Tax season is a hard and hassled phase every year. American citizens living abroad are no exception. Rather, they experience much more difficulty in filing their returns than anyone living on domestic ground. Obviously, it’s the hard to crack foreign tax laws coupled with various other disadvantages of living overseas. Over five million Americans face the stress of fulfilling complicated procedures for filing their tax returns. Though, there are ways to get the process simplified to a great extent, but still there aren’t many advantages for people living abroad.
Every American citizen who generates income abroad has to report it back home, without any exception, no matter where that income comes from. At times, it gets even worse when the income is double taxed, first in the country where it’s generated and then back in US. There is a way to avoid double taxation but it’s far too complicated to claim a credit for tax paid abroad. Most of the times, complications arise due to reporting time limit, and the time taken to gather documents abroad.
So, all in all we can say that Americans living abroad hardly get any incentives from US tax law.
Now, all this makes up for a recipe to give up US citizenship, and this is no joke. People who cannot comply with US income tax law, and simply find income opportunities abroad more lucrative, often take this hard route and voluntarily give up all the benefits of being an American citizen.
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