Today is the filing deadline for American taxpayers living abroad.
However, some folks no longer have to worry about the IRS. They've become "taxpatriates;" that is, they have surrendered their citizenship to avoid paying U.S. taxes.
For the first three months of this year, 499 individuals renounced their citizenship for tax purposes.
Andrew Mitchel, a tax attorney who follows such things in his International Tax Blog, says that while 499 isn't the largest number of quarterly tax expatriates in recent history (that was 560 in the second quarter of 2010), the quarterly average continues to increase.
Graph courtesy International Tax Blog
Making the tax move: You can't, however, just settle into your French farmhouse or Italian estate and expect the IRS to forget about you. If you decide to give up your U.S. citizenship for tax purposes, you have to let tax officials know by filing Form 8854.
Because of changes to the tax expatriation laws in recent years, which portions of 8854 to complete and what your final U.S. tax obligations are depend on when you expatriated. To help you figure all that out, in addition the form's instructions, the IRS has a special expatriation tax Web page.
That official IRS info is helpful, but your best move before you permanently vacate the United States in order to finally do away with U.S. tax obligations is to hire an attorney or other tax professional who specializes in expatriation.
And be prepared to see your taxpatriate status in print.
The law also requires the IRS to report each quarter the names of folks who renounce their citizenship. The names are published in the Federal Register.
You can check out the group for the first quarter of 2011 to see if you know anyone.
- U.S. tax expatriates expanding
- Overseas tax escape door closing
- A few foreign tax tips
- Flight of 'golden geese' taxpayers
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