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-   -   Pros and cons of being a USA citizen (https://britishexpats.com/forum/usa-57/pros-cons-being-usa-citizen-878509/)

mrken30 Jun 8th 2016 12:08 am

Re: Pros and cons of being a USA citizen
 

Originally Posted by FUB05 (Post 11967721)
On the Tax Implications, my understanding is that whether you are a USC living abroad or a GC holder living abroad temporarily, then you have to declare your worldwide income and complete a US Tax Return. If you resided in the UK and had a job and paying tax, then the double taxation treaty between the USA and UK would negate you having to pay tax on this income in the USA. This is for both GC holders and Citizens so I'm not sure where the disadvantage of being a US Citizen over being a GC holder comes in here for tax purposes. They both are required to declare their worldwide income whilst living abroad. Please correct me if what i am saying is incorrect.
thanks

If you are out of the US for more than 6 months there are extra hoops you need to jump through as a GC holder.

Giantaxe Jun 8th 2016 12:11 am

Re: Pros and cons of being a USA citizen
 

Originally Posted by FUB05 (Post 11967721)
On the Tax Implications, my understanding is that whether you are a USC living abroad or a GC holder living abroad temporarily, then you have to declare your worldwide income and complete a US Tax Return. If you resided in the UK and had a job and paying tax, then the double taxation treaty between the USA and UK would negate you having to pay tax on this income in the USA. This is for both GC holders and Citizens so I'm not sure where the disadvantage of being a US Citizen over being a GC holder comes in here for tax purposes. They both are required to declare their worldwide income whilst living abroad. Please correct me if what i am saying is incorrect.
thanks

Correct. The big difference is that it's a lot easier - and cheaper - to give up a GC than it is to renounce US citizenship. So imo you don't become a citizen until you're confident that the US is going to be your nexus pretty much for the rest of your life.

rbackhouse Jun 8th 2016 12:16 am

Re: Pros and cons of being a USA citizen
 

Originally Posted by Bob (Post 11967622)
They're weirdly quite pricey to find new ones though...and are worthless second hand down my way at least.

It depends on the car you buy.

Bob Jun 8th 2016 1:34 am

Re: Pros and cons of being a USA citizen
 

Originally Posted by rbackhouse (Post 11967733)
It depends on the car you buy.

True, but probably also more on local market. Cold weather area and manuals are tougher to get a hold of around here new and if you do see second hand, they're usually a bargain compared to the automatics.

theOAP Jun 8th 2016 5:37 pm

Re: Pros and cons of being a USA citizen
 
After the thoughtful comments from persons resident in the US some final thoughts from a dual USC/UKC resident in the UK. It will have nothing to do with USC versus GC status but will be one viewpoint of someone electing to live outside the US as a USC should that situation eventually come about after obtaining USC. Also, a further examination of some previous comments:

Quickly on inheritances, if a US person is resident in the US (or the UK for that matter) and is either a USC or a GC holder, and is the beneficiary of a UK (non-US person) estate, and if the bequest is of a certain value (depending on exchange rates - equal to $100,000), an information return is required. There are penalties ($10,000) for failure to file. Are they strictly enforced? Who knows?

https://www.irs.gov/pub/irs-pdf/i3520.pdf
See: Page 1, Who Must File, 4, a.

As has been noted previously, there is no reason an individual who is intending to remain a permanent resident of the US for life and has no objections to being a US citizen should hesitate in obtaining US citizenship.

For those uncertain of their future residence, some circumstances need to be evaluated.

As has been mentioned in previous comments, for those certain that at some point in the future they will reside outside the US, some serious evaluations need to be made. There are no hard, fast rules; individuals and their circumstances will differ. An assessment of the following would be helpful: (1 Will the person resume a career after leaving the US? (2 Will the person be retired after leaving the US, and if so what are the sources and types of income: (2a mainly derived from the US? (2b split equally between the US and foreign sources? (2c mainly derived from foreign sources? The last consideration (3, is the persons’ aptitude for co-ordinating a UK tax return with the filing of a US tax return. Depending on each individual circumstance, it may be very easy to achieve or it may be considerably complicated. The level of complication is in no way dependent on the persons’ wealth but on the sources and types of income and the persons’ aptitude for accounting.

For a non-US person resident in the UK, the US/UK Double Tax Treaty is 39 pages long. In this case, a substantial number of issues are covered by the Treaty. For a USC (even with UKC) resident in the UK, the Treaty is still 39 pages, but only about 3 of those pages are of use and cover a very limited number of issues thanks to the saving clause. The US/UK Treaty attempts to avoid double taxation. It does not avoid independent taxation by one of those countries (the US). For the USC resident in the UK double taxation can and does occur although not frequently. Taxation by the US of UK source income does occur more frequently, or will possibly occur at some point in time. The probability for US taxation of UK source income is increasing. This is particularly true if the individual files using FTCs, a must for those retired, thanks to increasing UK tax free income. Still, a person may go for years without being taxed by the US by use of a substantial amount of established excess credits. Just don’t make too much of a profit on the sale of your UK qualified residence, or have an ‘interest only’ mortgage unless you’re a gambler.

Ultimately, taxation by the US is not the major problem for a USC resident in the UK. The ability for varied investments and ownership along with the loss of data protection (privacy) are more worrying. For financial purposes, an individual (even with UKC) is primarily a USC resident in the UK. All financial institutions via an Act of Parliament will concur. USC can and often does trump UKC where financial products are concerned. For the USC, the US does not acknowledge UKC, even if resident in the UK, other than for a very few specific limited financial events. And, don’t become the Treasurer of any local group.

As was mentioned in a previous comment, it is also becoming expensive, and increasingly difficult, to renounce US citizenship once attained. If serious thought of eventually living outside the US exists, again, careful evaluation is required.

This is the polite opinion of only one person. Some of those USCs permanently resident abroad now speak of an invisible ‘Berlin Wall’ being constructed around the US (amongst other walls) where anything financially foreign is concerned. Otherwise, life is grand for the USC resident abroad.

mrken30 Jun 8th 2016 5:56 pm

Re: Pros and cons of being a USA citizen
 
I believe there are similar pitfalls if a UK or US trust fund is set up, a common method for reducing taxable inheritances.

Englishmum Jun 8th 2016 6:33 pm

Re: Pros and cons of being a USA citizen
 

Originally Posted by Giantaxe (Post 11967729)
Correct. The big difference is that it's a lot easier - and cheaper - to give up a GC than it is to renounce US citizenship. So imo you don't become a citizen until you're confident that the US is going to be your nexus pretty much for the rest of your life.

It depends on how long you have had a Green Card; you may have to pay an "exit tax" to the US Treasury Dept if you leave the US and give up your GC if you've held it for 8 years or more (according to a booklet issued by Deliotte's to my spouse - I am sure this info is online). I agree that it is easier than giving up citizenship though.

mrken30 Jun 8th 2016 6:38 pm

Re: Pros and cons of being a USA citizen
 

Originally Posted by Englishmum (Post 11968434)
It depends on how long you have had a Green Card; you may have to pay an "exit tax" to the US Treasury Dept if you leave the US and give up your GC if you've held it for 8 years or more (according to a booklet issued by Deliotte's to my spouse - I am sure this info is online). I agree that it is easier than giving up citizenship though.

My 8 years here seems to have flown by.

theOAP Jun 8th 2016 7:13 pm

Re: Pros and cons of being a USA citizen
 

Originally Posted by Englishmum (Post 11968434)
It depends on how long you have had a Green Card; you may have to pay an "exit tax" to the US Treasury Dept if you leave the US and give up your GC if you've held it for 8 years or more (according to a booklet issued by Deliotte's to my spouse - I am sure this info is online). I agree that it is easier than giving up citizenship though.

To be clear, that's any residence in each of the 8 years, so someone arriving in the US on Dec. 28 of year 1, with continued residence for 6 additional years, plus a departure on 3 Jan. of year 8 will be a long term resident for 8854 filing purposes (8 years), even though actual physical residence is 6 years and 6 days.

FUB05 Jun 8th 2016 8:22 pm

Re: Pros and cons of being a USA citizen
 

Originally Posted by FUB05 (Post 11967721)
On the Tax Implications, my understanding is that whether you are a USC living abroad or a GC holder living abroad temporarily, then you have to declare your worldwide income and complete a US Tax Return. If you resided in the UK and had a job and paying tax, then the double taxation treaty between the USA and UK would negate you having to pay tax on this income in the USA. This is for both GC holders and Citizens so I'm not sure where the disadvantage of being a US Citizen over being a GC holder comes in here for tax purposes. They both are required to declare their worldwide income whilst living abroad. Please correct me if what i am saying is incorrect.
thanks


Originally Posted by mrken30 (Post 11967728)
If you are out of the US for more than 6 months there are extra hoops you need to jump through as a GC holder.

Do you mean there are are hoops to jump through as a GC holder living outside the USA for more than 6 months from a tax perspective? I would have thought the filing process of GC holder living in the UK for more than 6 months in a year would be the same as a USC living in the UK. Both have to declare their worldwide income and complete a US Tax Return.

I understand that GC holders are not supposed to be outside the USA for more than 6 months at a time or 6 months in a calendar year. I am not sure which of these statements or whether both of these statements are correct. Although highly inadvisable, I have met a few UK citizens in my time who have US permanent residency status but live in the UK and who literally step foot in the USA once per year. I am not even sure if this is done on a 6 monthly basis but it is just once a year. I know of certainly one who have been doing this for many years and they have not been quizzed or questioned by anyone at POE into the USA. A huge gamble I know, but I even doubt if some of them meet there tax implications of having to complete a US Tax Return although living in the UK.

What i thought may have been quite difficult is the filing of tax seeing that both the UK and the US tax years start and close at different points in time. US = Jan 1st to Jan 31st while the UK is April 1st to March 31st. So logistically if you were working in the UK you would have to complete and submit a US Tax return before the UK Tax Year is complete.

mrken30 Jun 8th 2016 8:50 pm

Re: Pros and cons of being a USA citizen
 

Originally Posted by FUB05 (Post 11968545)
Do you mean there are are hoops to jump through as a GC holder living outside the USA for more than 6 months from a tax perspective?

Tax I believe there is little difference, but I was talking from a perspective of maintaining a GC. I am not sure how easy it is to lose LPR status if you don't adhere to the rules.

AdobePinon Jun 9th 2016 6:18 am

Re: Pros and cons of being a USA citizen
 

Originally Posted by Steve_ (Post 11966883)
There's some mistakes in that, maybe I should edit it. The issues with firearms have been done away with, various court cases established it was illegal to discriminate under the 14th amendment.

There are also issues with the taxes and federal jobs sections. Some would also argue that Jury Duty needs to go under Cons at least as much as Pros.

Regarding taxes, folks love to say that you must file a US tax return if a USC. The actual rules are in the instructions for form 1040. Having said that, most people who do not have to file would probably benefit by filing. Both monetarily, and in terms of documentation.

Also, arguments tend to be simplified on the estate / inheritance front. For example, while it is true that NM does not have an inheritance tax per se, NM requires inheritance to be added to gross income, and is therefore liable for gross receipts tax.

MidAtlantic Jun 9th 2016 12:14 pm

Re: Pros and cons of being a USA citizen
 

Originally Posted by FUB05 (Post 11968545)
What i thought may have been quite difficult is the filing of tax seeing that both the UK and the US tax years start and close at different points in time. US = Jan 1st to Jan 31st while the UK is April 1st to March 31st. So logistically if you were working in the UK you would have to complete and submit a US Tax return before the UK Tax Year is complete.

UK tax year is actually April 6 - April 5.

mrken30 Jun 9th 2016 4:17 pm

Re: Pros and cons of being a USA citizen
 
But UK taxes do not have to be submitted until the following December or January

Pulaski Jun 9th 2016 5:06 pm

Re: Pros and cons of being a USA citizen
 

Originally Posted by mrken30 (Post 11969188)
But UK taxes do not have to be submitted until the following December or January

That depends. If you aren't on PAYE you likely have to pay quarterly income tax. Income tax on some things us due twice a year/ six-monthly.


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