Deep Dive with Shawn Leaving America E12: Taxation without Representation and Renunciation
The invisible chain that follows every American abroad isn't nostalgia—it's the IRS. Unlike citizens of virtually every other nation, Americans must file tax returns no matter where they build their lives, creating a bureaucratic burden that turns paradise into paperwork.
This final episode of Leaving America dives deep into the unique tax situation facing U.S. citizens abroad. We explore the Foreign Earned Income Exclusion that shields most expats from actually paying U.S. taxes, but doesn't protect them from the annual filing requirement. We unpack FATCA—the law that turned Americans into toxic banking clients by forcing foreign financial institutions to report directly to the IRS or face severe penalties. Many expats now pay thousands to accountants just to file zero-balance returns.
For some, this perpetual tether becomes too much to bear, leading to citizenship renunciation—the ultimate step in cutting ties with America. We walk through this process step by step: the $2,350 fee, the embassy appointment, the potential "exit tax" for higher-net-worth individuals, and what happens to Social Security and Medicare benefits afterward. Is freedom from IRS paperwork worth giving up your blue passport?
Throughout the episode, experts like Tim Marting from Citizen Remote, David Lesperance from Lesperance Associates, Adrian Leeds from House Hunters International, and Basil Mohr-Elzeki from Henley & Partners offer insights on navigating these complex waters. We close with reflections from expats who've found their homes abroad, whether they've kept their U.S. citizenship or decided to let it go.
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Majestic Earth - Joystock