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FATCA Pushes “Accidental” Americans to Give Up US Citizenship

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Re: FATCA Pushes “Accidental” Americans to Give Up US Citizenship

#61

Post by erdos4d »

abellerose wrote: post #22

I tried to get rid of my US citizenship while residing in Canada. I found out about the $2.5k and cannot pay that while I’m not in a great financial situation to afford giving away that much. Also I suffered conversion therapy in Michigan against my will. So I greatly despise the idea of the US ever getting a dime from me. Luckily my name is different between citizenships and I’ve not disclosed being a US citizen to…

As a fellow expat who would very much like to get rid of my US citizenship too, I can tell you my experience with Americans is that they are not happy that anyone gets out and doesn't have to deal with the same crap they deal with. Tell them you like the life/people/culture in country X better and they get upset, defensive, angry even, like you wronged them by calling attention to the reality that its not actually a very nice place to live, and they know it, and they know they are stuck there. More than anything, I believe this essential truth about American character explains things like this $2.5K "fee" and the spineless response from the embassy you got. It's all just to fuck with you, cause you got away and don't have to live around those people and their crazy anymore.

Re: FATCA Pushes “Accidental” Americans to Give Up US Citizenship

#63

Post by nvarsj »

R0b0t1 wrote: post #54
nvarsj wrote: post #13

Being an American expat is a complete nightmare. The retroactive GILTI/transition taxes enacted by Trump and the republican Congress put a massive strain on my family and finances. Imagine getting a bill for a significant portion of your life savings despite paying already 50% tax in your foreign country and having dutifully filed US taxes at great expense. Never have I disliked being an American so much. Some people…

Your situation isn't normal. You need to be making quite a bit of money to be taxed. If you don't have any desire to return to the US why not just ignore it?

The taxes are the least of it. The expense and time it consumes to file the various forms is a huge pain. Anyone who has investments, a business, or property abroad will suffer from this. My net taxes were very low, but I have spent thousands on accountancy fees and hundreds of hours of my own personal time. GILTI was just the latest landmine.

I net in the low 6 figures, via my own consultancy. I have a one man shop which basically incurs the wrath of the IRS because it doesn't fit into the IRS tax code worldview. This is not abnormal, in fact many experienced software people in the city work this way.

I also can't just ignore it. The IRS under the Obama administration launched one of the most aggressive foreign tax ramp ups ever. With FBAR/FACTA, they know everything you have. It is incredibly risky to ignore filing and paying your US tax obligation - they can do all kinds of horrible things, with minimum 10k penalties and foreign agreements in place for enforcement. Plus I have retirement accounts in the US which could be affected.

Re: FATCA Pushes “Accidental” Americans to Give Up US Citizenship

#64

Post by thrower123 »

mantap wrote: post #34
jancsika wrote: post #21

> She received automatic citizenship by being born on U.S. soil, but has no other connection to the country, having left as a baby. Sorry, but there is no way in hell a European wouldn't know they have dual citizenship by being born in the U.S. And there's no way they wouldn't have renounced it in all this time unless they saw that citizenship as a benefit that outweighs the costs, or at least as a potential benefit…

It's not easy to renounce American citizenship. The US considers itself entitled to taxes from citizens who live in other countries. Even if they haven't been to the US since they were a baby. If you want to renounce citizenship you have to pay up.

I am looking on with interest as it appears increasingly plausible that US states will try some form of this justification in order to tax in perpetuity former residents who flee to lower-tax states

Re: FATCA Pushes “Accidental” Americans to Give Up US Citizenship

#65

Post by elgatonegro »

nvarsj wrote: post #55
elgatonegro wrote: post #30

Earlier quoted context omitted.

Looks like living abroad is not the issue here, being an owner of a foreign corporation is. There are millions of Americans living abroad, maintaining their US bank and retirement accounts.

So you're saying it's all okay as long as you remain a permanent employee your entire life with a company owned pension plan? Is that a joke? What if you want to buy property, invest in a business, open up a private retirement fund, or a million other things. All of these are a massive land mine for any American living abroad. On top of that you have things like FACTA that affects everyone. This kind of stuff has neg…

Buying property doesn't expose you to GILTI/transition taxes.

Neither does investing in a business. You just have to pay taxes on income derived from that business, as normal.

FATCA can be completely nullified by not maintaining foreign bank accounts. Keep your money in the US, problem solved. Maybe that's not an option for everyone but it's still an option.

Re: FATCA Pushes “Accidental” Americans to Give Up US Citizenship

#66

Post by TomVDB »

jancsika wrote: post #21

> She received automatic citizenship by being born on U.S. soil, but has no other connection to the country, having left as a baby. Sorry, but there is no way in hell a European wouldn't know they have dual citizenship by being born in the U.S. And there's no way they wouldn't have renounced it in all this time unless they saw that citizenship as a benefit that outweighs the costs, or at least as a potential benefit…

Even if they were aware that they are a US citizen, it is highly unlikely that they are aware of the tax consequences unless somebody explicitly told them. In almost all countries in the world, there is no good reason to renounce your accidental citizenship of a foreign country and there is no point in going through the trouble of doing so. And that doesn't even take into account the high cost of doing it.

Re: FATCA Pushes “Accidental” Americans to Give Up US Citizenship

#67

Post by aroberge »

icu wrote: post #23

The solution is to use your accidental US citizenship to your advantage. The US is actually a remarkable tax haven and has some amazing trust structures if you know what you're doing. For example the Roth IRA, will in most cases due to reciprocal tax treaties, allow for a tax free pension even when your tax residency is in another county. On top of the trust structures I've alluded to, there are few reciprocal data s…

This is an overgeneralization that is clearly incorrect in some cases. Just a quick example for Canadians, from [1]:

> Usually, it is best for United States citizens to not hold TFSAs since the costs of tax reporting and compliance usually exceed any benefits.

There is no US equivalent for TFSA.

[1] https://www.taxesforexpats.com/articles/retirement/simple-us...

Re: FATCA Pushes “Accidental” Americans to Give Up US Citizenship

#68

Post by seanmcdirmid »

elgatonegro wrote: post #37
eralps wrote: post #29

I am a green card applicant basically waiting to become a US citizen in the next 5 - 10 years. Comments are mostly blaming the person for not renouncing it but is renouncing really necessary? If I end up going back to the country I was born in and leave the US what benefit do I have as a US citizen? This has been a scary scenario for a long time for me and I don't think I would be able to pay tax to the US with my in…

If you become a US citizen you have to file yearly IRS tax returns, calculate and pay taxes. There is no getting around this, it does not matter where you live. The US has bilateral tax agreements with certain countries to avoid double taxation. So if you happen to be in one of these countries, you will normally pay taxes to your host country and if those are greater than the taxes owed to the US (which in many cases…

Not only do you have to file tax returns, but you’ll get no help in doing it since you aren’t going to be issued W2s. At least you can e-file now, but doing taxes abroad is much harder than doing them here.

Re: FATCA Pushes “Accidental” Americans to Give Up US Citizenship

#69

Post by UncleSlacky »

roywiggins wrote: post #17
muststopmyths wrote: post #9

So, these people chose to keep their US citizenship, but chose to not follow the rules ? The woman was brought over as a baby, but chose to keep the citizenship into adulthood, presumably acquiring a passport or other citizenship documents. Otherwise how are the banks finding out ? Why should she be surprised if the IRS eventually comes for her ? Seems like giving up citizenship is the right solution for these people…

You don't have to choose anything, if you're born in the US you're a citizen whether you get a passport or not. No affirmative steps required. It's not surprising that banks would cotton on. The US has been very aggressive about enforcing reporting requirements on citizens abroad, and they do it via the banks.

And what's worse is that if an American has a joint account e.g. with their (European) spouse in Europe, strictly speaking the bank shouldn't release information on that account as it violates privacy laws, which is part of the reason European banks aren't keen to hold accounts for US citizens.

Re: FATCA Pushes “Accidental” Americans to Give Up US Citizenship

#70

Post by Diggsey »

bloodorange wrote: post #47
mantap wrote: post #34

Earlier quoted context omitted.

It's not easy to renounce American citizenship. The US considers itself entitled to taxes from citizens who live in other countries. Even if they haven't been to the US since they were a baby. If you want to renounce citizenship you have to pay up.

In most countries, you do have to pay for government services. Renouncing citizenship is not a trivial thing and of course most countries would have some fee associated with it. One could claim "I have never been there since I was an infant" but it falls on the people rendering the service to verify the facts. I can see why people are upset (and I don't like the warmongering nation) but many of these complaints are n…

Most countries don't tax their citizens abroad though, so there's no real necessity to give up citizenship.

The US charges far more to give up citizenship than most other countries, and requires you to pay any outstanding tax before you can do so. For some people that is just not possible. What exactly are they supposed to do now that they can't access any financial services?

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