Nearly 1 million American citizens living abroad are considering renouncing their citizenship due to U.S. tax filing requirements, according to 1040 Abroad, a tax filing firm for expatriates.

The State Department estimates that about 9 million Americans live outside the U.S., with about a quarter “seriously considering” or “planning” to renounce citizenship. Of those looking to give up their citizenship, more than 40% said that tax filing requirements were spurring their decision, according to 1040 Abroad.

Regardless of where they live, U.S. citizens and resident aliens must file and pay income taxes on worldwide income. This means that expats may have to file and pay taxes in more than one place.

Around two-thirds of U.S. citizens living overseas believe they don’t need to file U.S. taxes and many are overwhelmed by reporting requirements, according to Olivier Wagner, founder of 1040 Abroad.

“It can get very complicated very quickly,” Wagner told I Am Expat.

A foreign bank report and financial account, known as an FBAR, must be filed with the Treasury Department once an expat’s foreign bank account balance exceeds $10,000.

According to 1040 Abroad, the deadline for filing an FBAR is April 15, with an automatic extension until Oct. 15 for those who miss it. Additionally, some who have accounts over a certain limit may also be required to file Form 8938, which is designed to prevent tax evasion.

The threshold for Form 8938 for a single filer at the end of the year is more than $200,000 and more than $400,000 for married couples filing together. For a single filer during the year, the threshold is more than $300,000 for a single filer and more than $600,000 for married couples filing together.

Some expats may also be required to disclose foreign savings and investment accounts.

In addition to the greater tax reporting burden, many expats say they are frustrated with the U.S. federal government. 1040 Abroad found that 60% of expats disagreed with the U.S. government’s approach to the COVID-19 pandemic and many feel the government does not represent them.

“In the end, many expats just want to live a normal financial life,” Wagner said. “I think it’s safe to say that the vast majority of Americans living abroad are what we consider middle class. We’re not talking about billionaires living on yachts.”

While giving up U.S. citizenship is relatively uncommon, it has become more common than giving up the citizenship of most other developed countries. According to 1040 Abroad, 3,000 to 6,000 American citizens have given up their citizenship each year since 2013.

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