The Foreign Account Tax Compliance Act may be to blame for 3,000 Americans giving up their passports last year.
CNN Money recently reported that 3,000 US citizens chose to give up their passports last year and renounce their US citizenship in favor of other countries. This marked a huge jump from the prior year when less than 1,000 people chose to give up their citizenship.
Your Passport and Taxes
Apparently, many of the people who’ve chosen to give up their US citizenship have done so because of taxes. This may sound like an odd reason to those of us who are expecting tax refunds over the next few months, but apparently, if you’re citizen of both the United States and another country, the US taxes your income regardless of where you earned it. This means that if you’re a US citizen living and working in another country, you might have to pay your taxes twice.
The tax code for people with dual citizenship is extremely complicated, and it became even more complicated in 2010 when the Foreign Account Tax Compliance Act was passed. The law contributed to over 1,500 people relinquishing their US citizenship in 2010 compared to just 742 people in 2009. An additional part of the law went into effect in 2013, which contributed to the jump up to 3,000 relinquished passports last year.
Still the Most Desirable Passport
It’s interesting to note, however, that while 3,000 people choosing to give up their US citizenship sounds like a high number, the US has more than 300 million citizens, about one third of whom hold valid US passports. Yes, 3,000 people chose to give up US citizenship last year, but our immigrant population is over 40 million people, according to the Migration Policy Institute. About 20% of all international immigrants are in the United States, even though our population accounts for only 5% of the world’s population. In other words, America is still seen as the land of the free, and people from around the world struggle for the opportunity to one day have a US passport of their own. The number of dual citizens who relinquish their US citizenship don’t even come close to comparing to the number of people around the world who are trying to obtain US citizenship.
Ready to Get Your Passport?
If you’re ready to get your first US passport and don’t want to be among the 3,000 that relinquished theirs, contact Swift today. We offer expedited passport services for new passports, replacement passports, as well as travel visas to countries throughout the world.
