# Taking US citizenship or not? Tax implications, etc.



## ina

I have been a green card holder for more than 5 years now so I'm eligible to apply for US citizenship. I had first planned to do that but now I'm not sure anymore. The reason why I wanted citizenship is because at the end of the year I will have to leave the US for a longer period of time, maybe many years (family reasons). I would lose my green card after living outside of the US for that long. So I wanted to take US citizenship to have a door open in the future in case I decide to return. I'm very attached to the place where I currently live in the US and I have built a business here as well (fortunately it is an online business so I won't have to give it up, but it is still a location-specific business). 

The reason why I'm worried about taking US citizenship is because of the tax consequences it would bring (filing tax in the US and the country where I would live). I know that I most probably wouldn't actually owe any US tax, but I still would need to file every year and make sure I know of all the current rules and requirements. I'm also concerned about having to file fbars because of privacy reasons (telling the government how much you have on your bank account feels odd), especially when it comes to any future shared accounts with another family member or foreign business partner. 

I also read that some banks in Europe (where I would live in the next years) have concerns when dealing with US citizens because of a new US law that requires foreign banks to disclose certain financial data of US citizens living abroad. So my question is, is it worth it to get US citizenship? Also, in case I lose my green card, is it possible to have it reinstated years later? Once I take citizenship and decide to give it up later, is this a big issue (for example when it comes to getting visitor visas after that) and also does one need to still file taxes after giving up citizenship? 

I don't know if I think too much but I have heard that in recent years more and more Americans have renounced their US citizenship for these and other reasons. I would be thankful for any advice. This problem has been on my mind for quite some time and I'm not sure what to do.


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## gairloch

I'm sure that you will owe taxes on all US business activities so if your online business is run from Germany but makes money in the US -you'd owe US taxes. Germany would also be interested.
Being a USC means paying taxes forever, but as you are a GCH you do not escape easily.
As a GCH, you will owe US taxes forever unless you file notice with the IRS and receive notice of its receipt (the IRS is very explicit in this). Leaving the US, sending in your GC, being out of the country too long, having USCIS laugh at your GC are all NOT accepted by the IRS. The IRS wants you to follow their rules. Running afoul of the IRS would likely impact any immigration application later. Recommend you go to the IRS website and start researching. I posted the link to it somewhere on this forum also.
[I am not a tax professional, seek professional advice before taking action.]

GC: From what I've read on the consular website you must reapply from scratch. Being a former GC holder does not give you an edge in applying and it could be denied depending upon your circumstances and US immigration law at the time of application.


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## Bevdeforges

You're the only person who can decide whether or not it's in your best interests to take US citizenship or not. You've outlined the considerations pretty well. I'll just add a couple comments:



> The reason why I'm worried about taking US citizenship is because of the tax consequences it would bring (filing tax in the US and the country where I would live). I know that I most probably wouldn't actually owe any US tax, but I still would need to file every year and make sure I know of all the current rules and requirements. I'm also concerned about having to file fbars because of privacy reasons (telling the government how much you have on your bank account feels odd), especially when it comes to any future shared accounts with another family member or foreign business partner.


This is all true, and there seems to be little or no way around it. Actually, the FBARs aren't so bad - and you'll find that more and more countries are requiring you to declare your foreign accounts in some manner. (France certainly does. I believe Germany is starting something like this.) 

The tricky and truly invasive forms are the various FATCA forms that you are supposed to file with your US tax returns once your stake in various sorts of foreign "financial assets" rises above a certain level. It remains to be seen, however, precisely how strict the enforcement is going to be on these FATCA documents - they've already backed down a bit on the threshold for filing them (at least for US citizens actually resident overseas) and there have been some modifications in the instructions to mitigate reporting for small businesses clearly operated to make a living rather than for stashing and laundering ill gotten gains (which is why the FATCA laws were passed in the first place).



> I also read that some banks in Europe (where I would live in the next years) have concerns when dealing with US citizens because of a new US law that requires foreign banks to disclose certain financial data of US citizens living abroad. So my question is, is it worth it to get US citizenship? Also, in case I lose my green card, is it possible to have it reinstated years later? Once I take citizenship and decide to give it up later, is this a big issue (for example when it comes to getting visitor visas after that) and also does one need to still file taxes after giving up citizenship?


This has also received quite a bit of press, though I haven't encountered it here in France. The banks are obviously out to save their own butts and to not fall under the audit scope of the IRS if they can possibly avoid it. Again, the level of enforcement for foreign bank disclosures to the IRS is still up for grabs. Taking US citizenship and then renouncing could become a "red flag" should you later need or want a visa, though technically it isn't currently. The issue of having to file taxes after giving up citizenship is a bit tetchy, too. If your net worth is more than a certain level when you renounce, you can be required to file US taxes for up to 10 years after renunciation. For poor folks, it's not a threat. But there is also language on the IRS website that indicates that the IRS may feel that you are still obliged to file US taxes even after the State Department recognizes that you have given up your green card. On what basis they do this or to what extent they enforce (or intend to enforce) this is anyone's guess.

To add to the confusion, there are tens of thousands of US citizens living overseas who do not file US tax returns at all. Some are blissfully unaware of the requirement, others don't make enough income to meet the threshold filing requirements, still others simply don't bother. To date, there has been no real concerted effort to track these folks down for their current or back filings unless they somehow come to the attention of the IRS, usually by calling attention to their wealth and/or US citizen status. I wouldn't simply drop off the radar if you maintain any sort of regular contacts with the US (things like regular travel, or if you hope to qualify for Social Security benefits or maintain an IRA or 401K fund back in the States), but in the absence of those... well, the call is yours.
Cheers,
Bev


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## ina

Thanks gairloch and Bevdeforges for your replies. I really appreciate it. Yes, I know even as a green card holder I have to file US taxes. But I guess a green card is easier to give up than citizenship. I haven't heard about the FATCA forms yet. That's what I'm concerned about that I may not know all the requirements and then one day the IRS can come with severe punishments for non-compliance. That's my main fear. So I'm not sure yet if I will take citizenship or not.


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## RødGrød

I thought it was illegal for German citizens to acquire a second citizenship unless they receive dispensation from the German government.


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## Bevdeforges

RødGrød said:


> I thought it was illegal for German citizens to acquire a second citizenship unless they receive dispensation from the German government.


German citizenship law has changed in the last 10 years or so. Apparently, to keep your German citizenship, you need to have "ties" to Germany - though those can be as simple as regular visits to family members there, or business interests.
Cheers,
Bev


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## ina

Yes, that's correct. It is now allowed for German citizens to get another nationality in case they first apply for what is called a "Beibehaltungsgenehmigung," which means a permit from the German government to keep German citizenship. But one has to have good reasons and send a form with explanations to them.


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## jimmyjam

Just look at the Saverin scandal and the ex-patriate bill 3205 that, if it passes, will basically forbid people from renouncing citizenship in the future under threat of permanent exile.

It is much better to be a foreigner than to be an ex-US citizen.

And if you take citizenship now you may never be able to renounce if things continue this way.


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## jimmyjam

*plans to forbid renunciation*

You have to think not only of tax but also of your human rights.

There is a new bill in process that, if it passes, will forbid people from renouncing their US citizenship under threat of banning any re-entry into the USA.

Of course at this stage it will mainly apply to people who have over 2 mio dollar net worth so you may not be concerned about it;

But it is important for you to know the general mindset and trends; this bill is outrageous but it is getting support from many high placed people. 

What will stop them, a few years down the road, from forbidding expatration all together except on a case by case approval basis.

Especially if you got citizenship by requesting it, and not through birth, you will be seen as an enemy and a traitor even worse the day you want to give it up.


http://www.expatforum.com/expats/ex...205-proposed-bill-enforce-reed-amendment.html


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## jimmyjam

*Link to lotsMUST READ before you move to the US*

Dear Ina,

One final post to show you the link to a special thread I created months ago to respond exactly to your question:

http://www.expatforum.com/expats/am...ving-america/99450-read-before-moving-us.html

For some reason it was met with hostility from several people who did not want to believe what I was saying, questioned any proof that was given, and finally the thread was closed.

I can understand that for most US citizens, what is currently happening to US expats and green card holders is hard to believe and it is met with denial.

Please have a look at the thread and the many links to resources and articles it contains.


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