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Yes, many people choose to retire in central america. I will probably more there too at some point. During the last few decades, many communities have sprang up in countries like Panama which are populated by gray haired Americans.
Is there any data or articles that anyone has found indicating how MANY u.s. citizens have elected to do this in 2012 ??
With everything going on in the u.s. as a whole, such as crime, federal and state corruption, rising food prices, high unemployment hence the lack of jobs, hence general panic it's started me thinking long ago about options how to live anymore in the U.S. ??
Any thoughts are welcome?
The vast majority are American expats (I'm an American currently living in Europe) who do not have the means to file U.S. income tax returns in addition to the income taxes they pay in their country of residence. The U.S. is the only developed country in the world that demands that its expatriated citizens continue to file (and if their income is high enough, i.e. over $90K a year, continue to pay) U.S. income tax. It costs approx. $4,000 to get a qualified tax adviser to file a U.S. tax return for you in the country I live in - and that's if you don't even owe the IRS any money, your income is too low.
The FATCA and the FBAR (fondly referred to by expats as the FUBAR... f***ed up beyond all recognition) are already in place and they are not aimed at wealthy U.S. citizens abroad. Rich Americans have access to expensive tax advisers, expensive tax shelters (see Mitt Romney), all the loopholes that exist. It is middle-class Americans living and working abroad who can't afford the services of pricey tax consultants and lawyers to file all the forms the IRS keeps inventing.
In addition, many American women are married to non-Americans and they live abroad. The IRS has started harassing the non-American spouses of American women to shake them down. They seem actually to be less interested in getting any taxes - they're mainly into imposing fines all out of proportion to the "offense". True example: an American woman, a housewife, stays home with the kids. She's married to a European, has lived in Europe for many years. Doesn't declare any income to the IRS because she doesn't earn anything. Her husband has her name on his bank account. The IRS found out and claimed it is her money and she owes the U.S. government for everything her non-American husband earns. The husband makes $100,000/year. The IRS imposed a fine of $500,000. This is completely crazy.
A woman I know recently gave up her U.S. citizenship which I know was difficult for her. She had lived and worked exclusively in Europe all her adult life. As she arrived at retirement age and would receive her pension fund (equivalent of a 401k) in capital, the U.S. government would tax her a minimum of 30% on her rather modest pension fund - which is supposed to last her the rest of her life. She is not eligible for U.S. Social Security, she is not eligible for Medicare. She is not planning on returning to live in the U.S.
Because of the FBAR, all American citizens abroad are required to declare how much money (and give details) they have in bank accounts, if their total bank assets exceed (for even 5 seconds in a year) $10,000. Allegedly, this law came into being to track terrorists and drug dealers. If that were really true, the bank accounts you would be legally obliged to declare would be a lot higher than $10,000... This is just to annoy people and try to collect fines. Apparently, IRS agents who can 'get' somebody, receive a bonus. Lucky them.
That's just plain abusive. The IRS apparently thinks the acronym stands for "International Revenue Service".
Some of you guys have reading comprehension problems. The issue isn't the number choosing to give up their citizenship, it's the increase as in why more in 2011 than 2008.
I really didn't think the reason was the new law since it hasn't kicked in yet. The author of the article doesn't say that either. They said more might choose to do it because of the law.
"First, in 2008 the expatriation rules were changed. There is no longer the 10 year U.S. tax return filing requirement. Although there is now a mark-to-market regime triggering gains upon expatriation, up to $636,000 of gain can generally be excluded for individuals expatriating in 2011 (the amount is annually adjusted for inflation). Further, non-U.S. citizen, nonresidents can now annually visit the U.S. for 120 or more days without becoming taxed as U.S. residents (under the pre-2008 rules, visits to the U.S. for more than 30 days during any of the 10 years following expatriation caused the individual to be treated as a U.S. resident for that year)... With the $636,000 exclusion from the mark-to-market gain, many individuals can expatriate without paying any U.S. tax.
The second reason for the increase in expatriations, I believe, is the recent publicity regarding the penalties and voluntary disclosures for failing to report offshore bank and other financial accounts."
I would also add that the U.S. Dollar went down 20% against most major currencies during 2011 - that means that the $90,000 deduction (when you live abroad and don't think, earn and pay local prices in dollars) makes about $70,000. You can only deduct (an incredibly complicated calculation of a percentage..) some of the income tax you pay in your country of residence... make that $70,000 - $50,000. As the cost of living is higher in Europe - and taxes are higher too - you end up with middle-class Americans unable to cover their expenses.
There has been a backlash against hiring Americans in Europe because of the IRS' interference.
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