Giving up U.S. citizenship so as to avoid taxes

118 posts in this topic

 

I can see that it doesn't matter for income taxes for most of us. But what about inheritance, say from my husband's life insurance (if we even make it that long)? How will my children be affected? The article posted said they could also be taxed? How does that work?

 

I think your biggest worry should be the German taxman.

 

As for your children, they have nothing to lose and everything to gain by keeping their US citizenship, at least until they're done with college and have decided where to settle down. The US offers a huge range of opportunities in terms of education and work, which compare very favorably not only to what is available here in Germany, but even to what is available in all EU countries put together.

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I think your biggest worry should be the German taxman.

 

As for your children, they have nothing to lose and everything to gain by keeping their US citizenship, at least until they're done with college and have decided where to settle down. The US offers a huge range of opportunities in terms of education and work, which compare very favorably not only to what is available here in Germany, but even to what is available in all EU countries put together.

 

The right to a US education is a good point, but only valid if they can afford it or get a scholarship. Still, it is best to have the option. I have no trouble with German taxes. They are high, but you get a lot of security here for participating in the system and I live here, not there.

 

Thanks for your input.

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I think the issue is not the right to a US education- we are currently in the US and are ensuring that our dual national children will be able to return to Germany for university. A college eduction here runs about $57k a year this year, let alone when my kids need it in 10+ years. The issue is the right to work here and to return here and look for work, as opposed to being required to be a visa slave to a company to be able to work in the US. Leaving all issues of patriotism or country love aside, imho that's worth it.

I have friends who felt otherwise.

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I am torn about it. The wide range of possibilities in the US and the flexibility it offers is what I prefer to the German closed job market. At the same time, if you actually get a decent job in Germany, your rights as an employee far outweigh those you have generally in the US. Everything from vacation time allowed, sick leave benefits, maternity leave and a lot more are standard here and not in the US.

 

I miss working in the US. I think employees are treated better here.

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No need to be torn. You can renounce your US citizenship and become German, if you wish, without this having any impact on your children's existing citizenship(s). When your children are old enough, they can make their own choices regarding where to study, where to work, and which citizenship(s) to keep.

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As I just said on the medical thread (I am sitting at a garage waiting for tires to be mounted and rotated), the US is better for top earners in some ways. And I mean really top. Quality of life is pretty good in Germany. But if I could take Germany's economy and Italy's weather, we'd have moved back after we lost my dad. Right now, I have the day off, the sun is shining, it's 80F and when the car is done I will go home and mow my fron 6 acres. Then I will hop in the pool.

However, the spouse is on a business trip to Dresden, so I will add that the societal support is pretty poor for families. Money also makes up for that, with daycare/nannies/babysitters.

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No need to be torn. You can renounce your US citizenship and become German, if you wish, without this having any impact on your children's existing citizenship(s). When your children are old enough, they can make their own choices regarding where to study and where to work.

 

I didn't mean I am torn about whether or not I should become a German citizen. I meant I am torn about whether or not I think employment in the US is a better 'prize' than in Gearmany. I am not even close to giving up my citizenship and only would in extreme situations(I am only interested in the topic).

 

The US is a place for people with money, who are healthy enough to work hard or have a good family. Without those things, you're screwed when hardship comes along.

 

That part about my choice not affecting children is good to know, though.

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Both the US and Germany have their advantages and disadvantages. Keeping your American citizenship allows you and your family the opportunity/ability to live and work in the US, which is worth something. It just opens up more opportunities for you.

 

To give up one's citizenship is a personal decision with many factors to consider. I choose to remain a US citizen because I believe the opportunity to live and work there is worth the tax hassle. I came clean through an amnesty program a couple of years ago. It cost me about 2K USD between the CPA and fines/penalties I had to pay, but now I am in good standing with the IRS. I just filed my 2013 returns and owed 32 USD and paid about 350 USD to file the paperwork.

 

The whole thing is a pain in the ass, wrong, unfair, etc. But those are the rules and as long as it is not causing me a major tax issue I will continue with the inconvenience. If US citizenship begins to create a huge tax liability rather than just an inconvenience, I may reconsider but will cross that bridge when I get there.

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I think the issue is not the right to a US education- we are currently in the US and are ensuring that our dual national children will be able to return to Germany for university. A college eduction here runs about $57k a year this year, let alone when my kids need it in 10+ years. The issue is the right to work here and to return here and look for work, as opposed to being required to be a visa slave to a company to be able to work in the US. Leaving all issues of patriotism or country love aside, imho that's worth it.

I have friends who felt otherwise.

 

If you think a college education in the US has to cost 57K USD a year, including room and board, you need to read up some more on the topic.

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I think the issue is not the right to a US education- we are currently in the US and are ensuring that our dual national children will be able to return to Germany for university. A college eduction here runs about $57k a year this year, let alone when my kids need it in 10+ years. The issue is the right to work here and to return here and look for work, as opposed to being required to be a visa slave to a company to be able to work in the US. Leaving all issues of patriotism or country love aside, imho that's worth it.

I have friends who felt otherwise.

 

If you think a college education in the US has to cost 57K USD a year, including room and board, you need to read up some more on the topic.

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I know exactly how much the college education I had cost, how much one will cost at the schools I was accepted into and why the heck would we pay even 20k for a mediocre third rate public school if our kids can get a good German terminal degree for free?

Perhaps you need to read up more on the topic. Three of my nieces are in college right now, as are 9 children of friends. I am very cognizant of current costs. The thought of those costs in 8, 10 and double 16 years blows my mind.

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I gave up my US citizenship, mainly because I wanted the German one but the messed financial laws of the US didn't hurt in making the decision. I have built my life here, and if I am honest with myself and decided I don't wish to live in Germany anymore, I would very likely choose either to go back to the UK or France, which is a lot easier as a German citizen than an US citizen.

 

I miss some friends and family back at home, but I don't miss life there as I do sometimes miss life in France and to a less extent the UK. I don't hate the US, but it is no longer home and I like the security in Europe in addition to the lifestyle. I see my family back in the US struggle when they get really ill or lose their jobs in a way there wouldn't here. I work as a teacher in a public school and it is easier to get tenure if you are an EU/German citizen.

 

It wasn't a decision I took lightly, but it is/was the right decision for me. I was lucky enough to do it before they started charging for it. I am happy than my finances aren't any of their business anymore. Why should they know how much money my German born and raised husband has and makes? It is bad enough they demand a tax return, but these laws are making it increasing hard for average Americans to conduct their affairs when they live outside the US.

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I haven't heard too much about this in the German media lately, but how is the German government going to reconcile FATCA with their privacy laws regarding dual citizens when it comes to turning over their information to the IRS? I know a few Germans and other EU citizens (including myself) who have the US given as their place of birth in their passports, but none of them were aware of FATCA before I told them about it. Many of them just shrug their shoulders and insist that they are "German" "Irish" or whatever and that they have nothing to do with US. Could FACTA lead to their being two different classes of EU citizens? Those with a US place of birth and those born outside of the US?

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When I recently went with some Americans to the bank to help them set up a bank account, they had to sign something that they agreed to have their information sent on to the IRS. But they only have US citizenship, I suppose someone with dual citizenship could just give the one, but you have so sort of official ID when you open an account.

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A question to those of you writing that the U.S. wants (and is entitled) to know how much the German spouse earns: where is this required? I thought I had researched this thoroughly and that my German husband's earnings (in Germany - he has no income from U.S. sources) do NOT have to be reported. Have I misunterstood something here? And if it is true that this must be reported: it can't possibly be subject to tax, can it? Regardless of how much?

 

And to those who have actually given up citizenship: is it true that you are not allowed to visit the U.S. afterwards?

 

Look forward to your answers ;-)

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A lot of spousal information winds up needing to be reported becaus of the fbar etc. Some people set up joint accounts not knowing what they are getting themselves into.

 

If you grew up in the States, or here for that matter, the idea of declaring _assets_ and not just income is completely foreign.

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A question to those of you writing that the U.S. wants (and is entitled) to know how much the German spouse earns: where is this required? I thought I had researched this thoroughly and that my German husband's earnings (in Germany - he has no income from U.S. sources) do NOT have to be reported. Have I misunterstood something here? And if it is true that this must be reported: it can't possibly be subject to tax, can it? Regardless of how much?

 

And to those who have actually given up citizenship: is it true that you are not allowed to visit the U.S. afterwards?

 

Look forward to your answers ;-)

 

You don't have to give it directly, but if you have a joint tax return or bank account where your spouse's salary goes. You have to disclose all joint assets.

 

You can go visit the US after renouncing, you are then just subject to the same laws as the country that you have citizenship. It is nonsense.

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Does anyone know if spousal information to this degree needs to be disclosed if I file married but separate? I thought I could just write "NRA" for her SS# on the 1040 and that was basically it.

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I know exactly how much the college education I had cost, how much one will cost at the schools I was accepted into and why the heck would we pay even 20k for a mediocre third rate public school if our kids can get a good German terminal degree for free?

Perhaps you need to read up more on the topic. Three of my nieces are in college right now, as are 9 children of friends. I am very cognizant of current costs. The thought of those costs in 8, 10 and double 16 years blows my mind.

 

I hope you aren't making the mistake of conflating free tuition in Germany with tuition plus room and board in the US. Furthermore, projecting current trends into the future can lead to some erroneous conclusions. There's only so much the market can bear, after all, even with the ready availability of student loans.

 

You're welcome to show me exactly how you come to the conclusions you did instead of being cryptic about it, and, hey, it's not like anyone could ever possibly get grants, stipends, or a scholarship (my sister got a free ride up through her doctorate and didn't pay a cent in tuition until she subsequently went to medical school), right? At any rate, this first-rate public university only costs 13K in tuition next year, and its graduates seem to do pretty well in the labor market.

 

It hasn't been that long since I was in school (my GI Bill didn't end until a few years ago), and I also have a number of family members currently attending university in the US.

 

Last but not least, it's well known that an ordinary US high school degree isn't equivalent to a German Abi, but of course, if you pass a lot of AP exams like you might have to in order to gain entrance to a German uni, well, you'd also get credit for the first year of study at most US universities. Oh, yeah, and don't forget that someone who hasn't attended Gymnasium in Germany might not find studying in the Fatherland to be the easiest path, especially if they don't plan to work here afterwards.

 

 

A question to those of you writing that the U.S. wants (and is entitled) to know how much the German spouse earns: where is this required? I thought I had researched this thoroughly and that my German husband's earnings (in Germany - he has no income from U.S. sources) do NOT have to be reported. Have I misunterstood something here? And if it is true that this must be reported: it can't possibly be subject to tax, can it? Regardless of how much?

 

And to those who have actually given up citizenship: is it true that you are not allowed to visit the U.S. afterwards?

 

Look forward to your answers ;-)

 

You don't have to report a non-resident spouse's non-US income, but you end up reporting joint accounts with them via whatever FBAR is now called and FATCA. If you are unsure about this, get some peace of mind by consulting an Enrolled Agent or a CPA.

 

Disclaimer: Nothing in this post should be construed as tax advice. Consult qualified experts for that.

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we are currently in the US and are ensuring that our dual national children will be able to return to Germany for university.

 

I wonder what your approach is. A regular US high school degree will not be considered as equivalent to a German Abitur, so your kids will have to go to Studienkolleg for at least one year. There are alternatives to such a regular high school degree, such as the IB (which is equivalent to the Abitur), but I think it is only offered at (expensive) private schools.

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