Why do people need to be a citizen in the United Stated if they have moved to another country, paying double taxes?

Since the taxes is based on citizenship and not residency, how come people that move abroad don’t renounce their U.S. citizenship?

12 Answers

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  • 4 weeks ago

    It's not always double tax.  Due to the foreign taxes paid credit and the foreign earned income exclusion, they don't always pay any U.S. tax -- if they fill out the paperwork correctly.

    And some of them want to be able to move back someday.

  • Generally one doesn't pay "double taxes".  There are tax treaties with most countries that partition the tax payments of Americans living abroad.  You might pay taxes to both countries, but the amounts are reduced so the sum is no more than paying just U.S. taxes.

  • 1 month ago

    Because MANY KNOW the USA is the best country there is for them to come back to later when COMMUNISM, MARXISM, SOCIALISM, and a COUP takes over wherever country they are in as .

  • 1 month ago

    Some do renounce, IF they hold another citizenship elsewhere & want to renounce. While they can return to US as tourists, of course, they cannot live in US again. Most American expats use Foreign Earned Income Credit (FEIC) and double-taxation agreements to eliminate or at least seriously reduce their US tax obligations while residing & working abroad, although they MUST file on time every year (whether they have any income or not, whether they owe any taxes or not). 

    NOTE: most American expats are on temporary visas, temporary employment contracts, etc, and cannot renounce, or don't want to. Renunciation is more common among "accidental Americans" - parents had their kid in US to get US citizenship for their child (& most hoped to obtain it for themselves, which is not possible), then took their kid back home with them. Those kids have never lived in US since birth, have birthright citizenship in their parents' country, and just want out of the US Tax Trap. And they hate their parents for their greed and/or idiocy which put the kid in this Trap.

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  • 1 month ago

    Probably because renouncing US citizenship is expensive; and just moving to another country doesn't make them a citizen there. 

  • 1 month ago

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  • Foofa
    Lv 7
    1 month ago

    A lot of expats do renounce their US citizenship just to avoid the headaches of US tax law. However, many nations have reciprocal taxing arrangements with the US to where they don't end up paying double. You're taxed based on where the work was done in most cases and not just because you hold citizenship in a nation you no longer live or work in. But clearly no one "needs" to be a US citizen. If one ended up that by some accident of birth it's easy enough to erase it if you no longer want to be a US citizen. I have a handful of cousins born in the US owing to guest lecturer parents who spent a year or so here. They tend to use their US citizenship to party in the States for a while when they're fresh out of college then to go home and renounce so they won't have to file a US tax return every year. 

  • Dan
    Lv 5
    1 month ago

    Many have done just that. But others don't renounce because they plan on returning to the US one day. The tax you pay to the foreign government can be claimed on your tax return as a credit so that most people don't owe but they still have to file. Also, US citizens who filed taxes also receive the stimulus checks. 

  • Anonymous
    1 month ago

    Depends on the country. Where trump has property, he pays taxes there instead of here.

  • Expat
    Lv 6
    1 month ago

    I’ve lived and worked abroad for 22 years. Americans abroad are required to file our income taxes but there’s a tax exemption for the first $125,000 earned abroad if you stay outside the US for at least 330 days of a year. So yes, we pay taxes in the countries we live and work, but unless you make more than $125,000 you don’t owe any taxes in the US. 

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