Everfair Tax : Surrey (Weybridge) Office

Suite 6, The Monument Building, 45-47 Monument Hill, Weybridge, Surrey, KT13 8RN  
Tel:  01932 320 800
 

Email: info@everfairtax.co.uk

All rights reserved | Privacy Policy | Use of Cookies

  • Facebook Social Icon
  • Twitter Social Icon

Website by www.CobsWebs .com 

More and more people are renouncing their American Citizenship. Figures show the growth between 2015 and 2016 as a 26 percent increase, with 5,411 giving up their citizenship or terminating their long-term residency status.

 

But why?

Things to keep in mind when considering expatriation…

With the United States being one of the only countries that collects taxes from citizens living abroad, many are tempted to terminate their citizenship in order to get around the administrative burden and cost of the annual filing and in some cases even additional taxes becoming due.

 

The process to relinquish citizenship is relatively simple, although the cost of the Embassy appointment required now stands at $2,350.

 

It is important however, to ensure you avoid any unintended tax consequences arising and therefore advice should always be sought from a Tax Professional as early in the process as possible so that you are aware of all the options and pitfalls.

 

A key consideration for example is that an “exit tax” will apply on expatriation if you have not complied with your tax obligations for the five years prior to expatriation. It is therefore key to ensure that you are up to date with all your filings before taking this step.

 

The exit tax also would come into play if your income tax for the previous five years is $160,000 or more or if your net worth is in excess of $2 million. Your net worth value calculations for this purpose will include and take into account everything; your property, investment accounts, assets such as artwork and any assets held overseas. Working in a similar way to capital gains tax, the Exit Tax will use the sale values to assess the amount of taxes to be paid. There is however an exemption from this tax, even if you meet the asset or income tax thresholds, for those US citizens who are also nationals of another country from birth and who meet other relevant criteria.

 

There will be many reasons for renouncing citizenship and not all will have a financial slant. Some may have been born in the U.S. but have lived most of their lives in another country, or for Meghan Markle, marriage to Prince Harry and her desire to become a British citizen is her trigger. Whatever it may be, we always recommend that professional advice is obtained to ensure that you are properly informed before commencing the process.