Trends in Expats Renouncing Citizenship: 2019 3rd Quarter Numbers Are Here

Each quarter, Greenback tracks the number of expats renouncing citizenship. Why? Citizenship renunciation is something that affects Americans living abroad exclusively, and it’s often a decision based primarily on the continued tax reporting requirements all American citizens have. The Federal Register just released the final count for the quarter ending September 30th. Let’s see how this tracks with the rest of the year’s numbers, and the reasons behind this momentous, definitive decision!

Expats Renouncing Citizenship – Why They Do It

Every American citizen retains the right to renounce their citizenship, but this decision is a big one because it is a final decision. Greenback’s annual expat survey conducted earlier this year revealed that one in five expats are seriously considering citizenship renunciation. Of those considering, 40% said it was due to the continued burden of filing taxes each year. However, giving up citizenship isn’t an option for all American expats, especially those planning on eventually returning to America or with family still living stateside. For those expats, tax filing requirements – and sometimes, payable amounts due – are an annual reality.

Becoming tax compliant is more important now than ever, for expats. The IRS can revoke the passports of anyone with seriously delinquent tax debt or tax debt that surpasses $52,000. Plus, the fees and penalties often racked up by expats who didn’t know about the tax-filing requirement can be daunting and quickly rise to the level of $52,000 and beyond.

How Many Expats Renounced This Quarter?

This quarter’s total of expats renouncing citizenship was shocking. The final number was 183, and this number is quite low. This is pre-FATCA (Foreign Account Tax Compliance Act) – or as many expats view it, when American tax requirements started to get seriously problematic – low. Before FATCA, a few hundred citizens would renounce each quarter. Since FATCA, and especially around the time of the last American presidential election, numbers have skyrocketed. To give you some background, the quarterly numbers in 2017 of expats renouncing citizenship looked like this:

Q1: 1,313

Q2: 1,758

Q3: 1,376

Q4: 685

In 2018, they looked like this:

Q1: 1,168

Q2: 1,093

Q3: 1,104

Q4: 685

So far, 2019 numbers are as follows:

Q1: 1,018

Q2: 609

Q3: 183

These low numbers lead to several questions. The first is: why the slowdown? In all likelihood, since FATCA was introduced in 2010, the majority of the Americans living abroad who did not want to continue to face the problems FATCA causes have likely finished renouncing. FATCA is no longer a shock, and with its near-decade of existence, many of those living abroad have either gotten used to working around it or renounced already.

It will be interesting to examine the numbers from the entirety of 2019 and see if the massive spike in renunciations looks like it is finally slowing to a trickle. With 40% of expats still considering the idea of renouncing, it also would not be surprising to see an uptick depending on what the future election holds for international taxation. Only time will tell, and we’ll be back with a report once the final count of 2019 is released.

Want to Get Tax Compliant Now?

Even expats renouncing citizenship must be tax compliant before they can relinquish their citizenship. We can make the process easy, no matter what your plans are. Get started with Greenback today, and let the expat experts handle your taxes!

Free Guide: 25 Things Every Expat Needs to Know About Taxes

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