Report from Canada: Renouncing U.S. citizenship can be costly, time-consuming

Source: The Globe and Mail

... Becoming un-American is a lot easier said than done.

Never mind the emotion. Renouncing the most coveted citizenship on the planet can take years and may cost nearly half of everything you own, including your real estate and pension.

A series of tough new U.S. tax laws, designed to root out Americans hiding money offshore, is suddenly prompting many expatriates to consider the ultimate act of national repudiation – becoming un-American. In a move set for 2014, the U.S. Internal Revenue Service will require foreign financial institutions to identify all accounts held by Americans. Many Canadian banks and brokers are already starting to document customers with suspected ties to the U.S.

That's put many of the roughly one million Americans living in Canada in a strange limbo – afraid of breaking the law, but even more fearful of the potentially enormous cost of coming out of the shadows.

Read more: http://www.theglobeandmail.com/news/world/americas/truth-justice-and-becoming-un-american/article2112388/singlepage/#articlecontent

How many people actually followed through and moved to Canada?

that should prepare you.

?

...... a few questions at the U.S. Immigration point at the Canadian airport, and then it's like boarding a domestic flight.

...wouldn't be bothering you now?

Awwwww....

Some of these people haven't lived in the US for decades, and at least one of them never did- she was born in the US to Canadian parents and went home when she was a few days old.

Seems to me that if you're born to foreign parents and live and work in a foreign country, maybe you shouldn't be paying US income taxes until you decide to live and work here, after the age of majority.

Past that, no I don't feel bad for the decades of absence. It's my believe that a substantial portion of the money owed is by people that found it advantageous to make their money from the US while being citizens of another country. While of course the majority of people aren't in that boat, the majority of the money almost certainly is.

The rich have been using off-shore banks and other tricks to avoid taxes for years. I'm sick and tired of it, of wealthy dipshits making millions tax-free and investing hundreds of thousands into the Greatly Obnoxiously-Patriotic party to keep their tax advantages while crying crocodile tears about how much they love America, freedom, democracy, and the joys of free-market capitalism.

So, no, I'm not going to cry much for the expat capital gains taxes by people making $150k+ a year and $2 million in assets. Especially because I'm sure there's a statute of limitations on tax problems. So the guy who lived in Canada gets to have fun reconciling his tax bill with the IRS for the last 7 years while having lived and earned for fifteen or 25 years.

Not citizenship. US citizens living abroad are liable for US income tax on income earned outside the US (with an exemption limit of around US$90K). Why should an American citizen pay US income tax on income earned in Canada if he's legally resident in Canada and already paying Canadian tax? I don't think there's any justification in that, quite honestly...and especially not in some cases of people who are American by accident, born in the US to non-US citizen parents, who've never been normally resident in the US yet find themselves told the IRS would very much like a cheque for back taxes now please.

"But the most significant hurdle of all is the exit tax that many would face. A 2008 law – the Heroes Earnings Assistance and Relief Tax Act, or HEART – assumes that expatriates dispose of all their worldly property when they renounce their citizenship. The tax applies to wealthy individuals, defined as those with annual income of roughly $150,000 or net worth of at least $2-million. So that house in Oakville, the cottage in Muskoka and the pension? The IRS will tax it as if it had been sold. And paying the U.S. tax won't clear you of any eventual capital gains you might owe in Canada when you actually sell.

For many Canadians, that would mean giving nearly half a lifetime of gains to the IRS. And the reconciliation process can take years."

Guess they were preparing for a flight of wealth.

On one hand I really have a difficult time buying a claim of ignorance on the part of adults who emigrated, but the people really being hammered by this policy is the children of American expats with few or no ties to the United States and unlikely to be major tax evaders. This isn't really reflected in the Canadian media coverage though.

And major league tax evaders aren't going to be caught up in this because they are vested in the world of offshore private banking where the IRS has no sway as by design these banks will never have any ties to the United States.