If you talk to Americans abroad these days, those who have been out of the US for a decade or more, you’re likely to hear a confession come out sooner or later: “I thought about refusing.” It’s not always said with pride, it’s not always said lightly, but it’s said with a strange mixture of weariness and relief. Withdrawal used to sound extreme, almost unimaginable. By 2025, it’s starting to sound… understandable.
No single policy change is driving this. Instead, it’s a bunch of small pressures that over time push people to a decision they once swore they wouldn’t make.
1. Applying to other countries is tired
Most of the frustration boils down to one strange fact: US taxes are based nationalitynot to stay. So even if you haven’t lived in the States for twenty years, the IRS still expects a full tax return every year.
For the 2025 tax year, that means including things like:
- the new one $130,000 FEIE,
- Foreign Tax Credit,
- and whatever combination of forms your situation requires, which can be shockingly high for someone with a normal life abroad.
There was a teacher in Spain who earned less than €40,000. He needed Form 1040, Form 2555, Schedule 1, FBAR, and FATCA to prove he didn’t owe anything. He laughed when he finally saw the list, not because it was funny, but because it made no sense.
It’s not that filling is impossible. It’s just endlessly complicated for reasons that feel disconnected from the reality of living abroad.
2. FATCA Banking Problems Are Not Over
And there you have it FATCAthat law from the beginning of 2010 most people from other countries hoped that it would “stabilize” now. It didn’t happen. Gulf countries, Europe, Asia, and everywhere else still treat US citizens like paper magnets. They are necessary.
And while FATCA is not trying to punish the average person, the negative consequences are real:
- banks ask for W-9s,
- investment accounts are rejected,
- some agencies close the accounts of US citizens entirely.
FATCA was intended to combat tax evasion. It ended up stumbling into ordinary lives.
3. The Emotional Stress of Not Feeling “Done”
Even outsiders who remain fully compliant tend to carry this sub-standard anxiety, like there’s always one more type, one more rule, one more reporting limit they’ve never heard of.
And the IRS doesn’t make foreign reporting optional:
- FBAR for accounts over $10,000
- FATCA Form 8938 if your goods exceed certain limits
- Forms like 3520, 5471, or 8865 if you have trusts or third parties
It becomes an annual mental burden. You finish your return in April or June, but somehow the tax year doesn’t feel like it’s over. Dumping, for some people, is not tax evasion. It’s about asking for permission to stop worrying.
4. Exit Tax Laws Are Scary, But Staying Sounds Bad To Some
People often think that the exit tax is what prevents withdrawals. And yes, the numbers for 2025 are important:
- $2,000,000 total value limit
- $206,000 five-year tax liability test
- $890,000 it is considered to be issued without sale
But here’s the nuance: most people give up don’t do it owe exit tax. Their number remains below the limit. Their average tax rate is modest. They just got bored with the program.
I noticed something surprising: the fear of the exit tax is great at first, but the fear to stay it gets bigger.
5. People’s Lives Just Move On
The other part of the story is soft, less technical. Many immigrants have family abroad now. They have built jobs, relationships, and daily rhythms that don’t involve the US at all.
And in that context, becoming a US citizen can start to feel at odds with who you are, less like a basic identity and more like a bunch of administrative obligations they never asked for.
It is not anti-American. It’s just life.
6. Compliance Costs Keep Rising
The final push? Money.
International tax preparation is not cheap, especially if foreign pensions, PFICs, corporations, or RSUs are mixed. Paying $1,000 to $3,000 every year to ensure you don’t owe anything… well, many describe it as “paying a registration fee to become a citizen I don’t use.”
Withdrawal becomes less about tax avoidance and more about seeking financial sanity.
When Weighing Your Options in 2025, You Don’t Have to Walk Alone
Whether you’re just frustrated, seriously considering withdrawing, or just trying to understand where you stand, Expat Tax Online can walk you through the rules step-by-step, from compliance to tax audit exit to what life looks like after expatriation. No pressure, no judgment, just clarity from people who work on cases like yours every day.
