4 ms·

The sad thing is that the renouncers often don't mind paying tax, they just can't deal with the crazy amount of paperwork and costs involved, especially if they

The sad thing is that the renouncers often don't mind paying tax, they just can't deal with the crazy amount of paperwork and costs involved, especially if they have investment income.

apercu 8y ago
Yea, typically we don't owe. Many of us live in "socialist" countries with higher taxes so we get credited for that. Where it hits us in accounting fees and (after FATCA) an inability to have investments outside of registered retirement plans. Also a bunch of other crap. Imagine having an additional tens of thousands of dollars of accounting fees in your lifetime because 'murica.
- pmiller2 8y ago
  Can anyone expand on this inability to have investments outside of registered retirement plans?” I have never heard of this.
  - MandieD 8y ago
    I'm an American who is a permanent resident of Germany, and the main reason is that the level of assets a normal middle-class wage earner can accumulate (think six figures) is not worth it to banks here to deal with the US-mandated paperwork, and so none of them will sell me stocks, mutual funds or index funds, despite my openness with both the country of my residence and the country of my birth. The only realistic savings mechanism I have given Europe's current near-zero interest rates is real estate; I can buy property, but I'm a bit hesitant to do that at the moment, given the disparity between purchase prices and actual rents. After FATCA started being enforced more heavily, there were Americans whose banks closed their checking accounts! Fortunately, I've not had a problem with very basic financial services, but no one wants to open a brokerage account for me once that American passport comes out. If I had eight figures to manage, no matter where I was actually resident, they'd probably figure out how to deal with the bureaucracies on both sides of the ocean...
    - pmiller2 8y ago
      That’s interesting. What prevents you from just opening a Vanguard account like any other American? Friction on the German side?
      - MandieD 8y ago
        I have my retirement accounts from back when I was still living in the US, but I cannot add to them. Anything I make on a non-retirement account has to be reported to the German tax authorities, too - and I'll probably have to pay German taxes on those gains when I pull money out of them. Germany taxes all income earned by its residents, no matter where the source, but if my husband (German citizen) were a US resident, they would not tax what he earned in the US.
        miscreanity 8y ago
        I am considering citizenship options for the same reasons - access to financial instruments that US institutions such as the SEC prohibit, despite some of those instruments being far better than can be obtained domestically. It can be difficult to achieve but the optimal situation is to be a citizen of a minimal or tax-free country, reside in a separate country and do business or work in a third. Treating countries/governments like companies that have to vie for your business is a perspective that helps protect oneself and family.
      - dagw 8y ago
        In the same position, and the last time I checked Vanguard (and similar) requires that you are a US resident to open a US account.
    - Youden 8y ago
      As someone who works with a lot of American expats, what's stopping you from opening a brokerage account at Interactive Brokers or Charles Schwab? That's what my colleagues seem to do.
      - nolite 8y ago
  - thisone 8y ago
    You run into PFIC problems with a number of foreign tax wrappers. Understanding PFICs enough to report them properly is bloody difficult. Once you know how to report those you have, you can do it yourself, but you most likely will not be reporting them to your best tax benefit, but instead in the way that is easiest to understand. When I had to research them, after 6 or so years of not understanding I had to report them before realising a gain, it took me at least 2 weeks of research and that was with prior knowledge of some of the acronyms you come across. At that point I think I understand enough to report mine but who knows. Iirc in my research I read a number of times that the IRS has been formally asked to clarify some parts but they haven't responded. And that PFICs are the purview of only a small handful of specialised IRS agents.

The sad thing is that the renouncers often don't mind paying tax, they just can't deal with the crazy amount of paperwork and costs involved, especially if they have investment income.

apercu 8y ago

Yea, typically we don't owe. Many of us live in "socialist" countries with higher taxes so we get credited for that. Where it hits us in accounting fees and (after FATCA) an inability to have investments outside of registered retirement plans. Also a bunch of other crap. Imagine having an additional tens of thousands of dollars of accounting fees in your lifetime because 'murica.

pmiller2 8y ago
Can anyone expand on this inability to have investments outside of registered retirement plans?” I have never heard of this.
- MandieD 8y ago
  I'm an American who is a permanent resident of Germany, and the main reason is that the level of assets a normal middle-class wage earner can accumulate (think six figures) is not worth it to banks here to deal with the US-mandated paperwork, and so none of them will sell me stocks, mutual funds or index funds, despite my openness with both the country of my residence and the country of my birth. The only realistic savings mechanism I have given Europe's current near-zero interest rates is real estate; I can buy property, but I'm a bit hesitant to do that at the moment, given the disparity between purchase prices and actual rents. After FATCA started being enforced more heavily, there were Americans whose banks closed their checking accounts! Fortunately, I've not had a problem with very basic financial services, but no one wants to open a brokerage account for me once that American passport comes out. If I had eight figures to manage, no matter where I was actually resident, they'd probably figure out how to deal with the bureaucracies on both sides of the ocean...
  - pmiller2 8y ago
    That’s interesting. What prevents you from just opening a Vanguard account like any other American? Friction on the German side?
    - MandieD 8y ago
      I have my retirement accounts from back when I was still living in the US, but I cannot add to them. Anything I make on a non-retirement account has to be reported to the German tax authorities, too - and I'll probably have to pay German taxes on those gains when I pull money out of them. Germany taxes all income earned by its residents, no matter where the source, but if my husband (German citizen) were a US resident, they would not tax what he earned in the US.
      - miscreanity 8y ago
        I am considering citizenship options for the same reasons - access to financial instruments that US institutions such as the SEC prohibit, despite some of those instruments being far better than can be obtained domestically. It can be difficult to achieve but the optimal situation is to be a citizen of a minimal or tax-free country, reside in a separate country and do business or work in a third. Treating countries/governments like companies that have to vie for your business is a perspective that helps protect oneself and family.
    - dagw 8y ago
      In the same position, and the last time I checked Vanguard (and similar) requires that you are a US resident to open a US account.
  - Youden 8y ago
    As someone who works with a lot of American expats, what's stopping you from opening a brokerage account at Interactive Brokers or Charles Schwab? That's what my colleagues seem to do.
    - nolite 8y ago
- thisone 8y ago
  You run into PFIC problems with a number of foreign tax wrappers. Understanding PFICs enough to report them properly is bloody difficult. Once you know how to report those you have, you can do it yourself, but you most likely will not be reporting them to your best tax benefit, but instead in the way that is easiest to understand. When I had to research them, after 6 or so years of not understanding I had to report them before realising a gain, it took me at least 2 weeks of research and that was with prior knowledge of some of the acronyms you come across. At that point I think I understand enough to report mine but who knows. Iirc in my research I read a number of times that the IRS has been formally asked to clarify some parts but they haven't responded. And that PFICs are the purview of only a small handful of specialised IRS agents.