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With more than 9.5 million citizens of the United States having an expatriate life, the American expat community is increasing. Regardless of their global stay, these citizens have their voting rights and are obligated to complete their Federal income tax responsibilities in the United States. USTAXFiling expat tax consultant conducted an in-depth survey specifically for this group to know the feelings of the expanding group of individuals.
Survey Criteria and Methodology: Unveiling the Expat Reality
The survey was carried out from 24 April to 14 May 2023; USTAXFiling expat trends successfully tapped the perspectives of a survey of more than 3,200 United States expats across 122 countries. The survey encapsulated respondents from several professionals and income groups.
The survey was focused on four major areas that are:
- The income tax filing requirements in the United States
- Renunciation of citizenship
- FBAR and FATCA or foreign banking regulations
- The complete experience of staying overseas as a United States citizen
Major key findings of the survey
The survey unveiled major insights that reflected the issues and considerations underpinning the experience of expats.
- Government representation:
More than 80 percent of United States expats feel their concerns are less likely to be resolved by the government of the United States than those of Americans staying stateside.
- Renouncing citizenship of the United States
Twenty percent of the expats in the US are seriously planning or considering renouncing their citizenship in the United States. Forty-two percent of additional would not rule out such a move in the coming years.
- Awareness of the IRS Streamlined filing procedure
The survey reports that 32 percent of expats in the United States had not heard of these processes planned to assist expats in achieving tax compliance
- Expat income taxes in the US
More than 64 percent of expats are confident of meeting their income tax filing obligations US, and 69 percent do not believe that they should file taxes US while staying overseas
- Returning to the United States
Only 11 percent of expats overseas plan to return to the United States permanently
- FBAR and FATCA (Foreign banking regulations)
10 percent of expats strive hard to secure safe banking services because of FATCA needs, and 5 percent are unfamiliar with FBAR reporting regulations
After the COVID-19 outbreak, more than 43 percent of expats expect to work remotely
- Adopt a hybrid model or full-time model
Also, there is an increase in the number of citizens in the United States renouncing their citizenship in 2023 shows that expats are grappling with new challenges. Perceived government hospitality, tax complexities, and political concerns are the huge contributing elements.
Growing Trend of Citizenship Renunciation
15 May 2023, a total of 5315 citizens of the United States renounced their citizenship, a huge increase from 2390 in 2022. The survey shows that there is growing dissatisfaction among expats in the US related to the complexity of US tax regulations and the perceived hostility of the government in the US towards their citizens.
There is an increase in the number of citizens in the US renouncing their citizenship because of several elements, including the huge cost of citizenship US, the perception that the government of the US is becoming increasingly hostile to citizens, and the complex tax regulations in the United States.
Taxation without any representation: no one is representing expat interests in Congress. I think the tax regulations are geared to catch wealthy people who try to evade income taxes but lead to an excess tax burden on the average expat US. Also, US expats overseas are restricted in their investment choices with US brokerage firms, e.g. (US banks and mutual funds do not want them as clients) We are penalized both overseas and US by our US passports as per one of the respondents of the survey.
One in five, that is, 20 percent of US expats, is either seriously planning or considering renouncing their citizenship in the US. This survey saw a decrease from survey results in 2022, which showed that 24 percent were planning for renunciation. Also, in 2023, an additional 42 percent said that they might not rule or plan to rule out renouncing their citizenship in the US in the coming years.
Out of those who said they might renounce their citizenship US, 34 percent said that their decision was dependent on the complexity of filing income taxes US annually. 14 percent of expats are worried about the recent political climate, and 13 percent said that their interest in renunciation was dependent on the American government’s direction. 11 percent report that they want to renounce as they are married to a non-US citizen overseas.
Representation and Taxation: A Struggle for Fairness
Underrepresentation resonates with a huge majority of US expats. More than 80 percent feel their concerns fall on deaf ears or there is no one to hear compared to Americans staying stateside.
Sixty-nine percent of US expats think there is no need to file US income taxes, while only 18 percent think otherwise. 13 percent are yet to decide on the problem.
One of our survey respondents reports that American citizens overseas are ambassadors for the US. We engage in cultural exchange, speak multiple languages, and function at high levels professionally to support the complexities of staying and moving overseas. Also, incentivizing Americans to be proud of the land of the free country and the primary interaction with the government of the US is a highly unfree and negative experience, being the only non-resident citizen across the globe that have to file income tax returns in multiple countries.
Despite the sentiment, 64 percent feel confident about meeting the tax obligations in the US. The rest of the people grapple with uncertainties showing concern for more accessible support for the demographic and accessible tax guidance.
IRS Streamlined Filing Procedures For US Expat
It was introduced to help expats to update their income tax status; the IRS streamlined filing procedures to stay underutilized. Thirty-two percent of the US expats are unaware of the program, thinking of the need for enhanced education and outreach.
FBAR and FATCA: Impact on US expats
The strict income tax laws imposed by FBAR and FATCA pose obstacles for expats US. Due to this, 10 percent of expats strive hard to save and secure their banking services overseas because of their demanding needs.
As our survey reports, the journey for US expats is fraught with financial and regulatory challenges. From tackling complicated income tax obligations to contemplating renunciation of citizenship, these US citizens navigate a complex and dynamic landscape.
Also, Policymakers should heed this call for change, making sure that expats US unique requirements and situations are properly addressed. This is high time now for a change of the regulatory framework that is more in tune with the realities faced by the American community globally.
USTAXFiling experts have all the recent updates related to US expats. Our USTAXFiling experts are a highly dedicated and talented team of experts who are there to help you. If you have any issues with income tax filing, connect with our experts at USTAXFiling, and they will resolve your income tax issue at the earliest. So, what are you waiting for? Schedule a call with USTAXFiling right away!