Anyone renounced USC for Ind Citizenship?

AmmuS · Post by **AmmuS** » Mon May 09, 2011 10:29 pm

Many have r2i'ed so I was wondering if anyone has actually went back to being an Indian citizen and in the process renounced their US citizenship?

Anyone??

AmmuS · Post by **AmmuS** » Tue May 10, 2011 7:18 pm

Really?

over 120 views and not one reply? LOL

R2I-2010 · Post by **R2I-2010** » Tue May 10, 2011 8:28 pm

AmmuS;387787Really?

over 120 views and not one reply? LOL

Because you are asking a question like - Has anyone won a multimilliion dollar lottery but did not claim the prize :-)

cabo · Post by **cabo** » Tue May 10, 2011 8:45 pm

AmmuS;387787Really?

over 120 views and not one reply? LOL

There are a lot of members, who have renounced a US greencard officially- basically so they can get a multiple entry visitors visa and not risk their past immigrant status affect the visa.

There is no apparent reason to renounce a US citizenship- people mainly seem to consider it for tax purposes- estate tax etc. Member Suyog had posted some info on the topic. Renouncing US citizenship when somebody is suddenly wealthy apparently has its own headaches. So, some here suggested that one is better off not taking the US citizenship in the first place especially if they plan to get quite rich and don't plan to work in US again.

What are your reasons to consider renouncing a US citizenship.

suyog · Post by **suyog** » Tue May 10, 2011 10:29 pm

renouncing green card after 8 years is considered same as renouncing USC from tax perspective. You may have to deal with exit tax and issues if you need a visa for future travel to the US.

AmmuS · Post by **AmmuS** » Tue May 10, 2011 11:02 pm

cabo;387817There is no apparent reason to renounce a US citizenship- people mainly seem to consider it for tax purposes.......What are your reasons to consider renouncing a US citizenship.

My reasons are the same as you have mentioned. With US tax requirements getting more stringent, I would think reverting back to Indian Citizenship status would allow people to generate more money/land, etc without being worry about the filing process in the US….hence without much headache.

“one is better off not taking the US citizenship in the first place especially if they plan to get quite rich and don't plan to work in US again.” – that would be ideal if we all had the power to foresee our future.

jaykana · Post by **jaykana** » Sat Jun 11, 2011 6:37 pm

@Cabo & Ammus : One of the friends I know (OCI & USC) is thinking in this direction, because of increasingly draconian US Tax Laws which are complicated and easy to miss, and little benefits of retaining USC except Social Security, which in any case might be available to all now, due to near closure of Totalization Agreement between US and India. In his case his only income is interest from his savings that he transfered to Indian banks into NRO and NRE accounts. With the requirements of FBAR and FACTA and fear of life-changing penalties in case of non-compliance (voluntary or accidental) his point is either he loses substantial amounts of money in back taxes and penalties and invites scrutity of all accounts or risks life-changing penalties...his children can always retain their USC status if it helps them..any idea how the exit tax works ?

ric123 · Post by **ric123** » Sat Jun 11, 2011 8:26 pm

jaykana, but i think your friend will still need to pay the back taxes + penalties before he thinks of giving up USC as IRS can still come after the fact.

Imissindia · Post by **Imissindia** » Sat Jun 11, 2011 10:25 pm

I am seriously considering renouncing USC as well after R2I. I have been fully compliant with all laws and tax matters but fail to see why I should keep on filing tax returns after I am living abroad. Even if the tax paid isn't much, the hassle and draconian laws are enough to make me consider it.

Now, there seem to be two sections of the law the might apply to regaining INC. One says that as an OCI you have to complete five years including one year residing in India before applying. The second section says that any person who was a former Indian citizen can apply after one year in India- no mention of OCI requirement.

jaykana · Post by **jaykana** » Sat Jun 11, 2011 11:45 pm

@Imissindia - The gurus on the forum with give a definitive answer but here are my two pennies for whatever they are worth -

1. The former clause holds i.e. 5 years after registration of OCI with 1 yr residence in India prior, as per Indian Consulate website.
2. Before you renounce USC you would need to consider a fee of $450/person for renouncing USC (this has come into force in 2010 (earlier it was free) since renouncing USC has increased manyfold due to draconian tax laws) + Exit Tax on Net worth if that exceeds I believe $600000/- (pl check) + possibility of tax audits to recover past taxes due.
3. Only US and Australia in all the developed countries tax their expats based on worldwide income and not on residence. There is widespread resentment in the expat community as reported in many reports, and many expats ask why they should be paying US taxes at all when they do not reside and use its services ?

By the way has anyone used Form 1116 for tax credits to avoid double taxation ? How is it used and what is the success rate ?