal with it if you have anything beyond a basic salary and savings accounts, is to keep as little in your name as possible.

On inheriting, when my mother passed away, the estate was (and still is three years on!) distributed in bits and pieces. There was no problem with my receiving distributions without having first filed taxes. I did need to update my SS records with my married name, but once that was done, payouts did commence. The rules in tax compliance change constantly so it's worth keeping an eye on.

Going back, i think someone said the $50k in a single institution is a threshold, effecting pension. Would it be wise to ensure if it reaches that level you then start a new one with a different bank? And keep an eye on thresholds, moving money where appropriate? Its such a hassle, especially as tgrre is nothing wrong or illegal with building up a pension pot, and yet you feel shifty trying to protect it! Barmy.

We need the house to be in dhs name as i earn pennies and will be a stap when the time comes. He's the earner. Will have to work something out to ensure that it isn't seen as just his asset in the future.

Okay, I haven't filed because I'm a SAHM, I make no money at all. The website says that if your income isn't above a certain amount (obviously, with an income of zero, mine isn't above that amount), you don't have to file. Right? That's what it says, right?

I hate tax stuff. Especially American taxes. I've spent my entire adult life in the UK, and it offends me that the US thinks they still have the right to a slice of my hypothetical earnings.

I haven't made my application for British naturalisation yet, but it looks like when I do, I'll be making it with the intention to relinquish my US citizenship. Didn't expect to have to make that decision this soon, but oh well. More than two thousand dollars is actually just taking the piss.

Caitner, you don't have to file, but filing is easy if you don't earn anything.

What you must do is file FBARs though. You send them to the Treasury in Detroit, not the IRS. That's where you list all your bank accounts and the highest balance they had for that year. You don't have to do this if your foreign bank account balances have stayed below USD 10,000 in total all year. Hard to do if you have a joint current account that you pay a mortgage on and they kids have a few savings accounts that you have signing authority on, etc.

Never even heard of FBARs before this thread, I looked into the tax returns and assumed that was the end of it. My husband and I do have a joint account, so I guess I have a few fun days of staring at bank statements ahead of me!

Thank you for the information.

someone said the $50k in a single institution is a threshold, effecting pension. Would it be wise to ensure if it reaches that level you then start a new one with a different bank? And keep an eye on thresholds, moving money where appropriate? Its such a hassle, especially as tgrre is nothing wrong or illegal with building up a pension pot, and yet you feel shifty trying to protect it! Barmy.

IMO which may be completely wrong it will depend on how companies are applying FATCA. If you have over $50k the company will obviously have to report it if you are a US citizen. They may well choose to report lower levels as well. I could be completely wrong, but I'd guess companies are doing whatever is the least expensive option for them.

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! I have no intention of letting the us government know they exist, let alone getting a passport. Dh does not want to move back there, ever... What a hassle for nothing!

honeysuckle Don't know if this point has been addressed (may have missed it) but I don't think your dh is eligible to pass on his citizenship to your children anyway.

Child born in wedlock to one U.S. citizen parent and one non U.S. citizen parent on or after November 14, 1986: A child born outside of the United States to one U.S. citizen parent and one non-U.S. citizen parent may be entitled to citizenship providing the U.S. citizen parent had been physically present in the United States or one of its outlying possessions for five years, at least two years of which were after s/he reached the age of fourteen. This period of physical presence must have taken place prior to the birth of the child.

And if you weren't married there when your children were born there is a whole other load of crap more to go through as well.

london.usembassy.gov/cons_new/acs/passports/robirth.html

England is home, and has been now for nearly 20 years, so I'm also considering downsizing to one passport. My wife does our taxes, and has kept up to date on FBAR, FATCA, etc. Filing is a huge thorn in her side every year (UK taxes are a breeze by comparison). Enough is enough.

A country which started with a tax revolt probably now has the most draconian system on the planet, and seems hellbent on creating a disgruntled expat class.

I've got my fingers crossed that the amount of the exit fee will be successfully challenged, because giving up your citizenship should be a basic human right available at nominal cost.

caitner, I was in your position 3 years ago. I did not pay an accountant to back file for me. I simply printed out the form. And filled it in for the this year and the previous six years (pain going through old files, but doable.) I sent it in with an apology note. I never heard anything back and I now file going forward.

Here is a useful link: bsaefiling.fincen.treas.gov/NoRegFBARFiler.html

I think the only remaining practical issue is inheritance. If you stand to inherit from parents in America you will be hit with estate taxes if you are no longer a US citizen. You don't pay estate taxes up to $5million if you are a citizen. If you are not a citizen, you will pay 40% beyond the first $60K. (This is my understanding anyway, please feel free to correct me!)

because giving up your citizenship should be a basic human right available at nominal cost.

I'm shocked they can charge anything because you've decided you don't want to be a part of their club anymore. It's not like we've chosen to be citizens of a state (in most cases) and you're not asking for anything from them as a citizen.

Thanks for the advice everyone. What knowledgeable people we have on mn!

I'm a US citizen.
My kids cannot inherit it because I never lived there as an adult.

I've never filed my US taxes (yeah I know, I'm an accountant)
I'm on the electoral roll in the US and they have still not noticed
BUT
when I was doing US returns for somebody else I checked my numbers : because of mortgage interest and other deductions, the IRS would end up owing me money for every single year.
I've chosen not to fill out the forms but if they come knocking I'll ask for the money.

And yes, still having the US passport is almost essential for when my relatives there die whose estates I'll need to handle travelling on open ended tickets.