Picture a Saturday night, it’s extremely cold outside, and some friends have gathered over some hot apple cider, talking about what’s been on all their minds lately……..
Marco said: Family education in progress…Today I informed my girls (12, 17 & 18) about the U.S. Governmen’s implicit intentions to stop them from living in Germany (their birthplace) and the same implicit intention of the U.S.Government requesting them to move to the U.S., if they would like to remain U.S. and German citizens and would like to remain financially unharmed. In short: I introduced them to Publication 54! One girl would have to file her first U.S. federal tax return next year and the minimum annual compliance costs to remain a U.S. citizen in Germany would be approx. $370 for her (if I wouldn’t do the paperwork). That would be 60% of one of her monthly paychecks. The fee to renounce is currently $2,350, so it would be cheaper for her to renounce after 6 1/2 years filing otherwise useless tax returns and other reports.
Credence said:
“When the time comes (my oldest kid with this problem is 9), the $2,350 will be a birthday present. Not that they usually get gifts anywhere NEAR that much, but since this is kind of my fault not theirs…. And now it’s back to work for me–if I can edit another 10 papers or so by the stroke of midnight on the 31st, I’ll have my renunciation fee.”
Marco: “You will *borrow* the child the money and make it a gift after everybody is free from the U.S. tax regime!”
Beverly: “You are allowed to gift 14K per year to each person on your gift list – usually your children – without paying taxes on the gifts, up to 1M (I think) over your lifetime. Don’t worry about the $2350-!!”
Andrew: “Better hope the fee is not raised again by then. In five years it went from $0 to $450 to $2,350. At that rate of growth it will be well over $40,000 by the time your kid reaches 18.”
Marco: “Maybe you could try to explain the German authorities that the U.S. CLN is too expensive for you! Germany would accept this if your current monthly growth income is less then $2,350 while the CLN is charged with more than 1.280€. The German Government believes that the U.S. price tag is an “unreasonable condition for renunciation” – I agree and I also believe it is maybe the only (bad) way to stop citizenship evasion on a larger scale.”
Denise: “My daughter has dual and when she has filed enough tax returns will be renouncing.”
Credence: “So I just sent my request for the documents and the appointment to the embassy!”
Marco:” I don’t think that all dual / U.S. families living abroad can afford such an amount and I don’t believe that they will follow the U.S. Governments wish to move to the U.S. to get away from the burdens either. We would end up with $9,400 in fees if we need to “extract” our U.S. citizenship from our lives in the near future. Since I made the mistake to surrender my girls lives to the U.S. administration by registering them in the first place, I would have to pay and I guess I will frame the receipts and certificates in my living room as a symbol of real freedom once it is done. I already started saving one year ago…”
Credence: “Four kids plus me here who will eventually have to pay that fee. Marco, I feel your pain!” (NB: At today’s rate, the renunciation fees for this family would be $11,785 USD)
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everyone stopped for a moment…. mulling all this over in their minds… and then……….
Tom Paine: “What about establishing a charity called “Renunciation Fund”? It could be used to assist those who need to escape U.S. tyranny but can’t afford it. Perhaps DA could do a blast to everybody on it’s mailing list: “This year, give the gift of renunciation to somebody who can’t afford to buy their freedom”.
Marina: “Tom Paine I think I will share your suggestion on the DA FB page!” 😉
Marina went over……
I liked this suggestion: “What about establishing a charity called “Renunciation Fund”? It could be used to assist those who need to escape U.S. tyranny but can’t afford it. Perhaps DA could do a blast to everybody on it’s mailing list: “This year, give the gift of renunciation to somebody who can’t afford to buy their freedom”.” This would be a worthy cause and would help the strapped Americans who need to renounce with their children. The way it is now, it’s unaffordable for many. But try explaining that to people who believe we are all the fat cats abroad. Actually it’s the fat cats back home who hide their money abroad, not us!
Joanna: “Tom, that’s a great idea. It’s so ridiculous that the media would love it. If we all contributed a dollar we’d have $8,000,000.00!” Poor kids…….
Marco: “I would call it “Freedom Fund” because the main purpose would NOT be renunciation but freedom, otherwise not available…. but for money...”
Joanna: “Yes!! Very catchy title. Americans and the media love anything with the word “freedom” in it. Freedom fries, etc.
Marco: “And the best: if we find a way to make it tax deductible for the donator in the U.S. and/or others countries, everybody will benefit (except the governments granting the tax deduction, governments supporting FATCA, IGA’s and the deriving burdens for U.S. people)”
Beverly: “Seems to me that at a cost of about $1000 per year for accounting fees to remain compliant, the renunciation fees will pay for themselves in just a couple of years!”
So they all guessed all that had to be done was…..
And just whoooo might those background singers be?
Just donate 1% of the renunciation fee to ADCS . OR launch an equivalent effort overseas. In for a penny, in for a pound. Hedging your bets so to speak.
The title shows no sense of irony about U.S. residents living abroad.
I don’t think I get you Tom.
You don’t hear the snide tone I mean?
This is a spoof even though it was a real conversation over on American Expatriates Facebook.
Is the IRS actually telling people that if they move to the USA with all their assets they will not be hit with penalties? Or is it a question hitting you with penalties and then stating you had best move to the USA to avoid another visit from Dirty Sanchez?
I, for one, was serious as a heart attack. After working around the clock after that post, I did make enough to pay the renunciation fee and am waiting to hear back from the Embassy; apparently they don’t answer emails during the holiday season, or at least not mine. So French of them!
Well my tax preparer did suggest I declare the kids: you’ll get some money back, he said, and you use that to help them renounce in the future!
@Credence
When you email the consulate here, the automatic reply says they try to answer within 5 business days UNLESS your query is about renunciation. They don’t specify how long it will take to get a reply for a renunciation.
Are you serious? That really makes me angry. That said, I didn’t even get the courtesy of a robo-response.
Governments that signed IGAs created this problem and should provide at least a tax credit (not deduction) equal to the US renunciation fee to its citizens that want to ‘dump’ US citizenship.
Isn’t it a pity that in 2016 we ‘dump’ US citizenship rather than strive to retain it out of devotion and honour?
Those are the FATCAs of life, kids!
@Salamander
The U.S. definitely has NOT said come back and all will be forgiven. I believe that the point was that complying with the U.S. tax code makes arranging one’s finances in many countries overwhelmingly complicated. Many U.S. citizens or greencard holders will feel compelled to move back to the U.S. or to renounce, but some people will have no reasonable options.
“Freedom Fund” is good start. How about “Freedom to Live in your Country of Choice” which includes:
-Freedom to marry a spouse outside the homeland
-Freedom to get a job outside the homeland
-Freedom to save for retirement outside the homeland
-Freedom to have your kids live like other kids outside the homeland
-Freedom not to be relegated to second-class citizenship in the country in which you live
-Freedom to open bank accounts outside the homeland without penalty or prejudice
-Freedom from any other penalties and hassles from U.S. interfering with your local banks
-Freedom to pay taxes and report world-wide income just to the country in which you live and work
-Freedom to be able to use one passport that matches the country in which you live
I know this is a bit off-topic to suggest adding to the list the “freedom to stop over in the US without going through their customs”. My 19-year-old is dating a “pure” Canadian who was in the UK for the fall and came back late Dec using the cheapest tickets available, which involved traveling from the UK to Chicago and then on to Canada. During the passengers’ 2-hour stop-over from the U.K. to Canada, they all had to spend 90 minutes in the line to declare customs to the Americans!
As a single dual national, I do find it disturbing that there is an expectation that I should marry a home lander. 90 % of them believe in the existence of an invisible man who lives in the sky. Out of the 90%, half of them think angles exist and that the events in their religious text actually happened and half of that group spend 50% of their time praying for the world to end. I believe that might well be the reason for the popularity for SUVs in America. The religious nuts are driving them as part of a bizarre plan B just in case their imaginary friends decides not to destroy the planet.
Somehow I do not think my sanity could stand a marriage to a homelander.