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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

#161

Post by leppr »

Brian_K_White wrote: post #152
clubber88 wrote: post #130

Earlier quoted context omitted.

And take away their right to vote. I’m an expat and I’m not allowed to vote and I don’t owe my home country any taxes (Canadian in the US) That’s the way it should be. I shouldn't tell my home country how to live a life I have no stake in, and they should not charge me taxes for services they cannot render abroad. End taxation and voting abroad!

Spoken like someone who is not stationed abroad, just for one off the cuff easy example. Perhaps I'm wrong but there must be countless reasons and situations like that which make this simple idea in fact merely simplistic. I certainly expect to still receive all manner of services while abroad. I expect my property to still be mine and protected by the police. My home should not revert to being owned by the state jus…

> I expect my property to still be mine and protected by the police.

Non-US citizens can and do own property in the US. Property tax is separate from the US tax on citizenship talked about here.

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

#162

Post by throwawayiionqz »

nickkell wrote: post #150
throwawayiionqz wrote: post #77

The best way out of this is the EU asking for reciprocal measures in future trade agreements and tax treaties (fatca reporting, residency based taxation). If US banks had the same reporting requirements to EU countries regarding EU dual citizens accounts, this absurd situations of being denied banking relationships in the country you work and reside would stop promptly.

Why would the EU ask for that? They don't tax their citizens when they're not resident in the EU

The US has some reciprocity in terms of information flow in the original FATCA agreement. The US (and US banks) does not comply.

Many countries would need information flow about their former or current tax residents to enforce tax obligations, similar to the information the EU banks report to the IRS about US persons. E.g. several EU countries have an exit tax on worldwide income and they would need the reporting from US banks to enforce it.

At the point this is also a competitivity issue for the EU to attract talent and capital. Coming to the EU after having been a US person (citizen or green card) is such a hassle for banking and to manage stock investments in the $100,000s. Just so much pain in terms of paperwork and tax uncertainty that staying in the US and not coming back to the EU solves a lot of hassle.

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

#163

Post by icu »

elgatonegro wrote: post #45
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…

> Yes, this is a remarkable pain to learn and administer, but it's all possible to do without paying thousands in ongoing accountant and lawyer fees. Where does someone begin this process? A few starting points would be appreciated.

Start with "U.S. Taxes For Worldly Americans: The Traveling Expat's Guide to Living, Working, and Staying Tax Compliant Abroad" by Olivier Wagner

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

#164

Post by icu »

lemonspat wrote: post #43
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…

Is the Roth 401k also then a tax shelter if your tax residency is elsewhere?

It would depend on your country's tax treaty and the treatment of the Roth 401k's annual required minimum distributions (RMDs). In comparison, for countries that don't accept Roth IRA pension income as tax free when tax resident in that country, the Roth IRA allows you to flexibility plan income amounts to stay under income thresholds for tax. This is one of the things you need to consider with a Roth 401k.

However, you could rollover funds from a Roth 401(k) to a Roth IRA, just be aware of the clock for the 5-year rule.

If doing any of this stuff please for the love of binary get proper financial advice!

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

#165

Post by genoissedba »

dasudasu wrote: post #141
Digit-Al wrote: post #76

Earlier quoted context omitted.

> A surprising number of Americans seem to think it's reasonable to tax non-residents, so such legislation may be hard to get passed. So let's get this straight. On one side you have Americans who think it's reasonable to tax people who don't live in the country and thus don't use any of the services that tax pays for and then on the other side you have Americans who believe that all tax is theft under the threat of…

It's not true to say they necessarily don't use any of the services. The US still defend its citizens abroad, and might evacuate you in case some disaster happens, do hostage rescue using the full power of its military and intelligence agencies, and will generally provide consular help and speak on your behalf should you get into trouble.

Speaking from personal experience - not really. My employer rescued me. The US did nothing. Maybe you are thinking of France?

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

#166

Post by dkarp »

nvarsj wrote: post #73
elgatonegro wrote: post #65

Earlier quoted context omitted.

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.

I think you have a very narrow view of an expats life. If you live in a country for 10+ years, it is impractical to not have a local bank account. You can't even get a rental contract easily without a bank account. Buying property exposes you to capital gains tax, which is essentially double taxation, because the UK taxes the buyer unlike the US. GILTI tax is limited to company ownership. Which is what hit me. I real…

Genuine question, have you considered giving in and going to work in the USA? As an American, working as a software consultant in the UK is swimming against the tide. You could be free of the tax burden and earn more by working practically anywhere in the USA.

I know money isn't everything, but would be curious to know what is keeping you in London (as someone in an analogous situation asking myself the same question).

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

#167

Post by genoissedba »

mmaunder wrote: post #56

How do you not know that you’re a US citizen? Surely that’s an edge case? The price of renouncing your US citizenship went from around $500 to just under $3000, so the key issue seems to be to make renouncing more accessible. If filing IRS paperwork no matter where you reside seems an onerous obligation for a citizen, try compulsory military service or currency export controls, both of which the US does not have.

Typically happens when a child is born in the US to non-US citizens who return to their home country. Often they do not realize that simply being born in the US creates citizenship (many countries do not have birth citizenship). There have been court cases in the US when a family comes to the US on vacation and one of the parents gets arrested for failure to file tax returns - the birth happened in the US and the hospital filed the paperwork and the computers remember.

As others have mentioned, it isn't just a case of filing IRS paperwork. I know many non-US banks will refuse to do business with someone if they discover the person is a US citizen because the bank paperwork is not worth it.

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

#168

Post by ehmish »

centimeter wrote: post #113
Digit-Al wrote: post #76

Earlier quoted context omitted.

> A surprising number of Americans seem to think it's reasonable to tax non-residents, so such legislation may be hard to get passed. So let's get this straight. On one side you have Americans who think it's reasonable to tax people who don't live in the country and thus don't use any of the services that tax pays for and then on the other side you have Americans who believe that all tax is theft under the threat of…

Turns out that when you have 330M people with completely incompatible ethnocultural backgrounds, you end up with an untenably wide variance in political beliefs. Europeans take note; this is where many of you are heading.

It leads to carnage, sure, but also leads to the United States being a very interesting and dynamic country. If i could live there i would.

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

#169

Post by mcv »

bloodorange wrote: post #39
mcv wrote: post #32

Earlier quoted context omitted.

This is not true. Many of these accidental Americans really weren't aware of this. Why would they? They never received a US passport or any other official US documents, never lived there, didn't go to school, and had no reason to be aware of their unintended dual citizenship until the US started bugging them for taxes. Also, renouncing this accidental citizenship is far from trivial. That requires jumping through a l…

While I don't like that warmongering nation any more than you do, in this case, it is not a secret that people's citizenship can be affected by where they are born, their parents' citizenship etc. So, if anything, their parents are to blame and not these folks who had no choice in the matter.

The US is really the only country in the world that's this aggressive about their citizenship. A few others come close (I believe Turkey doesn't allow you to revoke Turkish citizenship and claims children of Turks born abroad as citizens, or something like that), but most western countries determine citizenship based on where and how you register your child's birth.

It's quite unreasonable to expect all non-Americans to be aware of all these little exceptions in US law.

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

#170

Post by praestigiare »

A lot of people in this discussion are unaware of the scope of the difficulty and dismissive of the extent of the problem. While the article focuses on the plight of "accidental Americans," the burdens they face are the same faced by all Americans living abroad, and that is not a small number of people.

The number of American citizens living overseas is somewhere between 6 and 9 million last I read. That is around 2% of the total population of Americans, and more than the populations of 15 states. If you are a regular employee, and do not own property, and do not own a business, you can mostly get by with some extra tax paperwork each year and filing FATCA. (Which you had better hope someone tells you about, because the penalties are extreme if you mess it up.) If you can get a local bank account, you can live a relatively normal life, and this is what I see being pointed to by people in this discussion as the usual case. It is not. Nearly everyone falls outside this case eventually, the penalties are harsh, compliance is difficult, and it is all unnecessary.

Some examples:

You get married, and you fail to disclose your new spouses retirement account in your FATCA filing. That could cost you five figures.

You make a bit of self employment income on the side, not realizing that self employment income is not covered under the foreign earned income exclusion, and now you owe all of your profit in taxes.

You start a small business, and really, you're just fucked. All profit earned by your foreign business each year is counted as personal income added to your AGI in the US, but not excludable under the foreign earned income exclusion. And if you don't file (a form which, by the way, says at the top that it takes an estimated 100 hours to complete), or file incorrectly, the penalty is 10k a day until the filing is corrected. But at least you are only fucked now - if you already owned a foreign business in 2018, you got super fucked with a 10 year retroactive tax on all your business profits for the past decade. If you think this is an edge case, read some expat news sites. This wiped out thousands of Americans life savings.

I am an expat. I know many expats. The usual case is to find yourself fucked by these rules. Best case is that you spend a lot of time staying informed, hire good accountants, and avoid penalties. But even then things like GILTI can come along and destroy everything you have built.

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