Taxes seems to be a minor consideration when it comes to selecting your place of residence, but for Americans living overseas, taxes have suddenly become an important factor in choosing whether to remain a U.S. citizen or not. After the IRS began to strictly implement Foreign Account Tax Compliance Act (FATCA) to curb tax evasion, it created various problems for Americans living abroad, which had little to do with tax evasion.
There have been in the news cases of celebrities and wealthy individuals renouncing their U.S. citizenship because of the new compliance requirements. For many Americans living abroad, renouncing their U.S. citizenship is an emotional breaking away from the U.S. They are now required to make a choice that they never thought they would need to make.
For those American living overseas who have families or spouses of another nationality, the decision to remain a U.S. citizen is more complex. The decision to renounce U.S. citizenship is made often due to their children’s or their spouse’s needs. As under FATCA, not only U.S. citizens living abroad, but also the foreign financial institutions (FIIs) that they do financial transactions with are required to report to the IRS, sometimes there is little choice for Americans living aboard but to renounce their U.S. citizenship.
Even though the emotional ties many Americans living overseas have with the U.S. will remain, having to give up their U.S. citizenship will also stay in their memory.