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I'm quoted in the article and would be happy to answer questions about this. Our firm does a lot of this kind of work -- U.S. citizens and green card holders c

I'm quoted in the article and would be happy to answer questions about this. Our firm does a lot of this kind of work -- U.S. citizens and green card holders cutting all ties to the United States.

seanmcdirmid 13y ago
Why would this make sense for any country with taxes at or higher than the states, since you can write off taxes paid to foreign governments anyways? Yes, Singapore, Switzerland or Hong Kong, or any country like Afghanistan if you have enough power (Karzai), but for most of us? Also, 640 a year is hardly more than an anomaly statistically. I've been out for 7 years and haven't paid anything to the IRS yet, even without the FEIE I just deduct anyways. The only annoying thing is double taxation when I go back to the states on business trips.
- jawngee 13y ago
  My company is a Hong Kong registered entity and there is no tax because no work is being performed in Hong Kong. Personal income tax in HK is like 15%, but only of you earned that income in HK. Some people I know who have setup a similar thing only pay themselves 50k USD a year and the company pays for the rest as expenses. It's a little more complicated then that, but that is the gist of it. Hong Kong and Singapore are set up to work like this. It's how all the mainland Chinese hide their money from the communists.
  - tosseraccount 13y ago
    And get it into a Schwab account.
  - stfu 13y ago
    Very interesting. How much is the setup / running costs for a system like this?
    - jawngee 13y ago
      About $1200. There are a ton of companies in HK that will set it up for you (that's all they do).
      - nolite 13y ago
        I've been looking for a reputable one for this for a few months now.. hard to know since I have no connection. Can you give a recommendation?
  - seanmcdirmid 13y ago
    > Some people I know who have setup a similar thing only pay themselves 50k USD a year and the company pays for the rest as expenses. Technically those people are still on the hook for the expenses the company pays for them, sans the generous overseas housing deduction that congress recently implemented. I have the opposite problem really. All my money is held by the communists (well, in my China Merchants Bank account anyways).
  - gojomo 13y ago
    Are you a resident of HK or doing this as a citizen/resident elsewhere? I'd be interested in speaking with any experts/service-providers you could recommend for the process of setting up an HK-based company. (Contact info in my profile.)
- admford 13y ago
  Same here, been out of the States for 15 years and family have our own business. We've been paying taxes locally and filing tax returns yearly for the States. There's a minimum which one can make before they have to pay taxes to the US (about $70-80,000 a year individually). For an average person or family, it's hard to reach this amount, and as said before you can write off taxes paid in a foreign country. Though the main problem would be if you're registered as a Professional and individual business (contractor/consultant). Then you're liable for taxes in both the country you live in, and the US. I've been made a number of offers of work as a contractor and had to refuse (due to low pay since companies didn't want to hire employees only contractors, the fact I'd have to pay for all benefits, and also on top of that pay taxes on what ever I made).
  - rubyrescue 13y ago
    it's $95,100 for 2012, per person. so 190,200 if you're married.
    - seanmcdirmid 13y ago
      Ah, I recently got married, does my wife have to be a US citizen?
      - dalke 13y ago
        Perhaps http://americansabroad.org/issues/taxation/us-tax-implications-of-a-non-american-spouse/ http://americansabroad.org/issues/taxation/us-tax-implicatio... will help?
- philiphodgen 13y ago
  Yes it is a a small number. Canary in a coal mine, really. The people who leave go everywhere. Including high tax locations. Income tax is not usually the issue. Estate tax is a big reason. So are the tax penalties imposed by the US for trivial paperwork problems. Hint. You Aussies in the USA have a big big problem with your superannuations.
  - mech4bg 13y ago
    Do you mean Australian super or 401(k)? Would love to get some more detail on this.
- socialist_coder 13y ago
  What is the double taxation on business trips?
  - mprovost 13y ago
    You get paid for your time by your foreign employer and pay foreign taxes on that income, but the US won't let you deduct that as foreign earned income since you were in the US at the time. Even if you take a holiday to the US you are reducing the amount of foreign earned income that you can deduct for the year.
- dalke 13y ago
  I am a self-employed US citizen living in Sweden, so I can relate some of the paperwork. I manage it because I had a good accountant before I left the US, and she handles all of the paperwork. First, be aware that only the US and Eritrea taxes its citizens on their world-wide income, no matter where they live. If I were a South African citizen living in Sweden then I wouldn't have to pay taxes back to South Africa. But I am a US citizen, so I have to file taxes for both countries. Of that, $95,100 in 2012 is tax free, so I only pay taxes on what I make over that. Which I did one year, so that was fun trying to figure out how to pay the IRS from an overseas bank account. The US has a bunch of bilateral agreements on income taxes so that I don't have double taxation. However, there's only a handful of countries with bilateral social security agreements with the US. Luckily, Sweden is one of them; I needed to get a form to prove that as a self-employed person I was covered. Being self-employed overseas makes things more complicated. From what I can tell, if I had moved to New Zealand then I would be paying social security to both countries. I also need to report the maximum value of each of my accounts, because of the FBAR requirements. Some people have gotten in trouble with it. See http://www.thelocal.se/39522/20120306/ http://www.thelocal.se/39522/20120306/ for some examples. ("the penalty for non-compliance of FBAR is $10,000 per bank account per year, with the IRS looking back six years"). Have you filed your FBAR statement? Then there's problems with the banks. Swedish banks really don't want customers who are US citizens, because the US requires a lot of extra paperwork from the bank. FACTA makes this worse. I am a permanent residence here, with an account which was opened before the new requirements went into place, but last month I spent an anxious 30 minutes at the bank while they figured things out. There are more complications for a US citizen who wants to invest in a company. I think there's more reporting obligations for the company in that case. And of course I pay for a CPA to handle things, since there's no way I would keep track of the relevant laws myself. It ends up being this odious choice - how much are you willing to pay and how much hassle will you put up with in order to keep your citizenship? The even worse case is for someone who is an American citizen by birthright, but was born, raised, and lives outside of the US, with no intention of going to the US. I think these people are still supposed to file taxes and deal with all of this mess - and are potentially subject to huge fines for not having done so already, should the IRS decide to go after them. Also, it makes sense for a few corner-case reasons. The Wikipedia page on "Renunciation of citizenship" mentions that Vincent Cate 'renounce[d] his US citizenship to avoid the possibility of violating US laws that may prohibit US citizens from "exporting" encryption software.'
billpaetzke 13y ago
For those that are solidly American (e.g. 3rd+ gen), what are their options of where to go? Or is the only way to marry someone of the target country or have millions to get an investor/monied-type visa?
- philiphodgen 13y ago
  You buy a passport or you go to a country where you can get permanent residency and they you stay long enough to qualify for citizenship. Or yeah. Marriage. :-)
  - clamprecht 13y ago
    What is your opinion of the "economic citizenship" programs in countries such as Nevis & St. Kitts, Dominica, etc?
    - philiphodgen 13y ago
      Those are the traditional choices.
    - seanmcdirmid 13y ago
      Switzerland's cantons will let you work out a deal on citizenship and a flat rate on how much taxes you pay.
- beachstartup 13y ago
  * solidly American (e.g. 3rd+ gen),* and where exactly does one's US citizenship start becoming "unsolid"?
  - jfb 13y ago
    I read it more to mean, a US citizen with highly attenuated ties to another country; after 3rd generation, you aren't likely to have immediate family overseas, &c. At least, I hope that's what was meant.
MichaelGG 13y ago
I'm not a citizen, but have a friend that has dual US/Canadian citizenship. If he renounces the US side, will they harass or prohibit him from entering the US again? What are the downsides?
- koenigdavidmj 13y ago
  For those who are so inclined you are not permitted to possess or purchase a firearm if you have renounced US citizenship.
  - scott_karana 13y ago
    That sounds likely enough, but do you have a source? edit: nevermind, it's in 18 U.S.C. § 922 : US Code - Section 922
    - rosser 13y ago
      Link, with anchor, to the specific clause: http://www.law.cornell.edu/uscode/text/18/922#d_7 http://www.law.cornell.edu/uscode/text/18/922#d_7
    - koenigdavidmj 13y ago
      I only knew it because that is one of the questions that you answer on a Form 4473 (the form used for background checks at gun stores). There is a whole list of questions to which you must answer in the negative, and that was one of them.
  - dllthomas 13y ago
    ... presuming you're in the US.
- gnoway 13y ago
  Finding a job in the US would be more difficult, presumably.
  - seanmcdirmid 13y ago
cadalac 13y ago
Are most people leaving simply immigrants who got US citizenship vs real Americans with American parents? Are the majority leaving to the Middle-East? (Edit: just saw from a post that people are leaving to many different locations.)
- Torgo 13y ago
  I read some articles by a company that helps facilitate this, and their claim was these people tend to be expatriates that over time have had less and less connection to the country of their birth that the citizenship and taxation issues have become more trouble keeping than dropping.
cpursley 13y ago
Interesting. Do you ever have clients pursuing the PT / 5-flag theory? https://en.wikipedia.org/wiki/Perpetual_tourist https://en.wikipedia.org/wiki/Perpetual_tourist
rdl 13y ago
I'm curious if anyone does it now for reasons entirely unrelated to taxes or inheritance or finance or the hassle of filing taxes/regulatory in general, but purely as a political protest or something like that. I only know one person (who wasn't otherwise a criminal) who renounced for what seemed like totally non-financial, non-administrative reasons: Vince Cate, back in the 1990s, when he was my neighbor in Anguilla and wanted to work on crypto stuff during the ITAR ban days.
- jlgreco 13y ago
  One of the cornerstones for Socrates' defense of the rule of law was that any adult who did not like the law was free to leave, without being taxed for doing so. I find it interesting that there are clearly so many in this country who have very deep disagreements with the law, but so few seem to leave. Of course I do not blame them; simply moving somewhere more agreeable to you is not as simple as Socrates may have you believe...
  - rdl 13y ago
    I've "left" a few times (I think I've lived outside the US longer than I've lived in the US, at least after age 14), but as a US Citizen, the most egregious aspects still apply to me wherever I am. And renouncing one's citizenship is a far bigger step than leaving, or never having had it in the first place. Also, many of the problems with the US are actually global externalities and hurt non-citizens/non-residents abroad even more than they affect US citizens or those within the US. We essentially are responsible for the global war on drugs, for instance. It's hard to figure out what things would cause me to be so angry at the USG to renounce citizenship but not to remain in the US and use all means to try to fix the problem. e.g. if there were a genuine Hitler/Stalin/Mao-level takeover of the US, I wouldn't be content to just flee somewhere and try to avoid it; the only reason to leave would be temporarily to raise funds/forces to try to fix it. But I really don't see anything like that happening in the US -- much more likely just a long slide into comparative irrelevancy like the UK has done over the past 60-80 years.
- mprovost 13y ago
  Kind of. "Mr Wilfred alleges he is a victim of a CIA conspiracy after he had acted as a whistleblower to expose alleged corruption in the agency." http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10877269 http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&obj...

I'm quoted in the article and would be happy to answer questions about this. Our firm does a lot of this kind of work -- U.S. citizens and green card holders cutting all ties to the United States.

seanmcdirmid 13y ago

Why would this make sense for any country with taxes at or higher than the states, since you can write off taxes paid to foreign governments anyways? Yes, Singapore, Switzerland or Hong Kong, or any country like Afghanistan if you have enough power (Karzai), but for most of us? Also, 640 a year is hardly more than an anomaly statistically. I've been out for 7 years and haven't paid anything to the IRS yet, even without the FEIE I just deduct anyways. The only annoying thing is double taxation when I go back to the states on business trips.

jawngee 13y ago
My company is a Hong Kong registered entity and there is no tax because no work is being performed in Hong Kong. Personal income tax in HK is like 15%, but only of you earned that income in HK. Some people I know who have setup a similar thing only pay themselves 50k USD a year and the company pays for the rest as expenses. It's a little more complicated then that, but that is the gist of it. Hong Kong and Singapore are set up to work like this. It's how all the mainland Chinese hide their money from the communists.
- tosseraccount 13y ago
  And get it into a Schwab account.
- stfu 13y ago
  Very interesting. How much is the setup / running costs for a system like this?
  - jawngee 13y ago
    About $1200. There are a ton of companies in HK that will set it up for you (that's all they do).
    - nolite 13y ago
      I've been looking for a reputable one for this for a few months now.. hard to know since I have no connection. Can you give a recommendation?
- seanmcdirmid 13y ago
  > Some people I know who have setup a similar thing only pay themselves 50k USD a year and the company pays for the rest as expenses. Technically those people are still on the hook for the expenses the company pays for them, sans the generous overseas housing deduction that congress recently implemented. I have the opposite problem really. All my money is held by the communists (well, in my China Merchants Bank account anyways).
- gojomo 13y ago
  Are you a resident of HK or doing this as a citizen/resident elsewhere? I'd be interested in speaking with any experts/service-providers you could recommend for the process of setting up an HK-based company. (Contact info in my profile.)
admford 13y ago
Same here, been out of the States for 15 years and family have our own business. We've been paying taxes locally and filing tax returns yearly for the States. There's a minimum which one can make before they have to pay taxes to the US (about $70-80,000 a year individually). For an average person or family, it's hard to reach this amount, and as said before you can write off taxes paid in a foreign country. Though the main problem would be if you're registered as a Professional and individual business (contractor/consultant). Then you're liable for taxes in both the country you live in, and the US. I've been made a number of offers of work as a contractor and had to refuse (due to low pay since companies didn't want to hire employees only contractors, the fact I'd have to pay for all benefits, and also on top of that pay taxes on what ever I made).
- rubyrescue 13y ago
  it's $95,100 for 2012, per person. so 190,200 if you're married.
  - seanmcdirmid 13y ago
    Ah, I recently got married, does my wife have to be a US citizen?
    - dalke 13y ago
      Perhaps http://americansabroad.org/issues/taxation/us-tax-implications-of-a-non-american-spouse/ http://americansabroad.org/issues/taxation/us-tax-implicatio... will help?
philiphodgen 13y ago
Yes it is a a small number. Canary in a coal mine, really. The people who leave go everywhere. Including high tax locations. Income tax is not usually the issue. Estate tax is a big reason. So are the tax penalties imposed by the US for trivial paperwork problems. Hint. You Aussies in the USA have a big big problem with your superannuations.
- mech4bg 13y ago
  Do you mean Australian super or 401(k)? Would love to get some more detail on this.
socialist_coder 13y ago
What is the double taxation on business trips?
- mprovost 13y ago
  You get paid for your time by your foreign employer and pay foreign taxes on that income, but the US won't let you deduct that as foreign earned income since you were in the US at the time. Even if you take a holiday to the US you are reducing the amount of foreign earned income that you can deduct for the year.
dalke 13y ago
I am a self-employed US citizen living in Sweden, so I can relate some of the paperwork. I manage it because I had a good accountant before I left the US, and she handles all of the paperwork. First, be aware that only the US and Eritrea taxes its citizens on their world-wide income, no matter where they live. If I were a South African citizen living in Sweden then I wouldn't have to pay taxes back to South Africa. But I am a US citizen, so I have to file taxes for both countries. Of that, $95,100 in 2012 is tax free, so I only pay taxes on what I make over that. Which I did one year, so that was fun trying to figure out how to pay the IRS from an overseas bank account. The US has a bunch of bilateral agreements on income taxes so that I don't have double taxation. However, there's only a handful of countries with bilateral social security agreements with the US. Luckily, Sweden is one of them; I needed to get a form to prove that as a self-employed person I was covered. Being self-employed overseas makes things more complicated. From what I can tell, if I had moved to New Zealand then I would be paying social security to both countries. I also need to report the maximum value of each of my accounts, because of the FBAR requirements. Some people have gotten in trouble with it. See http://www.thelocal.se/39522/20120306/ http://www.thelocal.se/39522/20120306/ for some examples. ("the penalty for non-compliance of FBAR is $10,000 per bank account per year, with the IRS looking back six years"). Have you filed your FBAR statement? Then there's problems with the banks. Swedish banks really don't want customers who are US citizens, because the US requires a lot of extra paperwork from the bank. FACTA makes this worse. I am a permanent residence here, with an account which was opened before the new requirements went into place, but last month I spent an anxious 30 minutes at the bank while they figured things out. There are more complications for a US citizen who wants to invest in a company. I think there's more reporting obligations for the company in that case. And of course I pay for a CPA to handle things, since there's no way I would keep track of the relevant laws myself. It ends up being this odious choice - how much are you willing to pay and how much hassle will you put up with in order to keep your citizenship? The even worse case is for someone who is an American citizen by birthright, but was born, raised, and lives outside of the US, with no intention of going to the US. I think these people are still supposed to file taxes and deal with all of this mess - and are potentially subject to huge fines for not having done so already, should the IRS decide to go after them. Also, it makes sense for a few corner-case reasons. The Wikipedia page on "Renunciation of citizenship" mentions that Vincent Cate 'renounce[d] his US citizenship to avoid the possibility of violating US laws that may prohibit US citizens from "exporting" encryption software.'

billpaetzke 13y ago

For those that are solidly American (e.g. 3rd+ gen), what are their options of where to go? Or is the only way to marry someone of the target country or have millions to get an investor/monied-type visa?

philiphodgen 13y ago
You buy a passport or you go to a country where you can get permanent residency and they you stay long enough to qualify for citizenship. Or yeah. Marriage. :-)
- clamprecht 13y ago
  What is your opinion of the "economic citizenship" programs in countries such as Nevis & St. Kitts, Dominica, etc?
  - philiphodgen 13y ago
    Those are the traditional choices.
  - seanmcdirmid 13y ago
    Switzerland's cantons will let you work out a deal on citizenship and a flat rate on how much taxes you pay.
beachstartup 13y ago
* solidly American (e.g. 3rd+ gen),* and where exactly does one's US citizenship start becoming "unsolid"?
- jfb 13y ago
  I read it more to mean, a US citizen with highly attenuated ties to another country; after 3rd generation, you aren't likely to have immediate family overseas, &c. At least, I hope that's what was meant.

MichaelGG 13y ago

I'm not a citizen, but have a friend that has dual US/Canadian citizenship. If he renounces the US side, will they harass or prohibit him from entering the US again? What are the downsides?

koenigdavidmj 13y ago
For those who are so inclined you are not permitted to possess or purchase a firearm if you have renounced US citizenship.
- scott_karana 13y ago
  That sounds likely enough, but do you have a source? edit: nevermind, it's in 18 U.S.C. § 922 : US Code - Section 922
  - rosser 13y ago
    Link, with anchor, to the specific clause: http://www.law.cornell.edu/uscode/text/18/922#d_7 http://www.law.cornell.edu/uscode/text/18/922#d_7
  - koenigdavidmj 13y ago
    I only knew it because that is one of the questions that you answer on a Form 4473 (the form used for background checks at gun stores). There is a whole list of questions to which you must answer in the negative, and that was one of them.
- dllthomas 13y ago
  ... presuming you're in the US.
gnoway 13y ago
Finding a job in the US would be more difficult, presumably.
- seanmcdirmid 13y ago

cadalac 13y ago

Are most people leaving simply immigrants who got US citizenship vs real Americans with American parents? Are the majority leaving to the Middle-East? (Edit: just saw from a post that people are leaving to many different locations.)

Torgo 13y ago
I read some articles by a company that helps facilitate this, and their claim was these people tend to be expatriates that over time have had less and less connection to the country of their birth that the citizenship and taxation issues have become more trouble keeping than dropping.

cpursley 13y ago

Interesting. Do you ever have clients pursuing the PT / 5-flag theory? https://en.wikipedia.org/wiki/Perpetual_tourist https://en.wikipedia.org/wiki/Perpetual_tourist

rdl 13y ago

I'm curious if anyone does it now for reasons entirely unrelated to taxes or inheritance or finance or the hassle of filing taxes/regulatory in general, but purely as a political protest or something like that. I only know one person (who wasn't otherwise a criminal) who renounced for what seemed like totally non-financial, non-administrative reasons: Vince Cate, back in the 1990s, when he was my neighbor in Anguilla and wanted to work on crypto stuff during the ITAR ban days.

jlgreco 13y ago
One of the cornerstones for Socrates' defense of the rule of law was that any adult who did not like the law was free to leave, without being taxed for doing so. I find it interesting that there are clearly so many in this country who have very deep disagreements with the law, but so few seem to leave. Of course I do not blame them; simply moving somewhere more agreeable to you is not as simple as Socrates may have you believe...
- rdl 13y ago
  I've "left" a few times (I think I've lived outside the US longer than I've lived in the US, at least after age 14), but as a US Citizen, the most egregious aspects still apply to me wherever I am. And renouncing one's citizenship is a far bigger step than leaving, or never having had it in the first place. Also, many of the problems with the US are actually global externalities and hurt non-citizens/non-residents abroad even more than they affect US citizens or those within the US. We essentially are responsible for the global war on drugs, for instance. It's hard to figure out what things would cause me to be so angry at the USG to renounce citizenship but not to remain in the US and use all means to try to fix the problem. e.g. if there were a genuine Hitler/Stalin/Mao-level takeover of the US, I wouldn't be content to just flee somewhere and try to avoid it; the only reason to leave would be temporarily to raise funds/forces to try to fix it. But I really don't see anything like that happening in the US -- much more likely just a long slide into comparative irrelevancy like the UK has done over the past 60-80 years.
mprovost 13y ago
Kind of. "Mr Wilfred alleges he is a victim of a CIA conspiracy after he had acted as a whistleblower to expose alleged corruption in the agency." http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&objectid=10877269 http://www.nzherald.co.nz/nz/news/article.cfm?c_id=1&obj...