My husband was born a dual citizen because his mother is American but he was born in the UK and has never lived in America. Yet somehow, the US government started to say he owed them taxes which is insane. It was such a nightmare that he just decided to renounce his citizenship which cost a fortune too. Basically, they will hold you hostage until you pay them to let you go...
I’m just wondering when did your husband renounced his US citizenship/nationality and how much did he had to pay? Did he go to the US Embassy in London or to wherever the nearest US Consulate where you guys lived in the UK at the time?
I know people that have dual citizenship either because they were born in the US or have one American parent and they do their best to not remind the US that they exist. They don't even get a US passport even though that might be easier for them when travelling there. This system is just weird, some haven't ever met their American parent, they just happened to have one on their birth certificate
My god, the more I learn about the US the more I dislike it. Not the people (at least not all of them in general), but the whole system. It's as if they try to build the worst system ever and see how far they can push it until the people revolt 🤨
I am an American who has always lived in the US and can 100% agree. Our country is corrupt. The worst part is that in our schools they government heavily regulates what information is taught so we are taught a LOT of propaganda about our country being “the best in the world” so even Americans refuse to admit it’s a third world country wearing a Gucci belt. I hate this country and want to move but am too poor to afford the stupid double taxation rates.
The more I learn about America nowadays, the more pity I have for Americans. American Dream, American Nightmare. I'm so glad that my personal American Dream ended in failure and my return to the UK in 1990
US-UK dual national here, living in UK. It's not only Citizenship Based Taxation that needs to end; FATCA needs to go too. As long as FATCA exists, Americans living outside the US will continue to experience difficulties with obtaining bank accounts, investing, and saving for retirement. A few examples of roadblocks I've hit over the past year: I can only find one company that will allow me to open a SIPP pension account, I can't open an ISA or any other investment vehicle (and if I did, the filing would be RIDICULOUS), and I had trouble finding a new mortgage provider when my current deal expired, all due to my US citizenship. I could go on; those are just the recent examples. I'm just trying to keep a roof over my head and ensure I don't have to subsist on cat food when I eventually become too frail to work in my old age, but the US acts like I'm some zillionaire money laundering drug lord terrorist, dancing on the deck of my super-yacht with a glass of Cristal in one hand, and flipping Uncle Sam the bird with the other.
@@mikebreen2890 Yeah - makes me laugh at all these Brexiteers who banged on about sovereignty, when a foreign government (the US) can still target UK citizens for tax income earned here in the UK. Doesn't sound very "sovereign" to me.
@@Suspended4thYT To be fair, pretty much every country on earth has caved in to FATCA and US tax claims on other nations residents. But you are right, this is not only an utterly unjust claim on individuals, this is a clear breach of UK sovereignty. UK decides UK residents need tools to top up the lousy state pension and provides those tools, USA takes tham away with punitive taxation and the penalty laden reporting from hell.
Actually, most countries followed the US lead and now do this. FATCA became CRS… and CRS forces your bank to forward all your financial details to your (non US) country so they can check on you. Maybe other countries aren’t as explicit in the form filling - but it happens.
@@albedo0point39 FATCA and CRS are worlds apart. FATCA forces nations to send the personal and private financial data to a country where people do not live. CRS sends data from where a person does not live to the nation where they do live. CRS helps enforce legitimate taxation, FATCA helps enforce illegitimate taxation.
Trying to leave the US sounds an AWFUL lot like trying to leave an abusive relationship or escape a cult... I AM American and try to explain this every time someone tells me to "just leave if you don't like it." Yea Jimbob, as much as I would LOVE to move to a MORE FREE country, our lovely government makes it damn near impossible. Unless of course you are rich. And Jimbob never believes me. Like I have not seriously considered and researched this. Sigh...
I fucking hate this law. It really does seem like theft: a payoff for no benefits. I'm academically undesirable to other countries anyway, so I figure I'll just move to a slightly nicer state someday.
It really is! I've read a lot of expat stories and from what I'm seeing, the US is one of the hardest countries to leave. I'm still determined to leave this country behind, but it won't be an easy feat. Unfortunately your best bet is to either get married to a foreign citizen (and they would have to agree NOT to move to your country) or find a good job abroad (it's not impossible but unless you're a doctor or something, it will be hard and you'll likely have a citizen of that country chosen over you but that's pretty standard). But I do wish you luck in finding a way out, or at least ending up in a better place.
The cult and abusive relationship analogies have been made many times. After 12 years of paying close attention to this issue I can tell you without doubt, living outside of US borders is punishable under US tax code and associated laws. Land of the free, my ass.
US Citizenship-based taxation is a severe moral crime, and I hope it goes away in my lifetime. It obviously isn't sustainable for Americans abroad or the IRS, so what's the point?
@@kognak6640 If you don't make enough, you still have to do paperwork. Unless you willing to spend time to workout both local and USA irs papers. You'll to pay someone
I'm American living in Ireland the last 22 years (dual citizenship), and found out in 2014 I had been required to file with the IRS since the year 2000 (when I left the US for the last time). I earned so little that I didn't owe any money (I think the Foreign Earned Income Credit is quite generous - currently $106,000 a year), but the fact that I have to file causes my anxiety to spike like crazy. I've never earned enough to actually have to pay tax (if you're married to a non-US citizen, tick married-filing-separately), but it is some amount of bullsh*t that I have to file at all. I do it all myself and always have, because I refuse to pay an accountant when I don't owe anything. If you ring the IRS (the foreign filers number answers really quickly, the longest I have waited on hold is 11 minutes), they will answer your questions about how to file. The first year I filed, I rang them every day on my lunchbreak and they were super helpful (again total BS that they require this). I wish John Oliver would do a segment about it and raise awareness.
The FEIE is not generous, it is absurd. Giving other nations tax residents a break before having to send money to the USA? Secondly, it is SOURCE of income or gain that is likely to trigger taxes, FEIE only covers salary. Now what about that unemployment benefit, the gain on your mutual funds, the sale of that home....
@@mikebreen2890 I live a pretty simple life, so I have never come anywhere close to the FEIE. I agree it's ridiculous to require non-resident citizens to file every year (I did state that 3 times). I don't have mutual funds, don't plan on ever selling my home, and if I ever earn 6 figures a year, I guess I'll hire an accountant to help me figure things out or find loopholes like a rich person. Of course, I always hold onto the hope that they'll do away with this requirement.
@@melissashiels7838 The problem with DIY filing is people are usually putting themselves in more danger than if they simply stopped filing. 12 years now that I have watched this closely and one thing stands out crystal clear - it is those who try and comply that get hurt, those that don't don't. I have seen people penalized $250,000.00 for failing to file a 3520-A on time, when no tax was avoided or evaded. Just the timing of the form was out. Who even knew that a Canadian residents daughter needed to file a foreign trust form for her Canadian education savings plan? On FB recently was a lady persuaded to "come clean" convinced there was no tax as she had a very modest income only to find she has a large bill based on her French unemployment. 12 years I have watched this closely now and one thing has become abundantly clear, crystal clear. It is those who file that get hurt, those who don't don't. People with no real US connections, no US income os assets are better off not filing a damned thing.
@@mikebreen2890 yeah, my life has definitely been a bit worse since finding out I was required to do this. I cried for 4 days straight and couldn't sleep for a week over the terror of it. Every January 1st I wake up and think "It's a new year, oh sh*t, I gotta do my taxes". I do travel to the US once a year to see my entire family, so as long as I want to keep doing that, I need to file (or the US government can refuse to issue a new passport). I could just travel on my Irish passport, but that means getting a visa (admittedly, it's not that difficult to get). Once my parents are gone, or I am not physically able to travel anymore, I will probably give up my US citizenship. As much as filing taxes every year is a PITA, there's no point divesting myself of my citizenship until any inheritance or bequests are finalised. I still hold out a vague hope that someone like John Oliver could do a segment on it, it would create a groundswell, and eventually this requirement would be done away with.
@@melissashiels7838 The US only denies a passport tyo people that owe circa $53,000 in US taxes and all other avenues have been exhausted, they can't know you owe anything unless you file. Visiting the US as non filer is no issue at all.
I'm an European living in the US. Been here 13+ years at this point. People are shocked when I tell them I'm not a US citizen. I point to your video as to why, as I do plan on moving back to Europe at some point.
@@LiqdPT Living in the US without a green card makes you eligible for deportation. Either you are keeping up your green card in order to live in the US long enough to apply for citizenship, or you have overstayed.
@@argusfleibeit1165 we're talking about someone leaving the US though. If they leave the US on a green card, yes initially they would still have to file us taxes but you can abandon your green card and be free from that burdon
I'm in my 5th year living outside the US and I was trying to do my taxes and had to make one of the new IRS accounts to access some information that I couldn't receive by mail because, spoiler alert, I don't live in the US. It legitimately wouldn't let me make an account without a US mobile phone number that was documented in my name. I tried using various family members' numbers, none of them worked. The alternative was to receive a piece of mail in 10 business days (probably more like 15-20 given that I live outside the US) to a US address to prove that I was who I said I was. Keep in mind, this was after giving them scans of my birth certificate, passport, social security card, and having provided a video scan. They also had a thing where I would have to wait 2-3 business days to video chat with a representative - who has this kind of time??? I'm just trying to file my damn taxes that I shouldn't have to do because I don't live in your goddamn country, why is this so difficult???
bureaucracy - where monolithic stupidity is a characteristic, if not a virtue. I wonder how they would handle someone dying, and then a relative/dependent trying to convince them the subject was dead. 'Mr Alfonse Aardvark is deceased, he is in no position to pay tax.' "That may be so, but he will have to contact us by phone to verify his status' '.......'
Hi Thatcher, send your comment to your senators and rep and the Ways and Means/Finance committees of the House and Senate. Also to Democrats Abroad Taxation Task Force and Republicans Oversees. We've got to wake up Washington.
@@CoBaLe Washington have been told that this system is a disaster many times, they are not interested in doing anything that would allow US citizens to leave the tax system by leaving the country. For a nation so damned sure the whole world wants to live there, they sure have gone to some lengths to make sure nobody is free to leave.
@@REAZNx The USA currently holds international banking laws that allow them to freeze assets in almost any country in the world. "Don't pay it" puts you and your entire family at risk of losing any bank accounts associated with your name, including business accounts.
The fact that the US could still force me to fund their broken system if I leave the country upsets me. It was on the tip of my tongue to just say "well that's why I don't want to be an expat, I'm going to renounce my citizenship" until you mentioned the price. Granted I'd still rather pay the price of renouncing my citizenship, but I also realise that's either not an option for everyone or that some expats don't want to do that. I still find it incredibly messed up though, like they're punishing you for leaving "The Greatest Country in the World."
If they think you renounced for tax reasons, usually can be banned from ever reentering the US too. That and thr huge fees were results from all the expats immediately renouncing their citizenships when this horrible system was implemented. It really says a another about the US when they make us pay for the privilege of not being an American.
It's a horrible way for a country to treat its former citizens and just goes to show how little the country cares for its people. Like I said they're basically punishing Americans for leaving the country and renouncing their citizenships.
@@LittleRedIrishRover or they’re desperately trying to stop people leaving because they don’t want them knowing the ‘Greatest Country on Earth’ moniker is a lie.
I lived in the US for 20 years as a Permanent Resident. I never became a citizen because of the long arm of the IRS. I returned to the UK in 2018 and gave up my Green Card in 2020. Form 8854 is the final accounting of your entire global net worth so the IRS can determine if you owe them EXIT taxes!!! A tax on everything you have (some of which was previously taxed) in order to leave the country. It took me the best part of a year and several thousand dollars to file the 8854 and fix FACTA issues for the previous 5 years of tax filings. I’m still waiting to hear whether it has been accepted. If you do decide to renounce your citizenship Evan, Form 8854 will bring you to your knees in despair.
As a German who is about to take her exams to become a fully fledged tax advisor's assistant here in Germany I'm appalled by the way the US taxes their citizens. Seriously, wtf? Like.. our income tax law literally states in its first paragraph who has to pay income taxes here and yes, it definitely doesn't talk about being a citizen. Only about having one's main place of living as well as making their income here. We were told that is also because the government (and those of other countries) want to avoid double taxation. (Not to mention that as long as the tax office doesn't ask me to - I with tax class 1 and just being employed - don't have to file my taxes because it is paid for every month when I get my salary).
I'm an American living in the US, and I'm generally very mild-mannered, but when I file taxes, it enrages me to the point where I sometimes scream because the system is so broken and corrupt.
As almost every countries in the world. Corruption is well known in all wealthy nation and even in not wealthy nations. 😑 We decided to have democracy because we was sick of ancient monarchies, empires and dictatorship regimes. No! The democratic politicians act like ancient hierarcs. 😑 We need new revolutions to cut some heads.
Lol im Dutch. I literally go to the tax agency website, enter my login and check if they filled in things correct. Takes 10 minutes. Then i click "send" and thats me done for a year.
What made me angry was that when I was opening my bank account in Slovenia they asked me if I am subjected to taxation in the US and everyone is asked this when they open a bank account. Like how can I be asked this if I have literally no connections with US at all. If this would be another country there would be an outcry, but because it's US nobody cares.
I work in a Bank in Australia. The US strong armed our Government into a Treaty that makes us report all possible US citizens to the IRA and flag their bank accounts - which get frozen until they supply their US Tax file number equivalent.
The many banks in Europe need at least occasionally access to the US market. The SEC is feared among banks in Europe, because it can shut of access to the US market.
Just bizarre that any US citizen living abroad have to pay any tax to the US. I’m Australian but now live overseas - the last time I paid tax in Australia was when I became a resident in another country.
Yep, as Evan says, only the US and Eritrea do this anymore. Remember, the US is basically all about money. They don't want citizens doing anything to profit from without getting a cut.
It's not that you have to pay taxes to the US, but to have to report all global earnings. There are tax treaties that allows Americans to not have to pay taxes IF they earn less than $85,000. If you earn more yes you'll owe taxes on the difference between $85k and whatever you earned
@@jbmcdoogle The FEIE is now around $112,000 BUT it only applies to your salary! Anything not earned is liable to US taxes. There are loads of ways to be double taxed and thousands of ways to end up paying US taxes and the FEIE won't help one bit.
@@mister8765 No, you would take tax credits. But, and it's a big BUT, is any gains or income that is not earned is not protected byt the FEIE. You can be on French unemployment benefits and owe US taxes on that!
The whole system is absurd. As another US citizen in the UK, explaining to people here why I look like my brain is about to explode come this time of year is always such a shock to them. I'm "lucky" in that my taxes are relatively simple (because lol I don't have that much money), I can't imagine figuring it all out if I had actual assets. Though who knows, maybe 10yrs down the line they'll come back at me saying I filed these forms wrong every year and I owe them all my money. "Just renounce your citizenship!" - Regardless of the fee, what if we don't /want/ to renounce our citizenship??? Sure I have no plans to move back to the US, but I still consider it "home", and I'd hate to make it a bureaucratic nightmare just to visit my family. I like having my US passport, and while I do think there are plenty of flaws in the US, that doesn't mean I'm not proud to be an American. I may not be gung-ho patriotic, but I'm still happy to be an American! It's a lose-lose and, as you say Evan, it doesn't even actually catch the people it's supposed to.
I'm an American also living in the UK for the last 4 years. When I filed my taxes this year, I was so stuck on some of the questions (this is the first year where I met the threshold of money earned outside the US so I had to enter more information) that I am seriously considering renouncing my citizenship but the fact that it is so expensive to do so feels like exploitation to me
If you do want to renounce then check what capital gains you may have to pay for assets that you could 'potentially' liquidate (pension, house, savings') even if you have no intentions to do so at this time. Quote: "The US has a truly horrid exit tax for people leaving the US tax system by either renouncing their citizenship, or giving up a long-term green card. Unrealised gains in their assets, including their home, become subject to capital gains tax at the usual rate."
I had a Belgian client, her parents died, leaving her a very wealthy woman, she met and married an American (actually a native born Russian who had become a US citizen). He husband and her never lived in the US. Her husband managed her wealth, growing her millions into many more millions. Her husband was a rabid US patriot. The US IRS contacted the husband, he contacted his accountants, after about 6 months of the IRS bull …., the husband killed himself. Under Belgian law all the husbands assets transferred to the wife. The wife liquidated the US assets, closed all accounts, reverted to her maiden name, changed their children’s names to her maiden name (they had been registered). Neither she nor her children have ever gone back to the US to visit, nor invested in the US nor put money in US banks or shares.
Not an American, but I did live in New Jersey for the last 3 years of high school. My parents lost bank accounts over even *moving* to the US, so many banks in our native country just saw that we lived there, and even that already caused them to nope out. I had to postpone being able to have a bank account till we moved back to Europe, just so I would have no ties to being a "US person" in any capacity.
1.) Were you guys LPRs (lawful permanent resident) aka green card holders when you guys lived in New Jersey? 2.) How did your guys’ banks in Europe knew that you guys were living in the USA at the time?
A lot of banks in the UK won't touch American citizens. It would in effect contravene their own data privacy rules, as it would involve giving away customer data to a foreign government.
As an American living and working in Fiji, it's a real slap in the face to have to scramble every year to figure out how to do my taxes abroad. I have to do both federal and state taxes but I haven't lived there for 3 years now... I don't earn any money there.. like why??
@@User37717 And if Julia returns to the USA, she will be arrested for tax evasion. Also, any money that she has in the USA, would be frozen. Furthermore, depending on the treaties of the nation that she is at with the USA, she could be detained, arrested, and sent back to the USA as a criminal. That in turn would possibly prevent her from being allowed a passport later on as she might not pass a required background check - also affecting potential job opportunities, too.
You know what's weird? I'm a Polish citizen and from time to time I have to tell my Polish bank whether I'm obliged to pay taxes in US (there is a form about it I have to fill).
@@RandomPerson-tz7wk for expats yes For a Malaysian- no dramas. They have our IC numbers and we aren’t allowed dual citizenships anyway as adults. I haven’t paid taxes in malaysia since I left- I did advise the Income Tax peeps that I was leaving and filed the final taxes accordingly.
My husband is Canadian American but lived most of his life in Canada. Back in the early 2000s he renounced his citizenship. He was in his early 20's when he renounced American citizenship and it cost under $500. It was getting awkward with Canadian banks already back then. I am SOOO glad he did that before we married and had kids. Our incomes have grown a lot since then and it's bullshit paying American taxes when he wasn't educated in the US. He's one of the 'accidental Americans'. He never needed/wanted an American passport or American services. Why punish him?
You usually don't actually have pay any taxes you just have to do all the complicated calculations. This is what makes me so annoyed that they haven't scrapped the whole thing. I really doubt they are making much money. You'd only pay taxes to the USA if you're in a country with no bilateral tax deal, or a country that charges lower or different taxes. In the UK the taxes are higher so the USA doesn't get to see any money. It might differ in different places with lower tax.
I'm an American who has been living in Japan for almost 4 years & I am so thankful that my parents are retired accountants. I didn't know about all of this before they mentioned it and I'm not sure if my American friends in Japan know about this. I'm definitely going to share your previous video about this with them.
The American system is so weird to me. I'm Dutch and I've lived in Canada and the UK and everywhere I've lived I *only* had to pay tax in the country where I was living/working. The countries' tax agreements made sure I wasn't double-taxed. If I have income from the Netherlands for any reason (or any other country, really) I just declare that to HMRC and they sort it out.
Also, my US clients (I'm freelance) are the only ones who need me to sign a form declaring that I'm definitely not American and don't live in the US and they shouldn't withhold tax from me. Every single time for even the tiniest jobs. One time a client sent me the old version of the form but I was so familiar with it that I immediately noticed and could tell them they needed to use the new one.
I used to work with an American lady that's married to an English man (we're still friends too) and I can remember her annual nightmare of having to fill out her American tax returns. It's a bonkers system isn't it?
I worked at a bank in Austria, when FATCA came into affect. I had to go through hundreds of physical bank account files to check if there was any connection to the US. The bank had to provide documents that we did this. It was a horrendous amount of hours and I cannot put into words how mind numbingly boring it was.
Meanwhile the IRS spent $380 million implementing FATCA and never got it to work, so Austrian banks did this for nothing. Now the IRS says they never got funding (which is a lie) and they need more money. They also admit that the US broke its promise of reciprocity. This has allowed the US to go from not being a tax haven to being the #2 tax haven behind the Cayman Islands.
@@markfitzpatrick7186 what made it even more annoying at the time was, that when making the FATCA deal the Austrian finance minister managed not to get the reciprocity to get information of funds of Austrian citizens in the US. 🤦🏻♀️
Why are you paying tax to a country you aren't earning money in but Google, Apple, Amazon etc avoid paying tax in the country they are earning money in!? I am an Australian living in Australia but find this very werid.
I’m an American living in the U.K. I have a bit of an easy go of this whole thing at the moment because my salary is paid in the US. If the plans we have for this year work out, I’ll be earning an income in the U.K. instead and I am dreading having to do all of this. When I’m eligible, I will be renouncing my US citizenship as there are no benefits to keeping it.
There is "representation" though, the way law would mean it. Someone would have to make a big legal issue and try to prove that expats are not properly represented somehow in the US, so they shouldn't be subject to US taxation. So far, no one has done that. It would be a monumental effort with almost no hope of working in American courts.
@@adiuntesserande6893 It's usually as easy as emailing your county elections office and asking for the forms. Source: Have actually done this while abroad.
@@timothyreineke5691 if someone were a US citizen through one of their patents but had never been resident in any of states in the US, where would they vote?
I have a few friends from the UK who are dual UK/US nationals and were never told that they had to file US taxes by their parents. When they finally did find out they were left with the choice of spending thousands of pounds in legal fees to report their very small incomes of the previous years or never visit the US again essentially. They can't even legally give up their US citizenship until they fix the problem and even then, the US charges you to do that. Yes, the US CHARGES YOU TO RELINQUISH YOUR CITIZENSHIP. WTF?
The double taxation stuff has been a big item here in the Netherlands lately. Apparently a lot of people who have never even lived in the US do now also have to pay those double taxes. The accidental Americans. They have American citizenship and, as such, they're required to pay those taxes. Complete BS if you ask me. Especially because they need to pay those taxes for atleast FIVE years before they can give up their American citizenship so they won't have to pay those taxes anymore. Many of them intend to do so. The amount of paperwork is also shocking. Filing my taxes in the Netherlands litterally only takes me about three minutes.
US citizens can renounce without being tax compliant, the US government don't like to make this too obvious and neither does the tax complaince industry. Yes, I am totally sure of this.
What Evan is explaining here is 12 minutes of The United States being the land of the free... As long as you don't leave.... A bit Hotel California if you ask me....
Nope, you pay your tax regardless where you work. In or outside the states. So depending on where you are. You might get double tax, the local irs and USA irs.
This is another wonderfully informative opinion piece. As someone who literally just has to check if the info the tax service has about me is correct and then agreeing to it. This system is overcomplicated and only serves the rich. The worst thing is that the US and Eritrea are the only two countries with nationality based tax law. Eritrea, a dictatorship that will literally stretches its reach to other countries you have fled to and checks on you IN PERSON.
Yep. I met a US citizen who had lived in Canada since she was a child and when I mentioned to her about US taxation she knew nothing about it, and thought it was crazy that she’d be subject to US taxes when she didn’t live there and had no income from there.
Interesting fact. In the past few years every time my daughter has applied for car insurance or to open a new bank account one of the very first questions asked is ''are you or are you married to a US citizen?''. She can answer NO because she is British but did ask about the question. The answer was from the bank that if she was a US citizen they would refuse to give her a bank account, apparently it would mean that the IRS would then demand details of ALL their customers and their finances just in case one was a US citizen who hadn't been declaring his/her taxes. The insurance company merely stated that they don't offer insurance to US citizens because it might mean the IRS look at their business and their customers and they simply don't want to have to deal with the hassles this causes, despite them being an insurance company and not a bank. Apparently it is in case a US citizen has insurance on property that they haven't declared to the IRS. The only other country with such draconian tax laws is Eritrea, and even they only require tax on a mere 12% of your income. I have come to realise that every time a USAmerican states on social media about how free they are, their country is, and the rest of the world isn't that they have no idea of what they are talking about. When born they should have ''GI'' tattooed on their foreheads because every USAmerican is the property of the US government in the form of the IRS. You aren't your own person, you aren't allowed to decide where in the world you live and if you DARE to LEAVE the USA for another country then they are going to ensure that YOU PAY for daring to leave the fabulous, and very definitely UNFREE motherland for true freedom in the great wide world outside. You are about as free in many ways as those living in N Korea are.
I was born in America but have lived in the UK since I was 5 months old. The first I heard about having to file taxes to the IRS was from your earlier video on it. I am still working on trying to get a Social Security Number, so I can then file my taxes, and THEN look into how to renounce my American citizenship. Oh the JOY of surprisingly being an American! Land of the Free, indeed.
@@mikebreen2890 I would love to just renounce but you can't until you're up to date with the IRS. Otherwise, it looks like I'm renouncing just to dodge taxes. They don't see me as a Brit, they see me as an American who has moved abroad and surely the only reason you'd want to leave America is to go to a tax haven. Because UK taxes are so much lower than theirs.
@@mikebreen2890 Because you cannot renounce US citizenship without getiing a social security number and filing tax forms, essentially proving that you have US citizenship to renounce. In the meantime European banks will be very reluctant to have anything to do with you as you are subject to US taxation
@@mikebreen2890 When you renounce your citizenship they will that you report all of you and your partners financial situations, so that then can tax you on historical gains you have made, including your (UK tax free) pensions, ISAs and property.
Man this video is depressing. I would love to leave the US someday, but seems like a ridiculously high price to pay. Ridiculous that someone living elsewhere still has to pay taxes to their "home" that is no longer their home
It took me about 3 years to renounce citizenship because the consulate was closed during Covid. As a U.S. citizen, I was unable to access the services of my own consulate. Meanwhile, I continued to file every year. Even after you renounce, you have to fill out a big expatriation tax form listing every asset you have and you are taxed heavily on it over a certain amount. It's like paying death taxes at the end. This is in spite of the fact that, when you renounce, you swear before the officer that you "absolutely and entirely renounce [your] United States nationality together with all rights and privileges and all duties and allegiance and fidelity thereunto pertaining." It seems to me the duty to file the expatriation tax forms afterward is thus renounced...no?
I remember when I worked in Hong Kong, as Brits we would only pay 12% but the Americans would need to pay the 12% to the Hong Kong Government and then the difference to the US. I subsequently worked in the US for 10 years and every time I went t do a O1 visa filing they would ask me if I wanted to go for naturalisation and in the nicest way I was like "hell to the no" as I knew people who had one it then left and were living the nightmare you describe........
the association of accidental americans shared your video! it's a great one btw, as an american living abroad since age 8, I am so grateful to have found your channel, I wouldn't know this otherwise! I get all my IRS news from you hihi
It’s a really sad situation when you feel like you have to relinquish your US citizenship to avoid having to pay taxes when you don’t benefit from those taxes. I would hate to be in that situation - especially if you are an expat.
@@mikebreen2890 YES this. Its not just taxes. CBT makes normal actions like opening a bank account or saving so much harder. And let's not forget about the emotional damage, stress, anxiety... its so much more than taxes.
I work for a Norwegian company that send expats to the US - IRS also require Norwegian citizens to file for years after they have left for unknown reasons..
There is a complex set of rules that will keep you on the hook for up to 3 years - this same rule will also prevent you from regaining access to local financial services during that time. Generally, local banks will quarantine non US citizens for 5 years after they lived in the US.
Along with taking two years or more to renounce citizenship and being unheard as a foreigner. If you have an open fraud case against a school, even with plenty of evidence.. if you are turned down once it can take multiple years to escape an illegally founded debt taken through identity theft (My student loans were taken while I was not in the school, and I have a letter from the school which says I was not even enrolled and could not have taken the loans.) The government informed me they will garnish me and that it could take up to 6 years to get my case resolved.
Long story short, the US would rather tax the people who are trying to build a life outside of the US("how dare you leave the best country in the world") than install higher taxes on the super rich living in the US.
The system is broken in so many ways. This tax things SUCKS and make no sense. I'm one of those ppl who has American citizenship because of having a parent who is American -- I've never lived in the US and haven't been there for years (in part because of COVID) and have only visited for, at most, a week at a time. I oddly feel bad for the IRS here too though. They have these laws pushed on them that they are supposed to regulate, but then are also severely underfunded/understaffed so they can't do the miserable work they have been tasked to do, and then we're all annoyed that we have to deal with the IRS and how poorly they do their job. It seems like the real villains here are the law-makers and budget-makers who creating these insane laws, hobble the organization tasked to oversee them, and then scapegoat them for trying to do their job.
It really annoys me that non-resident, non-citizen spouses are also liable for US taxes on their non-resident income. We don't live in the States and we never will.
When my husband and I retired in the US the IRS charged us a penalty if we paid our income tax up front every year. If we wanted to pay it at the time of filing they charged us and additional $250. This was in addition to what we payed according to the tax tables. When you have no dedications to speak of that’s a terrible price to pay. No so much in money, but my God, the principal. “We don’t want your taxes all at once, we want it four times a year”. Makes NO sense to me, but I’m a logical thinker.
Really appreciated this, will be sharing to my “US expat moms in the UK” fb group. The US tax system is infuriating for those living in the US, can’t imagine the stress of those living abroad. When I asked how to handle the double taxation issue (while considering a move), I was told to hire an expat accountant. Crazy to think that after 12 accounting credits in business school, I still wouldn’t be able to handle it myself. 😳
Have you noticed that Moody's tax now does a renunciation of citizenship service? It's because they know full well that they do not have answers to the problems, because the only real solution is to lose that damned citizenship.
Nice. It is "Alice in Wonderland" but the lament from every member of Congress "But that is not what we intended..." is just plain insulting. I find it particularly amusing that Senator Warren thinks it is ridiculous for the average Americans to have to spend 11 hours each year filling out their tax forms. Apparently, she is clueless about was the IRS thinks about that. The IRS used to indicate how long it took to fill out a form. I am sure that they stop doing it because it got embarrassing. If an expat has a small business, they have to fill out the same form as Google and Apple. It is called the 5478. The IRS admits that it will take over one month of full-time work every year to fill it out. Isn't that scandalous?
EXACTLY!!! Warren is a strong advocate of double taxation of non-residents and FATCA. She argues that these are necessary to catch billionaire tax cheats, but the overwhelming evidence is that the wealthy are not impacted by these laws while ordinary people are crippled by them. She cries foul that Americans are paying 100s to file taxes, but ignores that Americans overseas pay 1000s to file their complex US tax returns. She calls herself a progressive advocate of the poor, but has no mercy on the hapless poor Americans overseas who have to fill out a 3520A on their meager mandatory local pension fund that will be double taxed into a negative balance by US double taxation.
Studio is looking fantastic! The thought of having to file a tax return every year (and later all these forms) always made me angry, and it seemed the height of hubris for the USA to demand that from its citizens. I also had some problems - not many, but some - with banks because of my US citizenship. It was a relief when I renounced it (unlike you, I had no choice; I wanted German citizenship, and Germany does not allow US citizens to keep their citizenship when they become German citizens). That was 8 years ago. Look at all the money I have saved in tax accountant fees!
I'm not an American but I know a lot of banks worldwide must have a KYC (know your customer) procedure and forms specifically for US citizens and anyone who's legally defined as a "US person". If a bank outside the US chooses to avoid the hassle of having said KYC procedure they just usually refuse US citizens from becoming their customer
You have to respect the naive optimism of the lawmakers who think that form filling will catch the bad people. It's like the immigration form that has the question "Are you a terrorist Y[ ] N[ ] ".
These questions seems dumb, but AFAIK the reason for it makes some sense from a legal perspective. The idea is that if they do indeed find that you lied answering any of those questions on that form, they can immediately act on the basis of your lie. No need to wait for additional proof of your actions and lengthy court proceedings - you have committed perjury by lying on the form, and can be punished for that as soon as possible. It's basically a way to legally speed up the process of catching unwanted persons.
Yes and people traveling from Germany who are a German citizens and visiting the US for a short time and were born after the second war are asked on the form traveling to United States Are you are Nazi?
The fear, stress and anxiety we faced for years because we couldn't afford the fee just to renounce (for my family multiple months of income) so had to suffer worrying that we might be unbanked was just hanging over me. I had asked if there wasn't some way the state department could waive any of the fee only to be told had to pay up front the full amount - it was clear they know that we didn't owe the US tax so needed to get money in another form. When banks sent out blanket threatening letters to all "US person clients" of account closure we were fortunate enough to have our CLN's but the thought that there will be many others that were potentially unbanked makes me feel sick. I still have anxiety over anything happening to our CLN's because it's the only proof we have that our freedom is bought and paid for.
Most countries have provisions for accidental citizens, usually by giving an opt in/out without charging them a cent. For those countries whose citizens that wish to expatriate to become citizens of another country the fee is less than 1/3rd of the US and can in many cases done by mail. I guess we can add that to the list other countries get right like healthcare, affordable higher education, public transport....that the US fails to do for the people living within its borders.
It's always so interesting to learn about this topic. I'm not American, but I'm from the EU and my husband's a third-country national, we're dealing with all kinds of documents to just let him live with me. I feel you, the bureaucracy is just too much for the ordinary people.
UK citizen here who has married a US citizen and I have gone down the naturalisation path and am US citizen too. Living in both countries. Taxation is incredibly stressful. Different tax years etc and paying accountants to hopefully sort it out, expensive.
If you are an American citizen, but not living in America, you shouldn't be taxed. If this in meant to punish tax dodgers, it's failing miserably, cuz those people have founds ways around this
And yet the system wont be improved because of the money made by the tax accountants that gets fed through to the political lobbyists.... or am I cynical?
the IRS and the healthcare system - failing to perform the task they were created to do, but succeeding wonderfully in enriching the entities created to manage the system.
This is just insane. This is one of those things where surely the amount of money and effort they probably put into processing these things can’t possibly outweigh the money they get back. Anyone rich/corrupt enough for this to actually be aimed at them is bound to either just lie on the form anyway, or they’ll have a good accountant who’ll figure out how to save them loads on what they need to pay. They’d be better served either following up offshore account leads, or coming up with smarter ways to tax big corporations.
Just so I don't feel like I have to answer this question every individual time I see it in this comment section, America has a different idea, definition, and connotation of freedom. Basically, what the US calls freedom would be more closely thought of as how every other first world nation would define a kind of anarchy.
What do expect when your government is The Three Monkeys - hear no evil, see no evil, and speak no evil, but lock you in or up anyway - with overwhelmingly dominant power? Unresponsive government is the source of most of the ills in most countries, and there will be a subset of people who would prefer no government at all because of their frustrations with them.
I’m a dual US/Portuguese citizen and these videos are the things really making me question if I’ll ever actually leave the US. It’s terrible they make it so difficult to live in this country, and then punish you if you’re able to actually leave.
Not an American, but the IRS argument they shouldn't have to help you within a certain timeframe should logically impinge not only on your right to pursue happiness, but also your liberty. It's one of the stupidest international laws out there.
I'm brazilian and I'm completely shocked here with this vídeo!!! It took me just few hours to complete my tax form and 95% of it was spent looking for my medical bill receipts since I never remember where I put them... I can do it online. Brazilian IRS provides an app, for both Android and iOS devices, and even a pre-filled form!! And my IRS form is considered "difficult" to fill, cause I have investments, income from a rented condo and I receive my son's alimony. But the most surreal for me is that even citizens who were born in other countries and never ever lived in the US have to pay taxes for the american government!! WTF????
10 years ago, I read a report that compared the complexity of tax systems (for individuals, not corporations) and Brazil was ranked as worst. The US did not make the top 10. During that 10 years, Brazil has evidently made big improvements while the US has gotten worse. However, if the researchers were to isolate the US taxation of non-residents, I am sure the US would be the most complex. A simple declaration of a pension fund requires 160 hours as estimated be the IRS. Most accounts will charge between 2000 and 4000 to do a pension fund declaration for Americans overseas. It's obscene.
I am really surprised no one has filed a federal lawsuit against the US Government on this issue. It is pounded into us from school that there is not supposed to be taxation without representation. But when you no longer live in the US and you have dual citizenship, this is precisely the case! So it seems to me that this law is unconstitutional. I wish a US constitutional lawyer would chime in here about what they think of this. Depending on your tax situation, it seems like it might actually be cheaper to sue.
And don’t forget having to file in your used to be home state! The system is completely pointless and causes me so much stress and anxiety every year, thinking I’ve forgotten something.
It is protected by a cadre of cross-border tax professionals who are raking in big fees from the hapless double taxes American families. So... perhaps it is not pointless to them, but pointless to the nation as a whole.
Sad to hear about your IRS problems. I never really appreciated how easy NZ income tax is. If you only have the pay you earn at work, bank interest and student loan, these are sorted at employer and bank level. You don't have to file a tax return at all....ever
Same in Finland. We get this automatically filled tax return sheet that only needs to be sent back if it needs some corrections, otherwise no need to do anything about it. In the UK I have to file my tax return yearly, but at least it's easy enough to do that I haven't needed an accountant yet although I'm self employed. The USA sounds like one of the least free countries in the world in so many ways.
America. The land of the "free" I spent a few years out of the UK and when I returned the Inland revenue wanted to know where/why/when inside leg measurements. They were politely told to mind their own business and that was the end of that.
I recently had to file a US tax form (we got equity from a company :)). So, how did it go? It frikin sucks. NOTHING can be done online, everything has to be sent via post on paper. You need to pay tax or get a tax return? ONLY CHECK. There is no bank in Poland that handles checks in any capacity. Great, thanks :)
Been thinking I might want to get citizenship somewhere else but this just sounds awful to deal with. It seems like the biggest obstacle to living abroad
Even though I probably would never be allowed to immigrate to the UK, because I'm disabled, without marrying a wealthy UK citizen to support me long enough to get UK citizenship, this would be the one nice aspect for someone like me. I can't work now in the US because I'm not allowed to have any income that would do me any good without losing the meager help you can get in the US for medical care.
I am a naturalized Dutch citizen who emigrated from the States in 1974. At the time of naturalization, my US passport contained a warning that naturalization could have serious consequences for my US citizenship. I took that to mean I would lose it. So I was more than shocked to find out in 2016 that I was liable for US taxes. With the help of a Dutch organization set up to help those with this problem, I was able under a new law to submit tax returns for the previous 5 years. I then made an appointment with the US consulate here to renounce my US citizenship. (Three other people were there that day for the same reason.) That 'privilege' cost me $2300, in addition to the back taxes and fees from the firm that helped me submit the returns. I think the US is one of just 2 countries that holds its citizens liable for tax no matter where they live or earn their income. There were so many Americans wanting to renounce their citizenship that it took longer than normal to obtain my 'Certificate of Loss of Nationality' that I had to present to my bank.
America has always had a different definition of "freedom" than the rest of the first world. What the US calls "freedom" is basically a form of anarchy everywhere else in the first world.
Worked with a dual citizen, he was born in the US, but he told us that he has an exemption as he relinquished his green card. No working in the USA. How is this freedom in that you do not work in the US but still have to pay tax?
Justice is out of fashion, punish everyone by making them prove their innocence. At airports they have long had procedures for identifying suspected drug smugglers but the next stage is to class every passenger as a suspected drug smuggler.....George Orwell predicted a lot of stuff that is happening now but it took a few years longer to get going.
I can't wait for the day when I can renounce my U.S. citizenship. I have no desire to return to the U.S. and I currently only make around $8000 in a year, so when I do my taxes, it definitely sucks. Slowly getting there... 😭
I’m just curious, @Ellary, do you already have another citizenship in the country where you live and work right now or are you still currently working on it residency-wise? What’s your other nationality (if you already have another one) and what country do you live right now?
@@PaulMaglaya No, unfortunately I don't have citizenship in another country. I'm still very far away from reaching my goals, but I've been slowly working towards it. My financial situation is the main thing that's been holding me back. I'm currently living in Georgia, but I don't plan on getting citizenship and living here permanently.
I’m a dual citizen because my dad is from the states. When I turned 21 my mom got a letter saying I owed taxes… I never worked in the states, I’ve never had a job at all, I hadn’t step foot in the country since I was 15. I had told my family I wanted to renounce my citizenship since I had no family left there, I hated the country as is (and I will say I went to many states as a kid and never liked it), and I’d have to pay taxes in a country I don’t live in and never will. Their reasons for why I should keep it; 1. other people want one 2. … that’s it
Yes, it does make me laugh when people state that some would kill for US citizenship. It's not a great reason to keep US citizenship when it's killing you.
Currently studying abroad in France, and I hope to return after I graduate from college soon. Really unfortunate about the whole tax thing. I'm glad I am a US citizen, but the more time I spend abroad, the more I realize all the weird and inconsistent things about how the US works.
You think a millionaire is in the top 1% ? Ohh, you sweet summer child... The top 1% for the US would be: "household incomes commonly exceeding $525,000 annually."
I live in the US and have for many years but I am not a US citizen - and this is one of the reasons why I hesitate to apply for citizenship, because it would potentially impact me later in life. It's just weird that this exists. And even more so in a tax system that is needlessly complicated and lacks automation (everyone has to file their own taxes more or less manually instead of the taxes being figured out for them like some countries do).
The penalty for failing to file FBAR is indexed to inflation, the minimum is not $10,000 but is actually circa $13,500. If the failure to file FBAR is deemed wilful the penalty is circa $135,000. This imposed on another nations tax resident for failure to file a form to the USA.
Great video, thank you! Even better if it made the point that Americans living abroad are taxpayers in their country of residence, often paying more tax than they would owe in the USA, and have to file even when zero tax is owing. Also, the American tax compliance is so complicated and privacy-violating that European banks and investment vehicles often reject American citizens as clients. Think about that for a second. Too complicated for banks, even though its their job!
US citizenship can cost you your career, your business, your retirement, your marriage, your privacy abd data protection rights and a whole lot more. This issue runs much deeper than most people could even imagine.
This is one of the problems of US citizens trying to comply from abroad without paying a pro $500 an hour, they end up partially filing or making a mistake and BOOM, welcome to the world of massive penalties connected to anything foreign to the USA. Heard of FBAR? Loads of people haven't and you have to see the penalties to believe it!
@@mikebreen2890 fbar i honestly thought i didn’t have to because there is an agreement between france and the us where France reports everything automatically to the irs about Americans with a bank account 😫 and I always indicated that I had this account on my tax return wtf
@@caroline2095 This system of taxing residents abroad is so bad that people simply do not believe it, including many Americans abroad, for a while at least. Indeed, many have never heard of FBAR> The penalties start at $10,000 per unreported account if the failure to file was deemed accidental, wilful failure is a $100,000 penalty. Bad? They are adjusted for inflation, the wilful penalty is actually circa $135,000. The good news is that under pressure from the tax payer advocate who rightfully pointed out that these penalties were grossly disproportionate, you may well get away with paying nothing by fessing up. Or join the land of the sane and stop filing a damned thing, if you have no US assets or income they won't know if you are dead or alive.
@@mikebreen2890 wow….btw realized i have been filing fbar since i started working (just never realized that’s what it was called lol) but not the 3 years before that when i was a student/unemployed and had no assets or taxable income. My assets are pretty low still so hoping they don’t bother me 😂
@@caroline2095 In my experience, 12 years of it now as an activist fighting this insanity, if you don't bother the IRS from abroad, they won't bother you. ;-)
I’m with you all the way Evan. It’s such a dumb scheme. I have relatives who are accidentally American because one of their part so was born & grew up in America. So would help those relatives if they just damb well scraped the shitty scheme that is pretty much useless.
Eh? What? You have to declare taxes when you live abroad and pay taxes in two different countries? If someone was in the UK twenty years ago and has a parent from the US and hasn't even been to the US they have to pay US tax? That's insane and some kind of thing I'd expect from North Korea
Thanks @Evan Edinger for an excellent video highlighting the injustices of citizenship-based taxation. We need to draw as much attention to this as possible.
Literally every meeting with my UK accountant culminates in tormented screams of the undead
hahahahhaha
88th scream, this being of the Finnish variety
My husband was born a dual citizen because his mother is American but he was born in the UK and has never lived in America. Yet somehow, the US government started to say he owed them taxes which is insane. It was such a nightmare that he just decided to renounce his citizenship which cost a fortune too. Basically, they will hold you hostage until you pay them to let you go...
I’m just wondering when did your husband renounced his US citizenship/nationality and how much did he had to pay? Did he go to the US Embassy in London or to wherever the nearest US Consulate where you guys lived in the UK at the time?
I know people that have dual citizenship either because they were born in the US or have one American parent and they do their best to not remind the US that they exist. They don't even get a US passport even though that might be easier for them when travelling there. This system is just weird, some haven't ever met their American parent, they just happened to have one on their birth certificate
Yep. All children born to US citizens are automatically US citizens, too, and subject to all US laws including taxes.
Sounds like freedom to me 🤣🤣🤣
I mean, he can just not pay anything, he's not breaking any UK law
My god, the more I learn about the US the more I dislike it. Not the people (at least not all of them in general), but the whole system. It's as if they try to build the worst system ever and see how far they can push it until the people revolt 🤨
Yep. The only serious competition they have comes from places like Russia, China and North Korea.
I am an American who has always lived in the US and can 100% agree. Our country is corrupt. The worst part is that in our schools they government heavily regulates what information is taught so we are taught a LOT of propaganda about our country being “the best in the world” so even Americans refuse to admit it’s a third world country wearing a Gucci belt. I hate this country and want to move but am too poor to afford the stupid double taxation rates.
They try to keep the people too ignorant to revolt!
@@meekos699 “A third world country wearing a Gucci belt” - as a Canadian, I find that absolutely poetic. 🙂
The more I learn about America nowadays, the more pity I have for Americans. American Dream, American Nightmare. I'm so glad that my personal American Dream ended in failure and my return to the UK in 1990
US-UK dual national here, living in UK. It's not only Citizenship Based Taxation that needs to end; FATCA needs to go too. As long as FATCA exists, Americans living outside the US will continue to experience difficulties with obtaining bank accounts, investing, and saving for retirement. A few examples of roadblocks I've hit over the past year: I can only find one company that will allow me to open a SIPP pension account, I can't open an ISA or any other investment vehicle (and if I did, the filing would be RIDICULOUS), and I had trouble finding a new mortgage provider when my current deal expired, all due to my US citizenship. I could go on; those are just the recent examples. I'm just trying to keep a roof over my head and ensure I don't have to subsist on cat food when I eventually become too frail to work in my old age, but the US acts like I'm some zillionaire money laundering drug lord terrorist, dancing on the deck of my super-yacht with a glass of Cristal in one hand, and flipping Uncle Sam the bird with the other.
Taxation based on citizenship is a feature of only two countries: the US and Eritrea. There’s a reason why other countries haven’t done this.
Imposing your taxation on other nations residents is a breach of other nations sovereignty, among many other wrongs.
@@mikebreen2890 Yeah - makes me laugh at all these Brexiteers who banged on about sovereignty, when a foreign government (the US) can still target UK citizens for tax income earned here in the UK. Doesn't sound very "sovereign" to me.
@@Suspended4thYT To be fair, pretty much every country on earth has caved in to FATCA and US tax claims on other nations residents. But you are right, this is not only an utterly unjust claim on individuals, this is a clear breach of UK sovereignty. UK decides UK residents need tools to top up the lousy state pension and provides those tools, USA takes tham away with punitive taxation and the penalty laden reporting from hell.
Actually, most countries followed the US lead and now do this. FATCA became CRS… and CRS forces your bank to forward all your financial details to your (non US) country so they can check on you.
Maybe other countries aren’t as explicit in the form filling - but it happens.
@@albedo0point39 FATCA and CRS are worlds apart.
FATCA forces nations to send the personal and private financial data to a country where people do not live.
CRS sends data from where a person does not live to the nation where they do live.
CRS helps enforce legitimate taxation, FATCA helps enforce illegitimate taxation.
Trying to leave the US sounds an AWFUL lot like trying to leave an abusive relationship or escape a cult... I AM American and try to explain this every time someone tells me to "just leave if you don't like it." Yea Jimbob, as much as I would LOVE to move to a MORE FREE country, our lovely government makes it damn near impossible. Unless of course you are rich. And Jimbob never believes me. Like I have not seriously considered and researched this. Sigh...
I fucking hate this law. It really does seem like theft: a payoff for no benefits. I'm academically undesirable to other countries anyway, so I figure I'll just move to a slightly nicer state someday.
It really is! I've read a lot of expat stories and from what I'm seeing, the US is one of the hardest countries to leave. I'm still determined to leave this country behind, but it won't be an easy feat. Unfortunately your best bet is to either get married to a foreign citizen (and they would have to agree NOT to move to your country) or find a good job abroad (it's not impossible but unless you're a doctor or something, it will be hard and you'll likely have a citizen of that country chosen over you but that's pretty standard). But I do wish you luck in finding a way out, or at least ending up in a better place.
Yes!! Spot on
The cult and abusive relationship analogies have been made many times. After 12 years of paying close attention to this issue I can tell you without doubt, living outside of US borders is punishable under US tax code and associated laws. Land of the free, my ass.
@@TuliTheUnruly they have plenty of digital nomad visasif you work online you don’t need a degree x
US Citizenship-based taxation is a severe moral crime, and I hope it goes away in my lifetime. It obviously isn't sustainable for Americans abroad or the IRS, so what's the point?
Money obviously. They get to keep it interest free before returning it as tax return.
If you earn more than $112 000 per year, you probably afford to pay Uncle Sam taxes from exceeding amount.
@@kognak6640
If you don't make enough, you still have to do paperwork. Unless you willing to spend time to workout both local and USA irs papers. You'll to pay someone
@@RandomPerson-tz7wk That doesn't happen, as far as I know, in the situation of dual citizen taxation.
@@jwb52z9 apparently does as Evan is dual citizen
I'm American living in Ireland the last 22 years (dual citizenship), and found out in 2014 I had been required to file with the IRS since the year 2000 (when I left the US for the last time). I earned so little that I didn't owe any money (I think the Foreign Earned Income Credit is quite generous - currently $106,000 a year), but the fact that I have to file causes my anxiety to spike like crazy. I've never earned enough to actually have to pay tax (if you're married to a non-US citizen, tick married-filing-separately), but it is some amount of bullsh*t that I have to file at all. I do it all myself and always have, because I refuse to pay an accountant when I don't owe anything. If you ring the IRS (the foreign filers number answers really quickly, the longest I have waited on hold is 11 minutes), they will answer your questions about how to file. The first year I filed, I rang them every day on my lunchbreak and they were super helpful (again total BS that they require this). I wish John Oliver would do a segment about it and raise awareness.
The FEIE is not generous, it is absurd. Giving other nations tax residents a break before having to send money to the USA?
Secondly, it is SOURCE of income or gain that is likely to trigger taxes, FEIE only covers salary.
Now what about that unemployment benefit, the gain on your mutual funds, the sale of that home....
@@mikebreen2890 I live a pretty simple life, so I have never come anywhere close to the FEIE. I agree it's ridiculous to require non-resident citizens to file every year (I did state that 3 times). I don't have mutual funds, don't plan on ever selling my home, and if I ever earn 6 figures a year, I guess I'll hire an accountant to help me figure things out or find loopholes like a rich person. Of course, I always hold onto the hope that they'll do away with this requirement.
@@melissashiels7838 The problem with DIY filing is people are usually putting themselves in more danger than if they simply stopped filing.
12 years now that I have watched this closely and one thing stands out crystal clear - it is those who try and comply that get hurt, those that don't don't.
I have seen people penalized $250,000.00 for failing to file a 3520-A on time, when no tax was avoided or evaded. Just the timing of the form was out. Who even knew that a Canadian residents daughter needed to file a foreign trust form for her Canadian education savings plan?
On FB recently was a lady persuaded to "come clean" convinced there was no tax as she had a very modest income only to find she has a large bill based on her French unemployment.
12 years I have watched this closely now and one thing has become abundantly clear, crystal clear. It is those who file that get hurt, those who don't don't.
People with no real US connections, no US income os assets are better off not filing a damned thing.
@@mikebreen2890 yeah, my life has definitely been a bit worse since finding out I was required to do this. I cried for 4 days straight and couldn't sleep for a week over the terror of it. Every January 1st I wake up and think "It's a new year, oh sh*t, I gotta do my taxes".
I do travel to the US once a year to see my entire family, so as long as I want to keep doing that, I need to file (or the US government can refuse to issue a new passport). I could just travel on my Irish passport, but that means getting a visa (admittedly, it's not that difficult to get).
Once my parents are gone, or I am not physically able to travel anymore, I will probably give up my US citizenship. As much as filing taxes every year is a PITA, there's no point divesting myself of my citizenship until any inheritance or bequests are finalised. I still hold out a vague hope that someone like John Oliver could do a segment on it, it would create a groundswell, and eventually this requirement would be done away with.
@@melissashiels7838 The US only denies a passport tyo people that owe circa $53,000 in US taxes and all other avenues have been exhausted, they can't know you owe anything unless you file.
Visiting the US as non filer is no issue at all.
I'm an European living in the US. Been here 13+ years at this point. People are shocked when I tell them I'm not a US citizen. I point to your video as to why, as I do plan on moving back to Europe at some point.
Do you have a green card? If so, find out the precise legal definition of "US Person"
@@lausanneguy abandoning a green card is far easier than renouncing citizenship though.
@@LiqdPT Living in the US without a green card makes you eligible for deportation. Either you are keeping up your green card in order to live in the US long enough to apply for citizenship, or you have overstayed.
@@argusfleibeit1165 we're talking about someone leaving the US though. If they leave the US on a green card, yes initially they would still have to file us taxes but you can abandon your green card and be free from that burdon
After 7 years you are going to be subjected to US exit tax like any other citizens.
I'm in my 5th year living outside the US and I was trying to do my taxes and had to make one of the new IRS accounts to access some information that I couldn't receive by mail because, spoiler alert, I don't live in the US. It legitimately wouldn't let me make an account without a US mobile phone number that was documented in my name. I tried using various family members' numbers, none of them worked. The alternative was to receive a piece of mail in 10 business days (probably more like 15-20 given that I live outside the US) to a US address to prove that I was who I said I was. Keep in mind, this was after giving them scans of my birth certificate, passport, social security card, and having provided a video scan. They also had a thing where I would have to wait 2-3 business days to video chat with a representative - who has this kind of time??? I'm just trying to file my damn taxes that I shouldn't have to do because I don't live in your goddamn country, why is this so difficult???
bureaucracy - where monolithic stupidity is a characteristic, if not a virtue.
I wonder how they would handle someone dying, and then a relative/dependent trying to convince them the subject was dead.
'Mr Alfonse Aardvark is deceased, he is in no position to pay tax.'
"That may be so, but he will have to contact us by phone to verify his status'
'.......'
Hi Thatcher, send your comment to your senators and rep and the Ways and Means/Finance committees of the House and Senate. Also to Democrats Abroad Taxation Task Force and Republicans Oversees. We've got to wake up Washington.
Just don’t pay it? What are they going to do? 😂
@@CoBaLe Washington have been told that this system is a disaster many times, they are not interested in doing anything that would allow US citizens to leave the tax system by leaving the country. For a nation so damned sure the whole world wants to live there, they sure have gone to some lengths to make sure nobody is free to leave.
@@REAZNx The USA currently holds international banking laws that allow them to freeze assets in almost any country in the world. "Don't pay it" puts you and your entire family at risk of losing any bank accounts associated with your name, including business accounts.
The fact that the US could still force me to fund their broken system if I leave the country upsets me. It was on the tip of my tongue to just say "well that's why I don't want to be an expat, I'm going to renounce my citizenship" until you mentioned the price. Granted I'd still rather pay the price of renouncing my citizenship, but I also realise that's either not an option for everyone or that some expats don't want to do that. I still find it incredibly messed up though, like they're punishing you for leaving "The Greatest Country in the World."
If they think you renounced for tax reasons, usually can be banned from ever reentering the US too.
That and thr huge fees were results from all the expats immediately renouncing their citizenships when this horrible system was implemented.
It really says a another about the US when they make us pay for the privilege of not being an American.
You mean the greediest country in the world.
That's the sad truth :(
It's a horrible way for a country to treat its former citizens and just goes to show how little the country cares for its people. Like I said they're basically punishing Americans for leaving the country and renouncing their citizenships.
@@LittleRedIrishRover or they’re desperately trying to stop people leaving because they don’t want them knowing the ‘Greatest Country on Earth’ moniker is a lie.
I lived in the US for 20 years as a Permanent Resident. I never became a citizen because of the long arm of the IRS. I returned to the UK in 2018 and gave up my Green Card in 2020. Form 8854 is the final accounting of your entire global net worth so the IRS can determine if you owe them EXIT taxes!!! A tax on everything you have (some of which was previously taxed) in order to leave the country. It took me the best part of a year and several thousand dollars to file the 8854 and fix FACTA issues for the previous 5 years of tax filings. I’m still waiting to hear whether it has been accepted. If you do decide to renounce your citizenship Evan, Form 8854 will bring you to your knees in despair.
You had to do all of this even though you weren't a citizen and only had a green card?
As a German who is about to take her exams to become a fully fledged tax advisor's assistant here in Germany I'm appalled by the way the US taxes their citizens. Seriously, wtf? Like.. our income tax law literally states in its first paragraph who has to pay income taxes here and yes, it definitely doesn't talk about being a citizen. Only about having one's main place of living as well as making their income here. We were told that is also because the government (and those of other countries) want to avoid double taxation. (Not to mention that as long as the tax office doesn't ask me to - I with tax class 1 and just being employed - don't have to file my taxes because it is paid for every month when I get my salary).
I'm an American living in the US, and I'm generally very mild-mannered, but when I file taxes, it enrages me to the point where I sometimes scream because the system is so broken and corrupt.
You should move aboard to the free world
@@hotmechanic222 did you watch the video lol
@@hotmechanic222 You obviously didn't watch the video.
As almost every countries in the world. Corruption is well known in all wealthy nation and even in not wealthy nations. 😑
We decided to have democracy because we was sick of ancient monarchies, empires and dictatorship regimes. No! The democratic politicians act like ancient hierarcs. 😑 We need new revolutions to cut some heads.
Lol im Dutch. I literally go to the tax agency website, enter my login and check if they filled in things correct. Takes 10 minutes. Then i click "send" and thats me done for a year.
What made me angry was that when I was opening my bank account in Slovenia they asked me if I am subjected to taxation in the US and everyone is asked this when they open a bank account. Like how can I be asked this if I have literally no connections with US at all. If this would be another country there would be an outcry, but because it's US nobody cares.
It's not that no one cares. it's that only the US and Eritrea do this at all anymore.
The US gvt can make life very difficult for foreign banks that fail to comply.
US citizens each year are asked on our tax forms whether we have holdings in other countries or pay foreign taxes.
I work in a Bank in Australia. The US strong armed our Government into a Treaty that makes us report all possible US citizens to the IRA and flag their bank accounts - which get frozen until they supply their US Tax file number equivalent.
The many banks in Europe need at least occasionally access to the US market. The SEC is feared among banks in Europe, because it can shut of access to the US market.
Just bizarre that any US citizen living abroad have to pay any tax to the US. I’m Australian but now live overseas - the last time I paid tax in Australia was when I became a resident in another country.
Yep, as Evan says, only the US and Eritrea do this anymore. Remember, the US is basically all about money. They don't want citizens doing anything to profit from without getting a cut.
It's not that you have to pay taxes to the US, but to have to report all global earnings. There are tax treaties that allows Americans to not have to pay taxes IF they earn less than $85,000. If you earn more yes you'll owe taxes on the difference between $85k and whatever you earned
@@jbmcdoogle I see. But still, $85k isn’t that much, especially living in london. So you’ll be paying double tax over that amount?
@@jbmcdoogle The FEIE is now around $112,000 BUT it only applies to your salary! Anything not earned is liable to US taxes. There are loads of ways to be double taxed and thousands of ways to end up paying US taxes and the FEIE won't help one bit.
@@mister8765 No, you would take tax credits. But, and it's a big BUT, is any gains or income that is not earned is not protected byt the FEIE. You can be on French unemployment benefits and owe US taxes on that!
The whole system is absurd. As another US citizen in the UK, explaining to people here why I look like my brain is about to explode come this time of year is always such a shock to them. I'm "lucky" in that my taxes are relatively simple (because lol I don't have that much money), I can't imagine figuring it all out if I had actual assets. Though who knows, maybe 10yrs down the line they'll come back at me saying I filed these forms wrong every year and I owe them all my money.
"Just renounce your citizenship!" - Regardless of the fee, what if we don't /want/ to renounce our citizenship??? Sure I have no plans to move back to the US, but I still consider it "home", and I'd hate to make it a bureaucratic nightmare just to visit my family. I like having my US passport, and while I do think there are plenty of flaws in the US, that doesn't mean I'm not proud to be an American. I may not be gung-ho patriotic, but I'm still happy to be an American! It's a lose-lose and, as you say Evan, it doesn't even actually catch the people it's supposed to.
I'm an American also living in the UK for the last 4 years. When I filed my taxes this year, I was so stuck on some of the questions (this is the first year where I met the threshold of money earned outside the US so I had to enter more information) that I am seriously considering renouncing my citizenship but the fact that it is so expensive to do so feels like exploitation to me
$2,500 now....or more thousands over the years? Which is better?
What were the questions exactly? (if you don't mind me asking)
Presuming you do not intend to return to the USA, that $2,350.00 is likely the best investment you will ever make.
If you do want to renounce then check what capital gains you may have to pay for assets that you could 'potentially' liquidate (pension, house, savings') even if you have no intentions to do so at this time.
Quote:
"The US has a truly horrid exit tax for people leaving the US tax system by either renouncing their citizenship, or giving up a long-term green card. Unrealised gains in their assets, including their home, become subject to capital gains tax at the usual rate."
@@johnwellbelove148 Hint: Renounce, IRS can go pound sand.
I had a Belgian client, her parents died, leaving her a very wealthy woman, she met and married an American (actually a native born Russian who had become a US citizen). He husband and her never lived in the US. Her husband managed her wealth, growing her millions into many more millions. Her husband was a rabid US patriot. The US IRS contacted the husband, he contacted his accountants, after about 6 months of the IRS bull …., the husband killed himself. Under Belgian law all the husbands assets transferred to the wife. The wife liquidated the US assets, closed all accounts, reverted to her maiden name, changed their children’s names to her maiden name (they had been registered). Neither she nor her children have ever gone back to the US to visit, nor invested in the US nor put money in US banks or shares.
There have been other suicides over this issue.
Not an American, but I did live in New Jersey for the last 3 years of high school. My parents lost bank accounts over even *moving* to the US, so many banks in our native country just saw that we lived there, and even that already caused them to nope out. I had to postpone being able to have a bank account till we moved back to Europe, just so I would have no ties to being a "US person" in any capacity.
1.) Were you guys LPRs (lawful permanent resident) aka green card holders when you guys lived in New Jersey?
2.) How did your guys’ banks in Europe knew that you guys were living in the USA at the time?
A lot of banks in the UK won't touch American citizens. It would in effect contravene their own data privacy rules, as it would involve giving away customer data to a foreign government.
@Vercingtorix7 It's sensible. A lot of banks in a lot of countries reject American customers.
As an American living and working in Fiji, it's a real slap in the face to have to scramble every year to figure out how to do my taxes abroad. I have to do both federal and state taxes but I haven't lived there for 3 years now... I don't earn any money there.. like why??
Julia.. just don't pay them, it's quite silly
@@User37717 And if Julia returns to the USA, she will be arrested for tax evasion. Also, any money that she has in the USA, would be frozen. Furthermore, depending on the treaties of the nation that she is at with the USA, she could be detained, arrested, and sent back to the USA as a criminal. That in turn would possibly prevent her from being allowed a passport later on as she might not pass a required background check - also affecting potential job opportunities, too.
You know what's weird? I'm a Polish citizen and from time to time I have to tell my Polish bank whether I'm obliged to pay taxes in US (there is a form about it I have to fill).
Same here in Malaysia.
Once they find out you're not an American citizen, that should stop.
@@jwb52z9 Not necessarily. They'll keep checking in case the situation ever changes.
This is mentioned in his video on US taxation for expats, it really is his best video.
@@RandomPerson-tz7wk for expats yes
For a Malaysian- no dramas. They have our IC numbers and we aren’t allowed dual citizenships anyway as adults.
I haven’t paid taxes in malaysia since I left- I did advise the Income Tax peeps that I was leaving and filed the final taxes accordingly.
My husband is Canadian American but lived most of his life in Canada. Back in the early 2000s he renounced his citizenship. He was in his early 20's when he renounced American citizenship and it cost under $500. It was getting awkward with Canadian banks already back then.
I am SOOO glad he did that before we married and had kids. Our incomes have grown a lot since then and it's bullshit paying American taxes when he wasn't educated in the US. He's one of the 'accidental Americans'. He never needed/wanted an American passport or American services. Why punish him?
You usually don't actually have pay any taxes you just have to do all the complicated calculations. This is what makes me so annoyed that they haven't scrapped the whole thing. I really doubt they are making much money. You'd only pay taxes to the USA if you're in a country with no bilateral tax deal, or a country that charges lower or different taxes. In the UK the taxes are higher so the USA doesn't get to see any money. It might differ in different places with lower tax.
I'm an American who has been living in Japan for almost 4 years & I am so thankful that my parents are retired accountants. I didn't know about all of this before they mentioned it and I'm not sure if my American friends in Japan know about this. I'm definitely going to share your previous video about this with them.
The American system is so weird to me. I'm Dutch and I've lived in Canada and the UK and everywhere I've lived I *only* had to pay tax in the country where I was living/working. The countries' tax agreements made sure I wasn't double-taxed. If I have income from the Netherlands for any reason (or any other country, really) I just declare that to HMRC and they sort it out.
Also, my US clients (I'm freelance) are the only ones who need me to sign a form declaring that I'm definitely not American and don't live in the US and they shouldn't withhold tax from me. Every single time for even the tiniest jobs. One time a client sent me the old version of the form but I was so familiar with it that I immediately noticed and could tell them they needed to use the new one.
I used to work with an American lady that's married to an English man (we're still friends too) and I can remember her annual nightmare of having to fill out her American tax returns. It's a bonkers system isn't it?
I worked at a bank in Austria, when FATCA came into affect. I had to go through hundreds of physical bank account files to check if there was any connection to the US. The bank had to provide documents that we did this. It was a horrendous amount of hours and I cannot put into words how mind numbingly boring it was.
Meanwhile the IRS spent $380 million implementing FATCA and never got it to work, so Austrian banks did this for nothing. Now the IRS says they never got funding (which is a lie) and they need more money. They also admit that the US broke its promise of reciprocity. This has allowed the US to go from not being a tax haven to being the #2 tax haven behind the Cayman Islands.
@@markfitzpatrick7186 what made it even more annoying at the time was, that when making the FATCA deal the Austrian finance minister managed not to get the reciprocity to get information of funds of Austrian citizens in the US. 🤦🏻♀️
Why are you paying tax to a country you aren't earning money in but Google, Apple, Amazon etc avoid paying tax in the country they are earning money in!?
I am an Australian living in Australia but find this very werid.
I’m an American living in the U.K. I have a bit of an easy go of this whole thing at the moment because my salary is paid in the US. If the plans we have for this year work out, I’ll be earning an income in the U.K. instead and I am dreading having to do all of this.
When I’m eligible, I will be renouncing my US citizenship as there are no benefits to keeping it.
Wasn’t the reason for the departure of the 13 colonies from the British Empire: “no taxations without representation”?
There is "representation" though, the way law would mean it. Someone would have to make a big legal issue and try to prove that expats are not properly represented somehow in the US, so they shouldn't be subject to US taxation. So far, no one has done that. It would be a monumental effort with almost no hope of working in American courts.
Americans abroad DO have representation, though. They vote in the state they last resided in.
@@timothyreineke5691 Except that no, we don't. It's nearly impossible to register to vote for any election if you live outside the country.
@@adiuntesserande6893 It's usually as easy as emailing your county elections office and asking for the forms.
Source: Have actually done this while abroad.
@@timothyreineke5691 if someone were a US citizen through one of their patents but had never been resident in any of states in the US, where would they vote?
I have a few friends from the UK who are dual UK/US nationals and were never told that they had to file US taxes by their parents. When they finally did find out they were left with the choice of spending thousands of pounds in legal fees to report their very small incomes of the previous years or never visit the US again essentially. They can't even legally give up their US citizenship until they fix the problem and even then, the US charges you to do that. Yes, the US CHARGES YOU TO RELINQUISH YOUR CITIZENSHIP. WTF?
The double taxation stuff has been a big item here in the Netherlands lately. Apparently a lot of people who have never even lived in the US do now also have to pay those double taxes. The accidental Americans. They have American citizenship and, as such, they're required to pay those taxes. Complete BS if you ask me. Especially because they need to pay those taxes for atleast FIVE years before they can give up their American citizenship so they won't have to pay those taxes anymore. Many of them intend to do so.
The amount of paperwork is also shocking. Filing my taxes in the Netherlands litterally only takes me about three minutes.
US citizens can renounce without being tax compliant, the US government don't like to make this too obvious and neither does the tax complaince industry. Yes, I am totally sure of this.
@@mikebreen2890 I read if US citizens pronounce without being taxed compliant for the last five years and the IRS will charge them a big penalty
I read a few US citizens to announce without being tax compliant for the last five years than the IRS will charge them a big penalty
@@enjoyslearningandtravel7957 It's not true, and how will the US make them pay any penalty? Nobody would help the US enforce it.
What Evan is explaining here is 12 minutes of The United States being the land of the free... As long as you don't leave.... A bit Hotel California if you ask me....
Nope, you pay your tax regardless where you work. In or outside the states. So depending on where you are. You might get double tax, the local irs and USA irs.
dude, you nailed it! )))
And as long as you're not born abroad from an american parent! That's what blew my mind!!
This is another wonderfully informative opinion piece. As someone who literally just has to check if the info the tax service has about me is correct and then agreeing to it. This system is overcomplicated and only serves the rich. The worst thing is that the US and Eritrea are the only two countries with nationality based tax law. Eritrea, a dictatorship that will literally stretches its reach to other countries you have fled to and checks on you IN PERSON.
Yep. I met a US citizen who had lived in Canada since she was a child and when I mentioned to her about US taxation she knew nothing about it, and thought it was crazy that she’d be subject to US taxes when she didn’t live there and had no income from there.
Interesting fact. In the past few years every time my daughter has applied for car insurance or to open a new bank account one of the very first questions asked is ''are you or are you married to a US citizen?''. She can answer NO because she is British but did ask about the question. The answer was from the bank that if she was a US citizen they would refuse to give her a bank account, apparently it would mean that the IRS would then demand details of ALL their customers and their finances just in case one was a US citizen who hadn't been declaring his/her taxes. The insurance company merely stated that they don't offer insurance to US citizens because it might mean the IRS look at their business and their customers and they simply don't want to have to deal with the hassles this causes, despite them being an insurance company and not a bank. Apparently it is in case a US citizen has insurance on property that they haven't declared to the IRS.
The only other country with such draconian tax laws is Eritrea, and even they only require tax on a mere 12% of your income. I have come to realise that every time a USAmerican states on social media about how free they are, their country is, and the rest of the world isn't that they have no idea of what they are talking about. When born they should have ''GI'' tattooed on their foreheads because every USAmerican is the property of the US government in the form of the IRS. You aren't your own person, you aren't allowed to decide where in the world you live and if you DARE to LEAVE the USA for another country then they are going to ensure that YOU PAY for daring to leave the fabulous, and very definitely UNFREE motherland for true freedom in the great wide world outside. You are about as free in many ways as those living in N Korea are.
I was born in America but have lived in the UK since I was 5 months old. The first I heard about having to file taxes to the IRS was from your earlier video on it. I am still working on trying to get a Social Security Number, so I can then file my taxes, and THEN look into how to renounce my American citizenship. Oh the JOY of surprisingly being an American! Land of the Free, indeed.
"Freedom" has a different connotation in the US. What the US calls "freedom" would really define a form of anarchy in the rest of the first world.
Why on earth would you file taxes?! Slap yourself around the head right now! If you want to renouince then just do it, forget the damned filing taxes!
@@mikebreen2890 I would love to just renounce but you can't until you're up to date with the IRS. Otherwise, it looks like I'm renouncing just to dodge taxes. They don't see me as a Brit, they see me as an American who has moved abroad and surely the only reason you'd want to leave America is to go to a tax haven. Because UK taxes are so much lower than theirs.
@@mikebreen2890 Because you cannot renounce US citizenship without getiing a social security number and filing tax forms, essentially proving that you have US citizenship to renounce. In the meantime European banks will be very reluctant to have anything to do with you as you are subject to US taxation
@@mikebreen2890 When you renounce your citizenship they will that you report all of you and your partners financial situations, so that then can tax you on historical gains you have made, including your (UK tax free) pensions, ISAs and property.
Man this video is depressing. I would love to leave the US someday, but seems like a ridiculously high price to pay. Ridiculous that someone living elsewhere still has to pay taxes to their "home" that is no longer their home
It took me about 3 years to renounce citizenship because the consulate was closed during Covid. As a U.S. citizen, I was unable to access the services of my own consulate. Meanwhile, I continued to file every year. Even after you renounce, you have to fill out a big expatriation tax form listing every asset you have and you are taxed heavily on it over a certain amount. It's like paying death taxes at the end. This is in spite of the fact that, when you renounce, you swear before the officer that you "absolutely and entirely renounce [your] United States nationality together with all rights and privileges and all duties and allegiance and fidelity thereunto pertaining." It seems to me the duty to file the expatriation tax forms afterward is thus renounced...no?
I remember when I worked in Hong Kong, as Brits we would only pay 12% but the Americans would need to pay the 12% to the Hong Kong Government and then the difference to the US. I subsequently worked in the US for 10 years and every time I went t do a O1 visa filing they would ask me if I wanted to go for naturalisation and in the nicest way I was like "hell to the no" as I knew people who had one it then left and were living the nightmare you describe........
the association of accidental americans shared your video! it's a great one btw, as an american living abroad since age 8, I am so grateful to have found your channel, I wouldn't know this otherwise! I get all my IRS news from you hihi
It’s a really sad situation when you feel like you have to relinquish your US citizenship to avoid having to pay taxes when you don’t benefit from those taxes. I would hate to be in that situation - especially if you are an expat.
It's not just taxes, this system is wrecking lives long before taxes are demanded.
@@mikebreen2890 YES this. Its not just taxes. CBT makes normal actions like opening a bank account or saving so much harder. And let's not forget about the emotional damage, stress, anxiety... its so much more than taxes.
@@alexis.kiyoko I understand, absolutely.
@@alexis.kiyoko I agree, emotional stress about taxes over a long time can damage your health
I work for a Norwegian company that send expats to the US - IRS also require Norwegian citizens to file for years after they have left for unknown reasons..
There is a complex set of rules that will keep you on the hook for up to 3 years - this same rule will also prevent you from regaining access to local financial services during that time. Generally, local banks will quarantine non US citizens for 5 years after they lived in the US.
Along with taking two years or more to renounce citizenship and being unheard as a foreigner. If you have an open fraud case against a school, even with plenty of evidence.. if you are turned down once it can take multiple years to escape an illegally founded debt taken through identity theft (My student loans were taken while I was not in the school, and I have a letter from the school which says I was not even enrolled and could not have taken the loans.) The government informed me they will garnish me and that it could take up to 6 years to get my case resolved.
This is something that causes hesitation for me about moving out of the US and I honestly think that's part of why they do it
Long story short, the US would rather tax the people who are trying to build a life outside of the US("how dare you leave the best country in the world") than install higher taxes on the super rich living in the US.
The system is broken in so many ways. This tax things SUCKS and make no sense. I'm one of those ppl who has American citizenship because of having a parent who is American -- I've never lived in the US and haven't been there for years (in part because of COVID) and have only visited for, at most, a week at a time. I oddly feel bad for the IRS here too though. They have these laws pushed on them that they are supposed to regulate, but then are also severely underfunded/understaffed so they can't do the miserable work they have been tasked to do, and then we're all annoyed that we have to deal with the IRS and how poorly they do their job. It seems like the real villains here are the law-makers and budget-makers who creating these insane laws, hobble the organization tasked to oversee them, and then scapegoat them for trying to do their job.
It really annoys me that non-resident, non-citizen spouses are also liable for US taxes on their non-resident income. We don't live in the States and we never will.
When my husband and I retired in the US the IRS charged us a penalty if we paid our income tax up front every year. If we wanted to pay it at the time of filing they charged us and additional $250. This was in addition to what we payed according to the tax tables. When you have no dedications to speak of that’s a terrible price to pay. No so much in money, but my God, the principal. “We don’t want your taxes all at once, we want it four times a year”. Makes NO sense to me, but I’m a logical thinker.
It seems like the irs they should’ve been happy having all the money at once instead of spaced out quarterly.
You would think it would but if they heard from us only once a year what would the others do the other 11 months of the year?
This looks like torture for me!! OMG!!
Really appreciated this, will be sharing to my “US expat moms in the UK” fb group. The US tax system is infuriating for those living in the US, can’t imagine the stress of those living abroad. When I asked how to handle the double taxation issue (while considering a move), I was told to hire an expat accountant. Crazy to think that after 12 accounting credits in business school, I still wouldn’t be able to handle it myself. 😳
Have you noticed that Moody's tax now does a renunciation of citizenship service? It's because they know full well that they do not have answers to the problems, because the only real solution is to lose that damned citizenship.
When I heard my American colleague talk about this, it blew my mind. It's nuts! You have to be bloody rich or retired to leave.
The study is looking very lived in x Plants for the win! (Is that a new fern???)
Nice. It is "Alice in Wonderland" but the lament from every member of Congress "But that is not what we intended..." is just plain insulting. I find it particularly amusing that Senator Warren thinks it is ridiculous for the average Americans to have to spend 11 hours each year filling out their tax forms. Apparently, she is clueless about was the IRS thinks about that. The IRS used to indicate how long it took to fill out a form. I am sure that they stop doing it because it got embarrassing. If an expat has a small business, they have to fill out the same form as Google and Apple. It is called the 5478. The IRS admits that it will take over one month of full-time work every year to fill it out. Isn't that scandalous?
EXACTLY!!! Warren is a strong advocate of double taxation of non-residents and FATCA. She argues that these are necessary to catch billionaire tax cheats, but the overwhelming evidence is that the wealthy are not impacted by these laws while ordinary people are crippled by them. She cries foul that Americans are paying 100s to file taxes, but ignores that Americans overseas pay 1000s to file their complex US tax returns. She calls herself a progressive advocate of the poor, but has no mercy on the hapless poor Americans overseas who have to fill out a 3520A on their meager mandatory local pension fund that will be double taxed into a negative balance by US double taxation.
Studio is looking fantastic!
The thought of having to file a tax return every year (and later all these forms) always made me angry, and it seemed the height of hubris for the USA to demand that from its citizens. I also had some problems - not many, but some - with banks because of my US citizenship. It was a relief when I renounced it (unlike you, I had no choice; I wanted German citizenship, and Germany does not allow US citizens to keep their citizenship when they become German citizens). That was 8 years ago. Look at all the money I have saved in tax accountant fees!
I'm not an American but I know a lot of banks worldwide must have a KYC (know your customer) procedure and forms specifically for US citizens and anyone who's legally defined as a "US person". If a bank outside the US chooses to avoid the hassle of having said KYC procedure they just usually refuse US citizens from becoming their customer
And yet here in Australia with myGov it now takes me 10 minutes to do my tax
your audio is very good. i don't feel like my ears are bleeding nor do i feel like i'm struggling like crazy to hear you.
Thanks :) I put a lot of time and effort into my audio pre and post processing
You have to respect the naive optimism of the lawmakers who think that form filling will catch the bad people. It's like the immigration form that has the question "Are you a terrorist Y[ ] N[ ] ".
However, if they did nothing at all about it, they'd have an entirely different large group mad at them then.
These questions seems dumb, but AFAIK the reason for it makes some sense from a legal perspective. The idea is that if they do indeed find that you lied answering any of those questions on that form, they can immediately act on the basis of your lie. No need to wait for additional proof of your actions and lengthy court proceedings - you have committed perjury by lying on the form, and can be punished for that as soon as possible. It's basically a way to legally speed up the process of catching unwanted persons.
I always wanted to know what happens if you say yes to that
Yes and people traveling from Germany who are a German citizens and visiting the US for a short time and were born after the second war are asked on the form traveling to United States Are you are Nazi?
@@Tytan626 But is that a real question from the immigration form? 😂
The fear, stress and anxiety we faced for years because we couldn't afford the fee just to renounce (for my family multiple months of income) so had to suffer worrying that we might be unbanked was just hanging over me. I had asked if there wasn't some way the state department could waive any of the fee only to be told had to pay up front the full amount - it was clear they know that we didn't owe the US tax so needed to get money in another form. When banks sent out blanket threatening letters to all "US person clients" of account closure we were fortunate enough to have our CLN's but the thought that there will be many others that were potentially unbanked makes me feel sick. I still have anxiety over anything happening to our CLN's because it's the only proof we have that our freedom is bought and paid for.
Most countries have provisions for accidental citizens, usually by giving an opt in/out without charging them a cent. For those countries whose citizens that wish to expatriate to become citizens of another country the fee is less than 1/3rd of the US and can in many cases done by mail. I guess we can add that to the list other countries get right like healthcare, affordable higher education, public transport....that the US fails to do for the people living within its borders.
@Northern_Soul US tax code and FATCA is slavery, not freedom.
It's always so interesting to learn about this topic. I'm not American, but I'm from the EU and my husband's a third-country national, we're dealing with all kinds of documents to just let him live with me. I feel you, the bureaucracy is just too much for the ordinary people.
UK citizen here who has married a US citizen and I have gone down the naturalisation path and am US citizen too. Living in both countries. Taxation is incredibly stressful. Different tax years etc and paying accountants to hopefully sort it out, expensive.
If you are an American citizen, but not living in America, you shouldn't be taxed. If this in meant to punish tax dodgers, it's failing miserably, cuz those people have founds ways around this
And yet the system wont be improved because of the money made by the tax accountants that gets fed through to the political lobbyists.... or am I cynical?
Nope I’m fact it’s a know fact turbotax abd the like do this
John Oliver did a tax video.
the IRS and the healthcare system - failing to perform the task they were created to do, but succeeding wonderfully in enriching the entities created to manage the system.
The compliance industry are the only winners, this is a gravy train for them.
@@mikebreen2890 It's not a gravy train, its a gravy boat, far bigger and moves far slower.
This is just insane. This is one of those things where surely the amount of money and effort they probably put into processing these things can’t possibly outweigh the money they get back. Anyone rich/corrupt enough for this to actually be aimed at them is bound to either just lie on the form anyway, or they’ll have a good accountant who’ll figure out how to save them loads on what they need to pay. They’d be better served either following up offshore account leads, or coming up with smarter ways to tax big corporations.
You nailed it! Rich people can pay for good accoutants and lawyers to dodge the IRS...
Just so I don't feel like I have to answer this question every individual time I see it in this comment section, America has a different idea, definition, and connotation of freedom. Basically, what the US calls freedom would be more closely thought of as how every other first world nation would define a kind of anarchy.
What do expect when your government is The Three Monkeys - hear no evil, see no evil, and speak no evil, but lock you in or up anyway - with overwhelmingly dominant power? Unresponsive government is the source of most of the ills in most countries, and there will be a subset of people who would prefer no government at all because of their frustrations with them.
I’m a dual US/Portuguese citizen and these videos are the things really making me question if I’ll ever actually leave the US. It’s terrible they make it so difficult to live in this country, and then punish you if you’re able to actually leave.
Not an American, but the IRS argument they shouldn't have to help you within a certain timeframe should logically impinge not only on your right to pursue happiness, but also your liberty. It's one of the stupidest international laws out there.
The original taxation video is how I discovered this channel, glad to have a part 2!
I'm brazilian and I'm completely shocked here with this vídeo!!! It took me just few hours to complete my tax form and 95% of it was spent looking for my medical bill receipts since I never remember where I put them... I can do it online. Brazilian IRS provides an app, for both Android and iOS devices, and even a pre-filled form!! And my IRS form is considered "difficult" to fill, cause I have investments, income from a rented condo and I receive my son's alimony. But the most surreal for me is that even citizens who were born in other countries and never ever lived in the US have to pay taxes for the american government!! WTF????
10 years ago, I read a report that compared the complexity of tax systems (for individuals, not corporations) and Brazil was ranked as worst. The US did not make the top 10. During that 10 years, Brazil has evidently made big improvements while the US has gotten worse. However, if the researchers were to isolate the US taxation of non-residents, I am sure the US would be the most complex. A simple declaration of a pension fund requires 160 hours as estimated be the IRS. Most accounts will charge between 2000 and 4000 to do a pension fund declaration for Americans overseas. It's obscene.
I am really surprised no one has filed a federal lawsuit against the US Government on this issue. It is pounded into us from school that there is not supposed to be taxation without representation. But when you no longer live in the US and you have dual citizenship, this is precisely the case! So it seems to me that this law is unconstitutional. I wish a US constitutional lawyer would chime in here about what they think of this. Depending on your tax situation, it seems like it might actually be cheaper to sue.
And don’t forget having to file in your used to be home state!
The system is completely pointless and causes me so much stress and anxiety every year, thinking I’ve forgotten something.
It is protected by a cadre of cross-border tax professionals who are raking in big fees from the hapless double taxes American families. So... perhaps it is not pointless to them, but pointless to the nation as a whole.
American living in Germany since 2016 and its stressful! Just filed my taxes and am still not sure I did it right.
Sad to hear about your IRS problems. I never really appreciated how easy NZ income tax is. If you only have the pay you earn at work, bank interest and student loan, these are sorted at employer and bank level. You don't have to file a tax return at all....ever
Same in Finland. We get this automatically filled tax return sheet that only needs to be sent back if it needs some corrections, otherwise no need to do anything about it. In the UK I have to file my tax return yearly, but at least it's easy enough to do that I haven't needed an accountant yet although I'm self employed. The USA sounds like one of the least free countries in the world in so many ways.
@@durabelle You don't have to file a tax return in the UK unless you're self employed. It's sorted at employer and bank level too.
@@phoebethegreat6253 True, that's partly why I mentioned being self employed. I can't even imagine how difficult that would be in the US!
You really never have to file a tax return? That's amazing, lol 👌🏻
Same here in Brazil! I can do it directly via website. Brazilian IRS provides an app, for both Android and iOS devices, and even a pre-filled form!!
America. The land of the "free"
I spent a few years out of the UK and when I returned the Inland revenue wanted to know where/why/when inside leg measurements.
They were politely told to mind their own business and that was the end of that.
I recently had to file a US tax form (we got equity from a company :)). So, how did it go? It frikin sucks. NOTHING can be done online, everything has to be sent via post on paper. You need to pay tax or get a tax return? ONLY CHECK.
There is no bank in Poland that handles checks in any capacity. Great, thanks :)
Been thinking I might want to get citizenship somewhere else but this just sounds awful to deal with. It seems like the biggest obstacle to living abroad
Avoid the USA and Eritrea, and you'll be fine on the taxation front.
Even though I probably would never be allowed to immigrate to the UK, because I'm disabled, without marrying a wealthy UK citizen to support me long enough to get UK citizenship, this would be the one nice aspect for someone like me. I can't work now in the US because I'm not allowed to have any income that would do me any good without losing the meager help you can get in the US for medical care.
It takes money and knowledge but here are the people I watch in case I win the lottery
@Offshore Citizen
@Nomad Capitalist
@Wealthy Expat
I am a naturalized Dutch citizen who emigrated from the States in 1974. At the time of naturalization, my US passport contained a warning that naturalization could have serious consequences for my US citizenship. I took that to mean I would lose it. So I was more than shocked to find out in 2016 that I was liable for US taxes. With the help of a Dutch organization set up to help those with this problem, I was able under a new law to submit tax returns for the previous 5 years. I then made an appointment with the US consulate here to renounce my US citizenship. (Three other people were there that day for the same reason.) That 'privilege' cost me $2300, in addition to the back taxes and fees from the firm that helped me submit the returns. I think the US is one of just 2 countries that holds its citizens liable for tax no matter where they live or earn their income. There were so many Americans wanting to renounce their citizenship that it took longer than normal to obtain my 'Certificate of Loss of Nationality' that I had to present to my bank.
for a country that brags about FREEEEEDOM, America really isn't very free is it?
America has always had a different definition of "freedom" than the rest of the first world. What the US calls "freedom" is basically a form of anarchy everywhere else in the first world.
the olny freedom they have is to die in a shool mass shooting.
Worked with a dual citizen, he was born in the US, but he told us that he has an exemption as he relinquished his green card. No working in the USA. How is this freedom in that you do not work in the US but still have to pay tax?
Justice is out of fashion, punish everyone by making them prove their innocence. At airports they have long had procedures for identifying suspected drug smugglers but the next stage is to class every passenger as a suspected drug smuggler.....George Orwell predicted a lot of stuff that is happening now but it took a few years longer to get going.
I can't wait for the day when I can renounce my U.S. citizenship. I have no desire to return to the U.S. and I currently only make around $8000 in a year, so when I do my taxes, it definitely sucks. Slowly getting there... 😭
I’m just curious, @Ellary, do you already have another citizenship in the country where you live and work right now or are you still currently working on it residency-wise? What’s your other nationality (if you already have another one) and what country do you live right now?
@@PaulMaglaya No, unfortunately I don't have citizenship in another country. I'm still very far away from reaching my goals, but I've been slowly working towards it. My financial situation is the main thing that's been holding me back. I'm currently living in Georgia, but I don't plan on getting citizenship and living here permanently.
@Vercingtorix7 Cambodia is lovely, but I have plans on the country I am wanting to immigrate to one day. Thank you for the information, however! 😊
I’m a dual citizen because my dad is from the states. When I turned 21 my mom got a letter saying I owed taxes… I never worked in the states, I’ve never had a job at all, I hadn’t step foot in the country since I was 15.
I had told my family I wanted to renounce my citizenship since I had no family left there, I hated the country as is (and I will say I went to many states as a kid and never liked it), and I’d have to pay taxes in a country I don’t live in and never will.
Their reasons for why I should keep it;
1. other people want one
2. … that’s it
Yes, it does make me laugh when people state that some would kill for US citizenship. It's not a great reason to keep US citizenship when it's killing you.
These videos are so helpful. This is all the stuff that I need to know.
Currently studying abroad in France, and I hope to return after I graduate from college soon. Really unfortunate about the whole tax thing. I'm glad I am a US citizen, but the more time I spend abroad, the more I realize all the weird and inconsistent things about how the US works.
I love the turquoise lighting and the lava lamp thingy in the background
danke! Took a lot of time on this backdrop organisation :)
How are we not herd more about this
FUD: Fear, Uncertainty. Doubt. Standard practice.
As an expat, I saw the title and immediately thought, ‘taxes.’ Lo and behold
You think a millionaire is in the top 1% ? Ohh, you sweet summer child...
The top 1% for the US would be: "household incomes commonly exceeding $525,000 annually."
Evan probably knows this, ,but all it really means in practical terms is that it should only apply to the very most wealthy American expats.
A million is greater than $525k, so yes a millionaire would be in the top 1%.
@@WerewolfLord I think he means salary versus net worth.
I live in the US and have for many years but I am not a US citizen - and this is one of the reasons why I hesitate to apply for citizenship, because it would potentially impact me later in life. It's just weird that this exists.
And even more so in a tax system that is needlessly complicated and lacks automation (everyone has to file their own taxes more or less manually instead of the taxes being figured out for them like some countries do).
The penalty for failing to file FBAR is indexed to inflation, the minimum is not $10,000 but is actually circa $13,500. If the failure to file FBAR is deemed wilful the penalty is circa $135,000. This imposed on another nations tax resident for failure to file a form to the USA.
Great video, thank you! Even better if it made the point that Americans living abroad are taxpayers in their country of residence, often paying more tax than they would owe in the USA, and have to file even when zero tax is owing. Also, the American tax compliance is so complicated and privacy-violating that European banks and investment vehicles often reject American citizens as clients. Think about that for a second. Too complicated for banks, even though its their job!
so what I've taken from this is that having an American passport cost you at least 1.5k a year.
Land of the free I guess...
US citizenship can cost you your career, your business, your retirement, your marriage, your privacy abd data protection rights and a whole lot more.
This issue runs much deeper than most people could even imagine.
Need a plant blog on how your plants grow so well
I’ve done my taxes every year since I’ve moved to Europe but I have never heard of fatca and now I am freaking out
This is one of the problems of US citizens trying to comply from abroad without paying a pro $500 an hour, they end up partially filing or making a mistake and BOOM, welcome to the world of massive penalties connected to anything foreign to the USA. Heard of FBAR? Loads of people haven't and you have to see the penalties to believe it!
@@mikebreen2890 fbar i honestly thought i didn’t have to because there is an agreement between france and the us where France reports everything automatically to the irs about Americans with a bank account 😫 and I always indicated that I had this account on my tax return wtf
@@caroline2095 This system of taxing residents abroad is so bad that people simply do not believe it, including many Americans abroad, for a while at least. Indeed, many have never heard of FBAR>
The penalties start at $10,000 per unreported account if the failure to file was deemed accidental, wilful failure is a $100,000 penalty. Bad? They are adjusted for inflation, the wilful penalty is actually circa $135,000.
The good news is that under pressure from the tax payer advocate who rightfully pointed out that these penalties were grossly disproportionate, you may well get away with paying nothing by fessing up.
Or join the land of the sane and stop filing a damned thing, if you have no US assets or income they won't know if you are dead or alive.
@@mikebreen2890 wow….btw realized i have been filing fbar since i started working (just never realized that’s what it was called lol) but not the 3 years before that when i was a student/unemployed and had no assets or taxable income. My assets are pretty low still so hoping they don’t bother me 😂
@@caroline2095 In my experience, 12 years of it now as an activist fighting this insanity, if you don't bother the IRS from abroad, they won't bother you. ;-)
I’m with you all the way Evan. It’s such a dumb scheme. I have relatives who are accidentally American because one of their part so was born & grew up in America. So would help those relatives if they just damb well scraped the shitty scheme that is pretty much useless.
Glad to be a Dutch citizin, by birth and getting my yearly taxes done in 30 minutes with hardly any opportunity to make a mistake
Eh? What? You have to declare taxes when you live abroad and pay taxes in two different countries? If someone was in the UK twenty years ago and has a parent from the US and hasn't even been to the US they have to pay US tax? That's insane and some kind of thing I'd expect from North Korea
If North Korea tried this, they would get more sanctions.
Yeah, as an American who has been living in France, citizen based taxation is SO dumb AND illogical!
Thanks @Evan Edinger for an excellent video highlighting the injustices of citizenship-based taxation. We need to draw as much attention to this as possible.