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The Law That Makes U.S. Expats Toxic

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Re: The Law That Makes U.S. Expats Toxic

#51

Post by mikeash »

Broken_Hippo wrote: post #48
mikeash wrote: post #10

Earlier quoted context omitted.

I don't agree with what that quote is saying. Americans living abroad can still vote, and therefore are still represented. It's true that Americans living abroad don't all have the same representatives, since they're represented by the elected officials from where they're registered to vote in the US, but that's a far different thing from saying that they have no representation at all.

I'm an american living in Norway. I can vote for president, sure. Supposedly I am allowed to vote in the district I last lived in the states, but trying to get any of this done is difficult, especially since the state I live in requires proof of address for voter registration. I understand the likelihood of the representatives there to care about any issues I have is pretty minimal. After all, americans living abroad…

How are you voting for President without also voting in the other elections that are up at that time? Presidential elections are technically a local affair, and the ballot will have all the races.

I personally never had any trouble voting while I was living abroad. It was slightly inconvenient to track down a fellow American to witness it, as required by the absentee ballot I was issued, but no big deal.

Re: The Law That Makes U.S. Expats Toxic

#52

Post by patio11 »

masklinn wrote: post #39
morgante wrote: post #17

It really doesn't make sense how the US is the only country which insists on taxing their citizens, no matter where they live. It makes American labor less competitive and promotes the insularity of American culture. I'm living abroad and you can definitely see the impact of the US tax system in the background of expats: Americans are severely underrepresented. The same salary, when offered to a British expat and an…

> The same salary, when offered to a British expat and an American, is much less attractive to the American because of the 30+% tax burden imposed. There's a ~100k foreign income tax exemption and many countries have tax treaties with the US which bypass even that and give a US tax credit corresponding to the already taxed foreign income. Big issues are there are constraints on the time you can spend in the US (too m…

Big issues are there are constraints on the time you can spend in the US (too much holiday there and you're not considered living abroad)

Check with your accountant for an authoritative take on the following, but since I happen to be right with a certainty approaching "Gravity exists" I'll write the correction here: There exist two tests by which you can qualify for the Foreign Earned Income Exemption. One is the physical presence test, which is automatically ruled in your favor (i.e. you are ruled to be a foreign resident) if you spend less than 30 days in a tax year physically in the US. The other is the Bona Fide Residence test, which is less of a deterministic question than physical residence. There's no limit to the amount of time you spend in the US every year as long as you meet the IRS examining officer's impression of someone who "clearly lives in a foreign country continuously for an indefinite period."

I've had years with upwards of 100 days in the US, and never had any problem with claiming Bona Fide Residence in Japan. As my accountant phrased it once: "If you've got only one refrigerator, and it's on, and it isn't in the US, then you're certainly BFR abroad."

For more on this scintillating topic: https://www.irs.gov/Individuals/International-Taxpayers/Fore...

Re: The Law That Makes U.S. Expats Toxic

#53

Post by binarray2000 »

You must look at it from the perspective of the Oligarchy: Wars, regime-changes, support to "moderate" forces, spying on the world just cost money. And you cannot afford all that by only taxing those at home. You need every dollar. So, you tax the expats (8.7 million of them!). They are abroad to work after all - they MUST have earnings. As an alibi for your new revenue source, you pass a new law (Fatca) while saying that you fight "terrorism, tax evasion and organised crime". Again! The game you have played so well (and so often) in the past still works. This time it's even easier: Expat "elitists" have no representation, and the Average Joe cannot think about Fatca when he comes back home - tired and overworked - after two jobs, worrying about his CC debt and plethora of other issues.

Re: The Law That Makes U.S. Expats Toxic

#54

Post by peripheral »

I have experience dealing with this. I'm not a U.S. person, but I have a company in a EU country that I co-own with a U.S. citizen (through personal holding companies). Our (EU) bank first demanded we fill in 9 ridiculously extensive forms detailing our entire business, then raised our bank fees from 5 to 105 euro per month, and then closed our account, giving us 2 weeks to send our balance elsewhere. All within a year time.

It's extremely hard for us to find a new bank outside the U.S., and inside the U.S. isn't easy either, since we're not a U.S. company, and do no business there. Thank god we're liquidating this company anyway.

Doing consulting work, I actually did some work for the bank that closed our account. And honestly, while I didn't get close to the departments that deal with FATCA, I can't say I blame them for closing our account. You should see how much of a headache all of the new regulations in the financial industry are for the institutions.

Re: The Law That Makes U.S. Expats Toxic

#55

Post by morgante »

deong wrote: post #26
morgante wrote: post #17

It really doesn't make sense how the US is the only country which insists on taxing their citizens, no matter where they live. It makes American labor less competitive and promotes the insularity of American culture. I'm living abroad and you can definitely see the impact of the US tax system in the background of expats: Americans are severely underrepresented. The same salary, when offered to a British expat and an…

I'm also an American expat (Iceland), and for a lot of people, there will be no difference except for inconvenience. If you make less than about $100,000 per year, you exclude that income from US taxes completely. You still have to file a 1040, but you just declare the income on one line and negate it five lines later. You send the IRS the completed form showing you owe $0 and you're done. And if you make more than $…

You're right that this isn't applicable in most European countries, but it does hit Americans harder in other major world cities which have lower taxes than the US, like Hong Kong or Singapore.

I'm in Abu Dhabi, where there is no income tax, so tax treaties aren't really helpful. As a result, salaries here are actually proportionally lower than they would be in a higher-tax country, which works out well for everyone besides Americans. The exclusion is helpful, but you can still end up with a substantial tax bill as well as having to be careful about how much time you spend in the US.

Re: The Law That Makes U.S. Expats Toxic

#56

Post by rurban »

rayiner wrote: post #40

Is taxing expats abroad really a problem? First, there is a large baseline exemption and most expats abroad don't pay U.S. taxes. Second, if you're intending to permanently leave the U.S. why should you keep U.S. Citizenship? And if you're intending to come back, is it really unfair to tax you? American citizenship has real benefits, especially if you're rich enough to pay expat taxes. The U.S. protects you and your…

It is a big one. Many expats had to resign their US citizenship to avoid this silly law.

Double taxation only exists in Aethopia and the US.

Read this blog: http://www.overseas-exile.com/

Protection? Yes, maybe that's the reason. To support the US military efforts and budget.

On a side-note: If I would applied to the US greencard, and then decided to move back to Germany, I would have to pay double income taxes. To Germany and to the US. You don't even need to be US citizen.

Re: The Law That Makes U.S. Expats Toxic

#57

Post by patio11 »

TimSchumann wrote: post #38
patio11 wrote: post #4

Related rules have also made holding US accounts more difficult for Americans overseas. I had my retirement accounts frozen by their previous custodian: "Sorry, our regulator doesn't let us deal with Americans overseas." I'm unsure whether that was sincerely "doesn't let us" or meant "would require a paperwork burden we find unacceptable relative to the money you few guys make us" but either way I was given thirty da…

> with $10k of financial engineering the problem goes away for forever As an American this upsets me greatly to hear. I feel it makes living abroad, especially to families of average means in this country, almost an impossible feat. I also wonder if only leaving the country for short duration vacation/business contributes to the "We're the best country ever!" mentality here and the "Wow, look at those weirdos over in…

almost an impossible feat.

FWIW: this is clearly not the case. It's just a paperwork burden with occasional inconveniences, some bigger than others. Millions of Americans, most of whom have more modest means than the typical software engineer on HN, make it work.

Re: The Law That Makes U.S. Expats Toxic

#58

Post by worldadventurer »

pibefision wrote: post #5

Maybe I'm wrong, but america is not the only country who taxes globally. Spain is taxing globally also.

It looks like China also has this on the books - to tax all globally earned income, but is starting to enforce it now: http://www.nytimes.com/2015/01/08/business/international/chi...

Re: The Law That Makes U.S. Expats Toxic

#59

Post by junto »

pyvpx wrote: post #15
TillE wrote: post #3

The government's actual "solution" to this problem has been to raise the fee of renouncing citizenship, from $450 to $2,350. No problem for wealthy people who want to avoid tax, but quite a large burden on everyone else. I plan to become a German citizen eventually, because I'm probably going to retire here. But thanks to Germany's disallowance of naturalized dual citizenship and America's tax complexities, that requ…

I keep seeing people repeat this, yet I can't find any information to confirm it. you can become a German citizen and still retain your US citizenship, from everything I've read and everyone I've asked on the matter.

It depends: https://en.wikipedia.org/wiki/German_nationality_law#Dual_ci...

Re: The Law That Makes U.S. Expats Toxic

#60

Post by onli »

gambiting wrote: post #34
pyvpx wrote: post #15

Earlier quoted context omitted.

I keep seeing people repeat this, yet I can't find any information to confirm it. you can become a German citizen and still retain your US citizenship, from everything I've read and everyone I've asked on the matter.

It's probably similar to how most EU countries work - you can have two citizenships,but both of those countries will only recognize their citizenship. So for example - if you had a dual Polish/British citizenship, Poland would only recognize your Polish citizenship. As long as you are in Poland, you are a Polish citizen in the eyes of the law, and you would not be officially treated as a foreigner, or even recignized…

No. In Germany we had a big debate about doppelte staatsbügerschaft at the beginning of the millenium. It was already a big undertaking to enable that at all, for children born here from parent with foreign citizenship. It does not go further than this, in general if you want to be german, you are german and nothing else. There are some exceptions as listed above, but they should not apply here.
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