Should I become an American Citizen?

[Captain3D]

Hi All

I have the application to become a US citizen (Dual Nationality with UK) in front of me and I am trying to think through the pros and cons. What do you guys think.

Pros:
- Have some kind of say in the country I work - voting etc
- Protection against immigration law changes that might take away my Greencard
- Secure my 401k plans and Social Security accounts etc
- Ability to leave the country for work and come back later

Cons:
- Social Security and general economic benefits may not be worth protecting 25 years form now
- Will always have to file US taxes
- If I want to leave permanently there could be heavy exit fees on assets

Plenty more I am sure. What do you think...phil

[doom&gloom]

Re: Should I become an American Citizen?

cons outweigh the pros...

[c1ue]

Re: Should I become an American Citizen?

My wife asked the same question, and here was my recommendation for her:

US citizenship has several benefits in these categories:

1) legal residence and work permission

If you have decided to relocate to the US for a long period, and/or have a job in the US which you plan to retain indefinitely, then US citizenship makes sense.

If you have a legal reason as a foreign national despite the above - for example her being married to me (US citizen), then there is no real need to jump in.

For someone without the legal reason - there is absolutely some risk of job-protectionist sentiment kicking in at some point.

2) Taxes

As you note, a US citizen must file taxes always. But the filing isn't the issue, the tax fiscal impact is.

To my knowledge there is no specific regulation covering pre-existing bank accounts of a foreign national or specific regulations covering dual nationality financial status.

But all US citizens must declare their foreign income thus indirectly foreign assets - which to me means declaring your pre-existing and/or dual citizenship/2nd nation assets and income.

What happens when tax policies get changed? Will you be forced to consider whether to technically break the law because your purely 2nd nation accounts are now taxed by the US?

What about tax precedence? The US always assumes tax precedence is the US' unless you are living abroad. How does your home country treat your 'local' income vs. the context of your 'foreign' income? From what I recall the UK is a 'dont ask dont tell' situation but I'd verify that - and it might change as well since as a 'Crown' subject you are legally still under obligations to said Crown.

3) Travel permission

The US 10 years ago was the best citizenship for generally travelling the world. This is no longer true. Between DHS and visa fees on foreign visitors and the resulting tit for tat, US passport holders are increasingly being discriminated against. At present dual citizenship holders avoid this by just using the appropriate passport - but it is only a (short) matter of time before the exit/entry stamps are automated such that this 'hopscotching' of passports will raise a flag.

4) FICA taxes and future benefits (Health care and retirement)

As a foreigner, I think you theoretically can reclaim at least some of the FICA payments. So long as you pay your share in your home country, you'll have something to backstop you in the future - but of course this means making a decision now.

The worst thing you can do is pay your SS here and then have nothing back home if you go back in retirement - you take on the entire future exchange rate risk yourself as well as the normal intra-national fiscal policy risk. Of course with the UK it is debatable which intra-national situation is worse.

I say this because I know personally several people from the EU who are stuck on Social Security in the US; while they are still EU citizens, they have nothing to look forward to in their original home countries as they spent their last 20 or 30 years in the US. The consensus among them was that retiring in the EU is better.

My wife decided not to go through with her US citizenship as a result, but every decision is different due to circumstances.

[Captain3D]

Re: Should I become an American Citizen?

thanks for the replies.

It is likely I will go ahead for the security of work here as well as the option of working away from the US if needed while still being able to return. I will of course have to keep a close watch on the situation as time gets closer to retirement.

phil

[c1ue]

Re: Should I become an American Citizen?

It is likely I will go ahead for the security of work here as well as the option of working away from the US if needed while still being able to return. I will of course have to keep a close watch on the situation as time gets closer to retirement.

Just keep in mind with HEARTS, the return trip can cost you money...

[Aussie]

Re: Should I become an American Citizen?

We lived 15 years in the US and when we moved away 5 years ago, I was initially regretful that we had not applied for citizenship.

Now I couldn't be happier. I feel like we dodged a bullet . . .

[flintlock]

Re: Should I become an American Citizen?

So it's all about the money now is it? Sad when the former virtues of the USA don't enter the discussion.

1850s Freedom, equality, liberty

2010 Social security, medicare, Green cards.

Not a reflection on you, but rather the allure of the US. My father in law is a Canadian with dual citizenship. He readily admits, he's only staying here for financial reasons (wife died).

[c1ue]

Re: Should I become an American Citizen?

So it's all about the money now is it? Sad when the former virtues of the USA don't enter the discussion.

I think there are more than enough threads talking about suspension of habeas corpus/Patriot Act, Interpol being exempt from the Constitution, etc etc already

And is the US really so much more free than the other 1st world nations?

For that matter I've seen arguments that Mogadishu is the ultimate in freedom: freedom to provide your own security. freedom to provide your own water. freedom to own and shoot any type of weapon you please. freedom to marry 10 year olds. etc etc.

[rabot10]

Re: Should I become an American Citizen?

Dual Nationality YES. US only NO!!!!!!!!!!

jmho

[ST]

Re: Should I become an American Citizen?

Hi All

I have the application to become a US citizen (Dual Nationality with UK) in front of me and I am trying to think through the pros and cons. What do you guys think.

Pros:
- Have some kind of say in the country I work - voting etc
- Protection against immigration law changes that might take away my Greencard
- Secure my 401k plans and Social Security accounts etc
- Ability to leave the country for work and come back later

Cons:
- Social Security and general economic benefits may not be worth protecting 25 years form now
- Will always have to file US taxes
- If I want to leave permanently there could be heavy exit fees on assets

Plenty more I am sure. What do you think...phil

Definitely they have become a lot more strict with regards to holding the green card but living outside the country. A border agent can take it away from you at any time if you live outside the country - in the past they have been lenient and admittedly they are still somewhat lenient, but I have heard of cases where they have start to confiscate residency.

As far as taxes go, I would guess that you have to file a return anyways so very unlikely that there is any difference between being a perm resident and a citizen, other than voting rights. I have two citizenships, as do my children, including American. My wife also has two including American,but a different first citizenship than I possess.

[c1ue]

Re: Should I become an American Citizen?

Dual Nationality YES. US only NO!!!!!!!!!!

The problem with dual nationality - if one is the US - is you are still stuck with all the US' tax and file issues.

Thus as a green card holder, you can choose to stop filing US returns and taxes should you leave.

As a US citizen, you don't have this option.

Yes, as a green card holder you are much more vulnerable to anti-foreign labor measures - hence my point earlier about long term job stability.

[flintlock]

Re: Should I become an American Citizen?

I think there are more than enough threads talking about suspension of habeas corpus/Patriot Act, Interpol being exempt from the Constitution, etc etc already

And is the US really so much more free than the other 1st world nations?

For that matter I've seen arguments that Mogadishu is the ultimate in freedom: freedom to provide your own security. freedom to provide your own water. freedom to own and shoot any type of weapon you please. freedom to marry 10 year olds. etc etc.

Oh I was not saying the US is so free anymore. I was lamenting that it doesn't even make the top reasons to become a citizen anymore. 30 years ago it probably would have.

[plinko]

Re: Should I become an American Citizen?

anyone know about the opposite scenario? I've been a lifelong US citizen, twenties, thinking about finding a job in the EU, CA, NZ, or AU though. Would I still have to pay us taxes if I work for a company based out of the other country? How would things work if I ever apply for dual-citizenship in the other country?

[c1ue]

Re: Should I become an American Citizen?

anyone know about the opposite scenario? I've been a lifelong US citizen, twenties, thinking about finding a job in the EU, CA, NZ, or AU though. Would I still have to pay us taxes if I work for a company based out of the other country?

Yes.

So long as you remain a US citizen, you must file for US taxes.

In general the country you live in also insists you pay its taxes.

The good news is that you pay the 'local' taxes, then pay the US' - but there has been a large exemption on top of this which zeros out your US portion for any but the most expensive of countries. This number is $87,600 as of 2008.

Unfortunately if there is a hyperdeflation of the dollar, this exemption will disappear at which point all you have is the deduction of the foreign taxes like a state tax from your federal return.

How would things work if I ever apply for dual-citizenship in the other country?

So long as you remain a US citizen, you are liable for US taxes.

Dual citizenship is not something recognized at all under the US tax code - for that matter is barely recognized in the US State Department. It is a "don't ask, don't tell" type of deal and basically worthless except for entry/residency issues in another country.

http://www.businesstaxrecovery.com/f..._tax_exemption

From a tax point of view, this can be a bit problematic since the Internal Revenue Service demands you pay taxes on all of your income regardless of where it is earned.

If you are seriously contemplating a career change out of country and it is long term, it might be worthwhile to ponder the ramifications of the HEART act (There is a HEARTS act now :eek:

http://robertschon.wordpress.com/200...tax-heart-act/

In essence this article tells us that when the proposed legislation described is signed into law by George Bush, citizens AND green card holders will be exposed to a US capital gains tax exit charge to the extent of their accrued gains on their world-wide assets if/when they give up their US citizenship/green card.
The Act will apply to any expatriate if that individual
(i) has a net worth of US$2 million or more; or
(ii) has an average net U.S. income tax liability of greater than US$139,000 for the five year period prior to expatriation; or
(iii) fails to certify that he has complied with all U.S. federal tax obligations for the preceding five years (the ‘covered expatriate’).
The Act will contain two exceptions. An individual will not be a ‘covered expatriate’ if he can certify compliance with US federal tax obligations as specified in item (iii) above, and:
(i) he was at birth a citizen of the U.S. and another country, provided that
(a) as of the expatriation he continues to be a citizen of, and a tax resident of, such other country, and
(b) he has been a resident of the U.S. for no more than 10 of the 15 taxable years ending with the taxable year of expatriation; or
(ii) he relinquished U.S. citizenship before reaching the age of 18 ˝, provided that he was a resident of the U.S. for not more than 10 taxable years before relinquishment.
On my analysis if A is a UK citizen and say gives up his/her green card and triggers the exit tax, s/he will currently get no UK step up in basis for his/her US tax paid on exit. This is real double taxation. Although the US and the UK have agreed to review their existing 2004 double tax treaty in 2009, I am pessimistic this issue will be resolved in a way satisfactory to the UK given the US displeasure at our recent changes in our rules applicable to non domiciled individuals.
For those assisting in obtaining visas/green cards for those wishing to live in the US, the issue as I see it is that if fee earner UK spouse (“X”) goes to the US for work and has a right to work in the US, his/her spouse needs a green card to live with X. As I see it this very act exposes X’s spouse potentially to the exit charge. My other concern is that the carve out from liability at (a) above is narrow in that if (as I have underlined) X’s spouse has left the US but (say) is now retired in France albeit a UK domiciliary, the carve out seems not to apply.
Those applying for a US passport need to be wary of the proposed exit charge when and if they leave the US.

Note this technically can even apply to green card holders.

Once again, while the limits thus far aren't so bad - a hyperdeflation of the dollar exposes almost everyone to it. I don't see Congress jumping to push these limits to keep up with dollar devaluation...

One reason why my spouse and I file separate returns...

[Captain3D]

Re: Should I become an American Citizen?

Oh I was not saying the US is so free anymore. I was lamenting that it doesn't even make the top reasons to become a citizen anymore. 30 years ago it probably would have.

As I asked the question I should say that I am currently a UK national so freedom, equality, liberty are not significantly different from living in England etc. And also this is itulip after all so the financial angle was emphasized.

Thanks for all the replies. I have now sent in my forms....phil