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Finance & Accounting
Pages 3 (753 words)
Tax liability: Effects of renouncing US citizenship
The efforts on reduction of tax liability has increased in the recent years as the tax payers feel that they are unfairly taxed on the income earned by them.
The US tax returns process requires the US citizens to pay tax on the incomes they earn all over the world. The US citizens are required to pay income taxes on their world-wide income irrespective of the fact whether they visited the US land in recent times or in the recent decades. This led to the renouncing of US citizenship by the US people which has increased from 231 in 2008 to 1781 in 2011. By giving up US citizenship, the people of US or people residing abroad are able to reduce their tax liability as they are not required to follow the lengthy process of US tax returns (Yoshov, 2007). The tax liability is also reduced as the taxes on worldwide income are reduced as an effect of renouncing the US citizenship. Thus the overall tax liability is reduced as a result of renouncing of US citizenship by people especially in US and also by people holding US citizenship and residing abroad.
Tax liability: Effects of dual citizenship
Many people having US citizenship have migrated to other countries where they also hold a citizenship of that country. England and Wales constitutes the highest number of US citizens all over the world. These people have dual citizenship in both the US as well as in another country like England. The effect of dual citizenship is, however, complicated as the people are required to pay taxes to both the US government as well to the Inland Revenue System of the country of residence. ...
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