Record number of U.S. citizens abroad renounce citizenship

immigration reform billAccording to data from the Internal Revenue Service, over 1,800 people have renounced their U.S. citizenship during the first half of this year. This is compared to 1,000 people renouncing their citizenship during the whole of 2012.

Some of these Americans are giving up their U.S. citizenship to save on taxes. It comes on the brink of the Foreign Account Tax Compliance Act, which requires that foreign institutions report all assets owned by Americans.

This act was made to try and recoup some of the $100 billion a year that Americans abroad evade in taxes, and is set to go in effect next year.

Robert Keats, a financial planner, believes that as many as 90% of those renouncing their citizenship are doing so purely because they’re being advised to by a non-U.S. accountant who doesn’t understand the implications.

Abandoning U.S. citizenship leaves you with many restrictions that stay with you for the rest of your life. He says that once people understand this, the majority decide to keep their citizenship.

A majority of these Americans are wealthy and live in Asia. One man, who is now a Hong Kong citizen, said it was more to do with the complicated paperwork than it was purely to do with the impending tax accountability.