4 ms·

I suspect it's better PR to say "instability” than "avoid paying taxes"

anovikov 2y ago
You can only avoid US taxes if you drop citizenship altogether. US has citizenship based taxation and you are stuck paying US taxes regardless of where you reside and what other passports you have. So getting another passport (as opposed to residence permit into your US passport) does not help you at all there. Almost all countries have double taxation treaties with US so you can credit your US taxes paid against your tax obligation in your country of residence, but if their taxes are lower than US taxes, you just pay US taxes. Again, no difference if you have that other country's citizenship, or just legal residence as an American. Difference happens only if you actually renounce your US citizenship and thus cease to be a U.S. person for tax purposes. People are getting second passports as a fancy object, and to avoid discrimination in countries where anti-Americanism is popular.
- Aspos 2y ago
  Having a second passport provides an option to ditch US passport and stop paying US taxes at any moment. One basically pays to buy an option to stop being subject to US taxation at a moment of their choosing.
  - rdl 2y ago
    It's a (virtually) necessary but not sufficient step in the process. The big blockers are exit tax over $2mm (basically, unrealized capital gains get taxed), and doing the actual appointment with an embassy overseas to document loss of nationality (if relinquished) or renounce (if renouncing; same effect, but much worse option IMO). If your assets are under 2mm, or if super liquid and thus easy to pay the exit tax, you have a pretty decent option. Otherwise, the exit tax can be addressed on a scale of multiple years (Puerto Rico has 0% capital gains under act 60, exemption from federal under irc 933, so move to PR first, realize capital gains, have no unrealized capital gains subject to exit tax when relinquishing...) I'm not a lawyer; not legal advice, or financial advice, entertainment purposes only.

You can only avoid US taxes if you drop citizenship altogether. US has citizenship based taxation and you are stuck paying US taxes regardless of where you reside and what other passports you have. So getting another passport (as opposed to residence permit into your US passport) does not help you at all there. Almost all countries have double taxation treaties with US so you can credit your US taxes paid against your tax obligation in your country of residence, but if their taxes are lower than US taxes, you just pay US taxes. Again, no difference if you have that other country's citizenship, or just legal residence as an American. Difference happens only if you actually renounce your US citizenship and thus cease to be a U.S. person for tax purposes. People are getting second passports as a fancy object, and to avoid discrimination in countries where anti-Americanism is popular.

Aspos 2y ago
Having a second passport provides an option to ditch US passport and stop paying US taxes at any moment. One basically pays to buy an option to stop being subject to US taxation at a moment of their choosing.
- rdl 2y ago
  It's a (virtually) necessary but not sufficient step in the process. The big blockers are exit tax over $2mm (basically, unrealized capital gains get taxed), and doing the actual appointment with an embassy overseas to document loss of nationality (if relinquished) or renounce (if renouncing; same effect, but much worse option IMO). If your assets are under 2mm, or if super liquid and thus easy to pay the exit tax, you have a pretty decent option. Otherwise, the exit tax can be addressed on a scale of multiple years (Puerto Rico has 0% capital gains under act 60, exemption from federal under irc 933, so move to PR first, realize capital gains, have no unrealized capital gains subject to exit tax when relinquishing...) I'm not a lawyer; not legal advice, or financial advice, entertainment purposes only.