According to Fortune Magazine, it may be time to get rid of your American passport in order to save money on taxes. The reason for this change has a lot to do with legal tax loopholes and more and more people are taking advantage of it. In 2012, there was the highest number of expatriation by American Citizens, including musician Tina Turner who has decided to become a Swiss citizen. Government figures that were released on Wednesday show more and more people are following suit and cutting off of their ties with the United States. Last year, the number of Americans who are getting rid of their citizen is 2,369, and that’s a 33 percent increase from 2011.
The reason for this is fairly straightforward. Getting rid of the American passport can mean a huge savings in taxes. That’s because there are only two countries in the world that tax citizens on income they make anywhere in the world, no matter where they live. Eritrea is one of them – the other is the United States. That means that if you live in another country, you still have to pay the United States government on any income you earn. That’s why Tina Turner, born Anna Mae Bullock, is giving her up her passport in favor of a Switzerland citizenship, where she has lived for a long time. The 73 year old singer got her full Swiss passport last April. She was originally born in Tennessee. Her husband was born in Germany.
The trend has grown in recent years and part of it is through the efforts of the United States to crack down on tax evasion and off shore bank accounts. If you visit the website of the U.S. Embassy you can find information on renunciation right on the home page. Most of the people who eventually rid themselves of their U.S. citizenship are already sporting dual citizenship in other countries. The United States Treasury is fighting back however, and a new law known as FACTA is causing some banks to stop servicing American clients. This rule will go in effect in July and will require foreign banks to carefully profile Americans that have at least $50,000 in their account and give that information to the United States tax authorities. The other option is to withhold 30% and send it to the U.S. Treasury.
