Expat Income Tax and Citizenship Renunciations

Expat Income Tax and Citizenship Renunciation

The Quarterly Publication of Individuals Who Have Chosen to Expatriate was recently published in the Federal Register, so the second quarter data from 2018 has now been finalized! What does citizenship renunciation have to do with expat income tax? Read on to find out about this and about what the trends so far this year mean for expats.

Recent History of Citizenship Renunciation Trends

2017 was an interesting year for renunciations. The breakdown was as follows:

Q1: 1,313
Q2: 1,758
Q3: 1,376
Q4: 685

Though the 4th quarter saw a drop in renunciations, the predictions for citizenship renunciation in 2018 among experts remained high. For the first quarter in 2018, the citizenship renunciations were totaled at 1,168, lower than any quarter in 2017 except for the outlying fourth. The second quarter total is 1,093 – perhaps lower than the experts expected, but holding somewhat steady from last quarter. This could be because 2016 and 2017 had record-setting numbers for expatriations, and we are now seeing a return to a normal, but slower pace.

Expat Income Tax and the Future of Citizenship Renunciation

Expats fill a lot of slots on the citizenship renunciation register, and for good reason. America is one of only two countries that base tax residency on citizenship. The other country? Eritrea. For expats, this means that they must file taxes each year, no matter how long they have lived in another country. Our 2018 survey data showed that expats overwhelmingly find the continued obligation to file and pay taxes yearly unfair. Further, of those considering renunciation, well over a third cited the tax requirements as the reason for their consideration.

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