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I am an American living in Prague and will be among those to give up their citizenship. The new FBAR requirements and the recently pushed through changes that r

• rtpg 11y ago
  To my knowledge there's treaties with the vast majority of countries to avoid double taxation if you're not making more than a very large amount of money ( filed taxes last year and ended up with a giant goose egg)
  • timthelion 11y ago
    Yes, but the legal risk is that if you don't fill out the forms right, then you have your assets seized and you get a huge fine. It has nothing to do with how much you pay and everything to do with how good your accounting is.
  • josh_fyi 11y ago
    There are treaties with some countries, but most of these treaties have "reverse loopholes." E.g., on any freelance income, a 15.5% Social Security tax from the first dollar, with no exemptions. Also, you pay the higher of both countries taxes for each kind of income. E.g., if the US has lower taxes than the other country in general, but higher taxes on cap gains , you pay the US the delta on the cap gains.
  • Ovid 11y ago
    Actually, no. The US has tax treaties with roughly 1/3rd of the countries in the world (source: https://www.irs.gov/Businesses/International-Businesses/United-States-Income-Tax-Treaties---A-to-Z https://www.irs.gov/Businesses/International-Businesses/Unit...). If you're not in one of those countries, too bad. Further, these tax treaties differ from country to country and don't always offer the same protections. Here, read the 42 page US/France tax treaty (https://www.irs.gov/pub/irs-trty/france.pdf https://www.irs.gov/pub/irs-trty/france.pdf) and try to figure out how you'd be impacted if you were living in France. We expats don't just have to hire accountants to do our taxes, we often have to hire international tax lawyers, EVEN IF WE DON'T EARN ENOUGH TO PAY US TAXES! Studies have repeatedly shown that the majority of expats are abroad to find a job, to teach, to volunteer, or for love. We're taxi drivers, waiters, English teachers, farmers, computer programmers, and so on. We're normal people who are being massively screwed by rhetoric in the US.
    • dogma1138 11y ago
      As an expat myself I always had the ability to get these services from my employer, in some cases I have even insisted that this will be part of the employment contract just like any relocation package.
    • dalke 11y ago
      That's only one type of tax treaty. There are also Totalization Agreements. Quoting https://www.irs.gov/Individuals/International-Taxpayers/Totalization-Agreements https://www.irs.gov/Individuals/International-Taxpayers/Tota... : > The United States has entered into agreements, called Totalization Agreements, with several nations for the purpose of avoiding double taxation of income with respect to social security taxes. These agreements must be taken into account when determining whether any alien is subject to the U.S. Social Security/Medicare tax, or whether any U.S. citizen or resident alien is subject to the social security taxes of a foreign country. You'll notice that's a much smaller list of counties. (When I went to the local Swedish tax office to request a copy of the declaration that I needed to include in my US tax forms, to say I was covered under the Totalization Agreement, they didn't know at first what I was talking about. Asking for the form also must have triggered something, because a month or so later I got a phone call from the Swedish tax office asking for why I needed that information, and asking for a copy of my most recent US tax forms.)
• orbifold 11y ago
  It seems rather strange to rescind citizenship because of tax issues, aren't there qualified tax advisors that can handle all of that for you? At least here in Germany they are quite affordable and usually pay for themselves because of the tax savings you get due to their advice. If you consult one you can also be rather confident that you don't accidentally forget about some new regulation.
  • josh_fyi 11y ago
    You need a tax advisor/accountant who is qualified in both the US and Germany and has knowledge of cross-jurisdiction issues. These people are expensive. Until now, only big corporations needed such advisors.
  • khgvljhkb 11y ago
    In Germany they are commonplace because the German system is the most intricate snake nest of paperwork and bureaucracy. Love the country, but jesus christ how could the system ever be navigated by one person, let alone a foreigner?
    • jakub_h 11y ago
      Is Germany really as convoluted, or more convoluted, than the US case law, the patchwork of local tax legislation in the US, or the US tax code, for example? I never understood how those things could ever be navigated by one person.
  • Ensorceled 11y ago
    My ex and I used to use the same accountant to file our taxes. As a Canadian citizen, our accountant charged me $100CDN, my ex who had joint US/Canadian Citizen was charged $500-$2000CDN depending on the year and the amount of work that needed to be done. So, yeah, there are qualified tax advisors who can help but it's painful.
    • gcb0 11y ago
      and even after that $2k is gone every year, you're still not sure you can't be fined. I've had to fix my taxes every year that i had paid Ernest & young to prepare them for me. had i trusted them blindly as most people do, I'd be subject to a couple $20k fines. of course, those depends on you being big/of interest enough to be bothered by the irs. but i like to have clean books and not count on luck.
• bespoke_engnr 11y ago
  I'm an American living in Europe. I report my income to the IRS every year, like you. Reading your comment gave me a scare -- what exactly would trigger the $20,000-80,000 fine or asset seizure? Is it a failure to report income taxes at all? Or do you make so much more than $100k/year that the double taxation is killing you? I'm just trying to figure out what, other than their already-reported income being audited, has got all of your expat friends so spooked...
  • timthelion 11y ago
    When many expats came abroad, the rules were rather lax. They didn't have to file US taxes due to their low incomes. Later the rules changed, and they had to file taxes. Those who didn't know about the change ended up having to pay a big fine. Lately, a new requirement was the need to file FBAR forms for every foreign bank accound and security: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-FBAR https://www.irs.gov/Businesses/Small-Businesses-&-Self-Emplo... Many people didn't know about the new requirement, and they had to pay big fines. What will be the next new requirement that startles people who don't have any contact with the country? No one knows. That is the risk, the uncertainty that there might be a requirement that you don't even know about...
    • bespoke_engnr 11y ago
      Ahh, thanks for the explanation (and the link). Much appreciated.
    • tbirdx 11y ago
      It is even worse for US Persons in Canada, many of whom have never even been a US resident in their entire life. The reason is our tax treaty... If you file in Canada, you're good. At least that is how it was. Now they are going after these people because capital gains are exempted from this aspect of the treaty so they think they are compliant by having filed in Canada, but then find out a house the sold 10-20 years ago should have been declared even if they have never had to file US taxes before.
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• robk 11y ago
  Have you come across anyone who has been fined under this law? I have not and know many people who are rubbish at filing on time or even in the same year. I've not seen any enforcement commensurate with $20k fines willy nilly. Not that I like the law, I've just not seen it enforced.
  • mpweiher 11y ago
    Non-enforcement of draconian laws is the problem. Especially if actually following those laws is difficult to impossible. It means that your fate is not decided by the law, but by arbitrary decisions of random officials. It is the opposite of rule of law.
    • Chathamization 11y ago
      This is a pretty huge problem in the US, though it doesn't get talked about much. The people who do suffer the penalties often get smeared so that people think this isn't a problem and couldn't happen to them ("It's like having Al Capone go to jail for tax evasion.").
  • dalke 11y ago
    For FBAR? There's an amnesty program in place which was introduced during the summer of 2014, which is better than then fines possible under the voluntary disclosure program. See http://www.forbes.com/sites/robertwood/2014/06/18/irs-announces-better-offshore-amnesty-program/ http://www.forbes.com/sites/robertwood/2014/06/18/irs-announ... . That reduced the outrage some. Before then, http://www.reuters.com/article/us-usa-taxes-foreign-idUSTRE7B723920111208 http://www.reuters.com/article/us-usa-taxes-foreign-idUSTRE7... reports that after 26 months of work, and at one time with a likely penalty of $172,000, the final penalty was $25,000 total. Does that count as "come across"? Even without paying the fine, http://www.thelocal.se/20120306/39522 http://www.thelocal.se/20120306/39522 reports "while Pamela may no longer be facing a seven-figure penalty, she's already racked up a bill of $40,000 in accountants' and lawyers' fees." Most of the cases I've heard of (the Reuters piece includes more) are of people who paid penalties under the voluntary disclosure program or had to spend a lot on accountant fees to get things straightened out. And there's still the stress of worrying if a minor mistake out of ignorance when I send the information to my accountant might still end up with huge penalties in the future.
• roddux 11y ago
  Out of curiosity, do you now have a citizenship in Prague? I am unaware how it works for Americans living in the EU.
  • dalke 11y ago
    https://www.justlanded.com/english/Czech-Republic/Czech-Republic-Guide/Visas-Permits/Citizenship https://www.justlanded.com/english/Czech-Republic/Czech-Repu... gives an idea of what's needed to become a Czech citizen. It's different for different countries in the EU.
    • c4n4rd 11y ago
      Besides Prague being a beautiful place, what else made you decide to live there? I am thinking about living in Europe too.. but it has been difficult to decide. Thanks and cheers.
      • dalke 11y ago
        I'm not the one who moved to Prague.
        • cariaso 11y ago
          hey I know that username. greetings from my new home in S. Korea :-)
          • dalke 11y ago
            'Round round, get around, CGHS grads sure get around! Saw your wedding pictures. Best of wishes for your newest resettlement.
      • timthelion 11y ago
        My grandmother is from Prague. I didn't actually "decide" to move here. My mother offered me a house that she was to inherit in return for comming to take care of an eldery aunt. It was a deal that I couldn't refuse...
• mike_hearn 11y ago
  > There are some benefits to being a US citizen, like that the army will rescue you if there is a civil war This is a common myth. If you don't intend to return to the USA there are no benefits to US citizenship, only downsides. The US may or may not rescue you if there's a civil war (see the fate of people in Yemen), but if they do, they will charge you for it at military rates you almost certainly cannot afford: https://travel.state.gov/content/passports/en/emergencies/crisis-support.html https://travel.state.gov/content/passports/en/emergencies/cr... See "Will the US government pay for my travel? What will it cost?" which says, essentially, that no, it won't. This is unlike other countries which DO evacuate citizens for free and DO NOT charge taxes on non-residents.
  • rayiner 11y ago
    My dad was evacuated from Yemen by the military when the civil war there broke out. That blue passport was his ticket out of a country that was rapidly disintegrating. He was not charged anything for that. So they don't always charge you (indeed I've never heard of it).
    • mike_hearn 11y ago
      http://www.latimes.com/world/middleeast/la-fg-yemen-us-citizens-20150410-story.html http://www.latimes.com/world/middleeast/la-fg-yemen-us-citiz... http://www.flyertalk.com/forum/16061379-post8.html http://www.flyertalk.com/forum/16061379-post8.html
      • rayiner 11y ago
        My dad was evacuated 15-20 years ago. Before that, Yemen was a poor but pretty peaceful country. I think we should evacuate the folks stuck there now, but the state department isn't wrong to say that they've had a lot of notice and shouldn't have been there in the first place.
      • xenihn 11y ago
        Didn't know about that situation with US citizens in Yemen, one of the comments posted in response to the LA Times article says Russia ended up evacuating them? Is that true, or just propaganda? The only source is RT..
• deleted 11y ago
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• nvarsj 11y ago
  I'm also an expat, living in the UK. The FBAR isn't too bad at all, it takes 30 minutes to file electronically if your records are in order. The real burden is filing my annual taxes. I'm a contractor with a limited liability company, common setup in the UK. However in the US, this is treated as me having financial interest in a foreign C-Corp, which has an extremely complicated tax return. Fortunately I have a family member who is an accountant and loves new "challenges". Other people in similar situations spend several thousands a year to file their taxes.
  • wlesieutre 11y ago
    I've heard elsewhere that foreign banks were closing down accounts of American expats because the customers aren't worth the FATCA paperwork. Have you encountered any trouble with that?
    • sdenton4 11y ago
      We've seen trouble with this in Canada. My partner's investment manager is basically kicking us out because we're living in the US now.
    • Symbiote 11y ago
      That can happen. One of my colleagues had this problem, except he solved it by not being American (he'd not returned a form which they'd sent, asking him to confirm his lack of American citizenship). I expect the reporting requirements are a burden for small banks, especially ones competing heavily on price rather than offering a full service. I'm not American, but am a similar burden to a bank, and was strongly advised to open an account only with the country's largest bank.
    • vecinu 11y ago
      This was literally in the article.
      • wlesieutre 11y ago
        Yes, sorry I mean that I'd read about this in several other places had assumed that it's become a common occurrence. But nvarsj's comment suggests that it's been no big deal for him. I'm curious if he's personally run into banking problems, or just the pile of tax paperwork.
• freddie_mercury 11y ago
  "the recently pushed through changes that require foreign banks to report are really a huge burden" The OECD is adopting CRS which is a wider-reaching version of FACTA. 51 countries are adopting it in September 2017. Another 34 (including Hong Kong, Switzerland, Singapore, and the United Arab Emirates) will adopt it a year later, in 2018. I have (some) hope that what we're seeing now is the teething pains and they'll go away in a few years. But (as a fellow expat) I agree it is not a great time right now :(
• briandear 11y ago
  Army coming to rescue? Nope. Here's a story about the US specifically NOT going to rescue Americans in Yemen: http://www.bloombergview.com/articles/2015-04-22/americans-trapped-in-yemen-u-s-says-good-luck- http://www.bloombergview.com/articles/2015-04-22/americans-t... Have a look at this evacuation application: http://www.state.gov/documents/organization/211837.pdf http://www.state.gov/documents/organization/211837.pdf Here's the key wording: "3. I understand that: (a) I will be billed for the cost of my/our transportation no greater than the amount of a full-fare economy flight, or comparable alternate transportation, to the designated destination(s) that would have been charged immediately prior to the events giving rise to the evacuation. (b) My obligation to repay my loan will not be considered paid in full until it clears through the account of the Treasurer of the United States. (c) Until I have paid my loan in full, I and all listed U.S. citizen family members will only be eligible for a limited validity U.S. passport. (d) If my loan is in default, I and all listed U.S. citizen family members will not be eligible for a limited validity U.S. passports. (e) My loan will be subject to interest, penalties, and other charges for late payment as directed by law and regulation. (f) I will be liable to pay any costs for collection." If you're interested in reading the State Department Budget: http://www.state.gov/documents/organization/100033.pdf http://www.state.gov/documents/organization/100033.pdf You'll notice that US Citizens Services is self-funded from fees collected from Americans using their services. I'm not saying that's wrong or right, but by comparison, the Social Security Administration doesn't charge fees for services. The US is the ONLY country besides Eritrea that taxes non-resident Americans. Interestingly, Eritrea's tax warrants "investigation" by Swiss authorities: http://www.swissinfo.ch/eng/controversial-levy_swiss-prosecutors-investigate-diaspora-tax-for-eritreans/41742742 http://www.swissinfo.ch/eng/controversial-levy_swiss-prosecu... And from the British: http://www.theguardian.com/global-development/2015/jun/09/eritrea-diaspora-tax-uk-investigated-metropolitan-police http://www.theguardian.com/global-development/2015/jun/09/er... Yet, the US does the exact same thing. Here's an economist article discussing the situation in more detail: http://www.economist.com/news/leaders/21605907-americas-new-law-tax-compliance-heavy-handed-inequitable-and-hypocritical-fatcas-flaws http://www.economist.com/news/leaders/21605907-americas-new-... In the Facebook group Citizenship Taxation, FATCA and Citizenship Based taxation are the key topics. There are countless stories of double taxation (despite normalization agreements, as those agreements don't cover certain taxes like French Social Charges.) My primary complaint about Citizenship Based Taxation is that Americans abroad have no representation. You register to vote in your "state of residence" -- so while you can just pick a state at random if you want, the fact is that we do not have representation because the representatives from a state represent residents of that state. It is illegal to register to vote in a state in which you aren't resident. To register to vote as an overseas American, you effectively have to commit fraud. There's also the related issue of "Accidental Americans" -- these are Americans who became Americans by virtue of birth to American parents even if they have never set foot in the US. Many of them don't even realize that they are Americans -- however, they have FULL tax liability to the United States on all their income for their entire life. When they open overseas bank accounts, banks often discover they are a "US Person" and thus their accounts are subject to either not being opened or subject to seizure by the US treasury department for failing to report the account per FATCA. Violations start at $10,000 per incident. Here's an article about those penalties: http://money.cnn.com/2015/04/01/pf/taxes/irs-penalties/ http://money.cnn.com/2015/04/01/pf/taxes/irs-penalties/ My opposition to Hillary Clinton and Bernie Sanders is based exclusively on their support for FATCA (Bernie voted for it) and Citizenship Based Taxation. Clinton was the one who introduced the $450 citizenship renunciation fee (now raised to $2300.) Democrats Abroad is on record opposing Rand Paul's repeated bills to repeal FATCA. They also oppose the lawsuit challenging both FATCA and the constitutionality of citizenship based taxation. I know this was a long rant, but this issue is one I face continually and it has harmed a large number of people for minimal benefit. The myth that American citizenship has "value" to an overseas American is just that.. a myth.
• klunger 11y ago
  I am an American in Norway... I thought you only had to file FATCA for bank accounts that had more than $10,000 USD in them at some point in the past year. Not a few hundred. Are you sure about that? (if so, oh sh*t)
  • atlbeer 11y ago
    You have to fail FACTA regardless if you hold an overseas account. If you hold less than $10k USD than it's a few check boxes and takes less than 10 minutes
    • geomark 11y ago
      Nope. You must file FBAR for all of your accounts only if the sum of them ever exceeded US$10,000 during the year. That requirement has been around for many years. The IRS rules concerning FBAR are here: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-FBAR https://www.irs.gov/Businesses/Small-Businesses-&-Self-Emplo... And the pertinent text from that page: "Who Must File an FBAR United States persons are required to file an FBAR if: 1. the United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and 2. the aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year reported." FATCA is a new burden on foreign financial institutions that requires them to report to the US government on US citizens who have accounts at their institutions. It's meant banks in several countries have refused services to US citizens and closed their accounts.
      • furyg3 11y ago
        This is only if you are self-employed or a small business owner, correct? If you are an American living abroad and working for a company does FBAR apply to you?
        • spiralpolitik 11y ago
          Any United States person has to file if they have more than $10,000 held in a overseas account. A United States person is defined as: "United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States." (There are exemptions for very specific circumstances) A lot of United States persons living overseas are unaware that they need to file, and a lot of permanent residents or H-1Bs in the US are unaware that they also need to file if they still have assets held overseas. They have ramped enforcement up over the last few years so a lot of people are out of compliance and don't realize it. Thankfully at least at the See: http://business.financialpost.com/personal-finance/taxes/uncle-sams-corner-max-reed-fbar http://business.financialpost.com/personal-finance/taxes/unc... (Disclaimer: Not an accountant. Consult an accountant for tax related advice)
• lhopki01 11y ago
  I lived in Nigeria during a period of violence when thousands died. One of my enduring memories was the reactions of the Americans living there at the time. They were so sure that the army would come and save them and when it didn't they were dumbfounded. When someone from the US eventually turned up after the violence had all died down all the US citizens were offered was the opportunity to be part of the convey out of the city. I wonder where the dead set certainty that the army will save them comes from?
  • amazon_not 11y ago
    Movies perhaps?
    • saiya-jin 11y ago
      yes, movies like Tears of the sun. considering the number of US citizens, they are all over planet and it's a rather unreasonable expectation. generally US citizenship meant much more in the past than it means now since there are more interesting places to live (albeit in long term US might still prove as best spot... or not).
      • gotchange 11y ago
        When the most recent war broke out in Yemen, the Indian govt managed to evacuate its citizens from Yemen using their navy and if you take into account the size of the Indian diaspora in the Arabian Peninsula including Yemen, it wasn't an easy feat and I can't imagine that the USG wouldn't be capable of carrying out a similar evacuation plan or doing what it could to get their citizens out of harm's way abroad.
        • lhopki01 11y ago
          I highly doubt there are many Indians in Yemen. It's a poor country and doesn't have many migrant labourers like the UAE or Bahrain do. Also the Americans I knew seemed to expect helicopters to come pick them up and all that. Saying to your citizens they need to get out and we've got a navy ship in port that you can get on if you want isn't really evacuating your citizens.
• jerf 11y ago
  What austerity are you talking about? That's not a US thing. There's been no austerity here; government spending has continued fairly normal growth once you factor out the stimulus spending. Although since that seems to be what a lot of EU governments are calling "austerity", perhaps we have had it.
  • oldmanjay 11y ago
    Remember how a large percentage of gov't administrators complained that their normal annual budget increase being lowered slightly was a cut? Remember how they cut services that didn't even depend on that increase in response? Calling it "austerity" is at least as honest.
    • jbooth 11y ago
      If you have union contracts dictating that your costs go up by X% a year to roll over personnel, then a budget increase of less than that is indeed a cut as you'll be laying off personnel to meet the budget. See also: Every departmental budget ever, public or private (non-unioned employees expect a small annual raise as well)
    • TazeTSchnitzel 11y ago
      Due to inflation, budgets must increase each year. If you don't increase the budget in line with inflation, it's a cut in practical terms.
      • oldmanjay 11y ago
        A prevarication is a lie in practical terms. Automatic budget increases are justified at the end of every fiscal year by spending all of the leftover money, i.e. unneeded money that was automatically budgeted is spent on crap solely to justify getting more unneeded money.
        • SteveLAnderson 11y ago
          That may happen, but like the "cadillac welfare queen" is an exception, not the rule. For most departments, they run out of money before the end of the fiscal year.
• deleted 11y ago
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• MCRed 11y ago
  What do you mean by "austerity"? The US government has spent $8T under Obama in new debt (and that beats the previous record set immediately before by George W Bush- it's not a partisan thing, both parties over spend.) As an american who has lived overseas, I totally agree with you about FBARs, it's beyond unreasonable. But where is the austerity?
  • toomuchtodo 11y ago
    https://en.wikipedia.org/wiki/United_States_budget_sequestration_in_2013 https://en.wikipedia.org/wiki/United_States_budget_sequestra...
• endtime 11y ago
  Can you explain what you mean by austerity and how it is responsible for new taxes?
• ryanackley 11y ago
  Lived in Australia for 5 years. Was several months late filing FBAR my first year. Did it on time my second year. Completely forgot my 3rd and 4th year. Filed 3 at the same time on my 5th year. I was never contacted by the IRS for failing to file on time. The point being, it's scare tactics. I filed a complaint with the https://www.irs.gov/Advocate https://www.irs.gov/Advocate and they are well aware of the issue. They have brought it up repeatedly in their report to Congress. The IRS's response is an FU and it shows how toothless the Advocate's office is. You can see their report on international issues here https://www.irs.gov/pub/tas/2011_arc_internationalmsps.pdf https://www.irs.gov/pub/tas/2011_arc_internationalmsps.pdf, The reporting requirements section is close to the bottom.
  • cylinder 11y ago
    So to someone in the same boat as you you'd say just file the tax return and be done with it? I looked at the FBAR online form and could not imagine ever filling that out when I permanently live overseas, it actually infuriates me.
  • randyrand 11y ago
    Hi! I work for the IRS and we'd love to get this squared away. Please contact me at collection0010@irs.gov and we can resolve this immediately. Best
    • deleted 11y ago
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    • tbirdx 11y ago
      Hi, I'm a Canadian business owner who does lots of US contract work and I have colleagues who are US persons in both countries. Every time a US Customs agent asks me if I will ever be interested in becoming a citizen I laugh and tell them about situations like this. When I was young I dreamed of moving to the US, now it is a huge joke because of all the paperwork and FACTA's "Hotel California" implications. Now I will never apply to be a US citizen. Especially because I would have addditional paperwork until I die. BTW, this even affects Canadians and Canadian legal entities as we're all forced to declare we are not US Persons even if it is obvious we are not. FACTA is an overreach of power and the IRS should do a better job pushing back against laws like this. The US was once known as "the place to do business" (at least in the Americas) but now it appears to be just a gigantic bureaucracy. I think it is good people are renouncing their citizenship... Perhaps it is the only way to let the government know how bad the system is.
• toddh 11y ago
  The FBAR requirement is not new. It's been around for decades. FBAR is part of the Bank Secrecy Act form 1970. The problem is the $10K threshold is not indexed for inflation. The reason the fines are so high is to catch criminals & tax evaders. If you have a couple of hundred in the bank you don't have a filing requirement anyway.