Are you getting rattled by some Democrats' talk of higher taxes and are now thinking a move abroad would shield you Guess again.
Unlike many countries, the United States imposes taxes on its citizens no matter where they choose to live.
"If you're a U.S. citizen or a greencard holder — a lawful permanent resident — you'll continue to file and pay taxes to the United States regardless of whether you have any association with the U.S. any more," said Kenneth Freshman, a partner and director of global tax services at accounting firm KLR.
And if you were to renounce your U.S. citizenship, which would mean freedom from the long arm of the IRS, you'd face both fees and possible taxes imposed on certain assets at the point of expatriation.
This week, Sen. Elizabeth Warren, D-Mass., floated a proposal to assess a 2 percent annual "wealth tax" on people with more than $50 million in net worth and 3 percent on those worth more than $1 billion, according to a Washington Post report. The measure would also levy a one-time tax penalty on people with more than $50 million in assets who try to renounce their U.S. citizenship.
Freshman Rep. Alexandria Ocasio-Cortez, D-N.Y., also has talked about a 70 percent marginal tax rate on income above $10 million.
Generally speaking, taxes and reporting requirements can be complicated for the 9 million or so U.S. citizens residing elsewhere.
The U.S. has tax treaties with some countries, which can deliver a tax break in the form of lower rates or some exemptions. Also, the foreign earned income exclusion allows you to exclude up to $105,900 (for 2019) earned in another country as long as you meet certain criteria.
Yet beyond filing a tax return every year with the IRS, you also face financial-reporting requirements.
"There are all sorts of anti-abuse rules in the U.S. tax code and the presumption is that when you set up a foreign bank account or business, there's the potential for abuse," Freshman said. "So you have to do a lot of reporting."
For starters, you'd have to file a Report of Foreign Bank and Financial Accounts, or FBAR, which discloses any accounts you own that hold an aggregate of more than $10,000 during any point of the year.