Expatriation Trends Among the US Population
According to a recent Rasmussen Reports poll, 9% of the US population has considered “expatriation.”
This represents nearly 1 in 10 Americans thinking about giving up their US citizenship and passport.
While some of this may just be “talk”, the data suggests a growing number of Americans are seriously considering expatriation.
Factors driving this trend include the endless political gridlock in Washington, increasing intrusions into private lives, and the widespread unemployment and underemployment challenges, particularly among younger generations.
Expatriation Numbers on the Rise
The number of Americans “officially” expatriating reached record levels in the second quarter of 2013.
The actual number is likely much higher than officially reported.
Misconceptions About Expatriation and Taxes
The mainstream media often claims that Americans give up their citizenship solely to avoid paying taxes.
The high-profile case of Facebook co-founder Eduardo Saverin’s expatriation was a perfect example. The media claimed he saved $67 million in federal income taxes. But this is not true. When Saverin expatriated, he had to pay a significant “exit tax” on the pre-IPO value of his Facebook shares, likely over $350 million.
While avoiding future US taxes on non-US income is a factor, the reality behind expatriation is much more complex.
Expatriation Experiences from Our Consulting Clients
- Closed Bank Accounts in Switzerland. One client who had lived in Switzerland for over 40 years was forced to give up her US citizenship after the banks she dealt with closed her accounts. The banks did not want to comply with the extensive reporting requirements imposed by the US on accounts held by American citizens. It was simply easier for them to terminate their relationships with US customers.
- Threatened Mortgage Cancellation in Germany. Another client received a letter from a bank that had previously issued a mortgage for her home in Germany. The bank threatened to cancel the mortgage unless she could prove she was no longer a US citizen. Rather than face a significant balloon payment, she gave up her US passport.
- Unexpected Tax Bill in Canada. A Canadian client contacted our firm after receiving a $20,000 bill from the IRS, despite believing he was fully compliant with all US tax and reporting obligations. He had even hired a prominent US accounting firm to prepare his tax returns annually at a cost of over $5,000. The issue stemmed from a Canadian educational savings plan account he had set up for his daughter. While the gains in the account were tax-deferred under Canadian law, they were not exempt from US taxation, leading to the unexpected tax bill and his decision to expatriate.
The Challenges of Being an American Abroad
More than 7 million Americans now live abroad. Many face significant challenges in their daily lives.
Many Americans living overseas can no longer hold bank accounts, qualify for mortgages, or set up tax-deferred accounts for retirement or their children’s education.
They consider expatriation not solely due to taxes. They often have to give up their US citizenship just to function financially outside the country.
Americans residing within the US are largely shielded from these consequences, able to easily access banking, mortgages, and tax-advantaged accounts.
But when Americans live overseas (part or full time), they encounter a vastly different financial landscape. The vast majority of international banks refuse to work with US citizens, often ignoring inquiries completely.
Are You A Good Candidate for Expatriation
To expatriate is a big decision. One that has implications far beyond possibly paying an “exit tax” upon your permanent departure.
Expatriation means, for example, that you no longer have the automatic right to enter or live in the United States. You’ll need to get a visa to do so, unless your non-US passport qualifies you for visa-free entry.
Before making this decision, review several key factors to ensure it’s the right choice for you.
You can find more information here: Are you a good candidate for expatriation?
Need Help?
We can assist in every phase of giving up your US citizenship or long-term residence. This includes helping you get a second passport before giving up US citizenship.
And if you’re not ready to expatriate, we can help you take advantage of tax breaks in the Tax Code that apply to US citizens and permanent residents living overseas.
Schedule a free no-obligation consultation with a Nestmann Associate to see if expatriation is right for you.
How to Move Out of the US Permanently… From Start to Finish.
Thinking about saying goodbye to Uncle Sam? Here’s everything you need to know about expatriation. The good. The bad. And the often unspoken.
Learn more here: How to move out of the US.
