Why are US expatriates often caught in the tax trap? Why don't they move to a country that permits dual citizenship such as the UK?

Or renounce the US passport for a UK passport instead?

Both are equal in ranking.

6 Answers

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  • 1 month ago
    Favourite answer

    The problem is GETTING citizenship elsewhere first! Then it can take a year or more to qualify, apply, & get approved for renunciation (& pay the Exit Tax) - at considerable expense. ALL US citizens, legal permanent residents, & other "US persons" as defined in law are in the US Tax Trap, and extricating oneself from that is a very long-term & expensive proposition. 

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  • RICK
    Lv 7
    1 month ago

    If you have dual citizenship  you are still subject to US taxes on worldwide income

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  • Foofa
    Lv 7
    1 month ago

    Many many US expats renounce US citizenship the moment they naturalize elsewhere for that very reason. It's only the ones who want to retain that as a Plan B who have to deal with the tax ramifications. 

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  • 1 month ago

    The first $100,000 per year one earns broad is exempt from US taxes, and US citizens get credit for income taxes paid to the foreign country where they live. 

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  • Anonymous
    1 month ago

    The Foreign Account Tax Compliance Act requires US/UK citizens living in the UK to file tax returns with the IRS. UK PM Boris Johnson held dual citizenship by virtue of being born in New York but renounced this when the IRS required him to pay capital gains tax on the sale of a house in the UK which did not attract capital gains tax there. It isn't that easy to obtain UK citizenship.

  • Anonymous
    1 month ago

    One, the US allows dual citizenship and doesn't require dual citizens to renounce citizenship anymore. Also, American expats living abroad don't have to pay taxes. It's a tax shelter for them, not a tax trap.

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