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FATCA Pushes “Accidental” Americans to Give Up US Citizenship

135 points by stanrivers 6y ago

swiley 6y ago
How the hell do you accidentally get U.S. Citizenship? It's hard enough just getting a visa!
- krastanov 6y ago
  Second paragraph: "She received automatic citizenship by being born on U.S. soil, but has no other connection to the country, having left as a baby."
- khuey 6y ago
  Being born in the US while your parents are here temporarily is the easiest way.
  - deleted 6y ago
    [deleted]
- dunce2020 6y ago
  https://en.wikipedia.org/wiki/Anchor_baby https://en.wikipedia.org/wiki/Anchor_baby but on accident.
  - dctoedt 6y ago
    It's BY accident; "on accident" is incoherent gibberish, no matter how many young whippersnappers imagine that it's clever of them to "evolve" the language in this way. (And get off my lawn while you're at it ....)
    - dkarp 6y ago
      It’s a common mistake by non native English speakers. There are many non native English speakers on the internet. Go easy, it’s not necessarily what you assumed
  - 24gttghh 6y ago
    You could have shared a more neutral article title like this[0] instead of that charged phrase: '"Anchor baby" is a term (regarded by some as a pejorative' [0]https://en.wikipedia.org/wiki/Birthright_citizenship_in_the_United_States_of_America https://en.wikipedia.org/wiki/Birthright_citizenship_in_the_...
    - dunce2020 6y ago
      Yes, I could have. But I didn't. Oh well.
ttul 6y ago
Why it must cost over $2,000 to give up something that others spend much more trying to acquire is a total mystery. Surely it does not cost $2,000 to make a note of someone’s ex-citizenship.
- gambiting 6y ago
  Yeah it's stupid. But many countries have similar weird rules about this. In the UK the fee is about £400 so not too bad, but for instance in Poland the only way to do this is to write a letter addressed to the current President of Poland and only they can grant it(my understanding is that they always do, it's pretty much an automated process, but you do actually have to send a letter to the president).
  - est31 6y ago
    In Germany, if you are a male inside a certain age range, you first have to get a waiver from the government office responsible for the draft before you can lose your citizenship.
    - smnrchrds 6y ago
      In Iran, you have to first finish your military service, currently 2 years, then apply to the president's office, which (almost?) never approves an application anyway.
      - lixtra 6y ago
        And your children will be Iranian as well.
        smnrchrds 6y ago
        Yes. If you are male. Children of female citizens have to apply to get citizenship.
    - hef19898 6y ago
voisin 6y ago
The US could solve most of its expat issues if they simply said foreign accounts are those accounts foreign to your current place of residence. By saying foreign means foreign to the US, they’ve made it very challenging to form banking relationships in expats’ countries of residence. The next step would be to repeal citizenship based taxation in favour of residency based taxation like every other country on earth (except for Eritrea).
- C4K3 6y ago
  A surprising number of Americans seem to think it's reasonable to tax non-residents, so such legislation may be hard to get passed. If you support such legislation, consider supporting lobbying groups such as American Citizens Abroad https://www.americansabroad.org/ https://www.americansabroad.org/
  - Digit-Al 6y ago
    > 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 violence? Talk about extremists at both ends.
    - dasudasu 6y ago
      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.
      - Digit-Al 6y ago
        I don't buy it. We're talking here about people who have literally never lived in America since they were too young to even remember. They have lived in another country, paid taxes in that other country, and probably have a passport for that other country. If anything happens to them there would likely be an expectation that their adopted country would look after them, not the US.
muststopmyths 6y ago
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. Not debating the merits of whether the US should be taxing expats, this does not seem "accidental" to me in the least. Also as far as owing onerous back taxes go, aren't taxes you paid in your country of residence deductible ? For most EU countries wouldn't that result in net zero US taxes ? Edit: as pointed out by commenters, you have to list your place of birth in documents. stupid me
- 0xTJ 6y ago
  "presumably acquiring a passport or other citizenship documents" Why are you being so bold as to assume that? I'm not saying that either way is the case, but you can't assume that that's the case. Also, as stated elsewhere in this thread, dropping the citizenship is expensive. Why should someone have to pay money to not be taxed by a country they have no relationship with, other than having been born there?
  - deleted 6y ago
    [deleted]
- _petronius 6y ago
  > but chose to keep the citizenship into adulthood, presumably acquiring a passport or other citizenship documents That is ... not how citizenship works. Once you are a citizen, it can be very difficult to get rid of that status (souce: born in the US, will end up paying an arm and a leg to get rid of mine). Failing to get a passport, file returns with the IRS, etc. can lead to you getting ignored, but it can also lead you to getting into serious hot water in the future. Example: most passports list the place of birth of the holder. If you are an American citizen, you must enter the US on a US passport. Because of American citizenship law, someone trying to enter the US on a Dutch passport with a place of birth listed as being in the US is going to have to do some explaining, and possibly provide documentation of renouncing their US citizenship. "I never applied for my American passport" is probably not going to cut it. It's a huge pain! > Also as far as owing onerous back taxes go, aren't taxes you paid in your country of residence deductible ? For most EU countries wouldn't that result in net zero US taxes ? It depends! But you still have to file, and there are still penalties for filing late, and even if you do, IRS reporting requirements to other banks mean that many European financial institutions won't touch you with a 10-foot pole no matter if you are also a European citizen. Ones that will (like my bank), still won't offer you much beyond current account services and a basic savings account. If you want to do any kind of real saving for the future or basic investing (ETFs, for example), you are going to have trouble. The supposed disruptors in the market for this kind of thing (Trade Republic etc.) certainly don't have the resources or the interest in dealing with you either.
nvarsj 6y ago
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 have it much worse than me. The whole system is punitive and evil and punishes ordinary people for simply not living in the US. I can’t even open a simple retirement fund without it being a landmine. I have already made up my mind to renounce, due to the immense stress and uncertainty. But you can’t even do that because all embassies are closed until further notice. Top that with the hefty fees to file the exit taxes and the renunciation fee and it’s a giant shit sandwich. I advise never living abroad if you are an American. And think very carefully before getting permanent residence or US citizenship as a foreigner. You are becoming an inmate of the IRS for life.
- elgatonegro 6y ago
  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.
  - nvarsj 6y ago
    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 negatively touched the entire expat community, saying otherwise just shows ignorance.
    - elgatonegro 6y ago
      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.
jancsika 6y ago
> 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 down the road. This article imbues Accidental Americans with the stereotypical dumbassery of I-Am-A-Real-American's in an attempt to get me to sympathize with people who don't want to pay taxes. Edit: added Hulk Hogan entry song reference for clarity
- mleo 6y ago
  I have dual citizenship with another country and haven’t given it any consideration since I have not lived there since I was 18 months old. I wouldn’t know or consider tax implications of the country since I have lived my entire life here and identify as American.
- andrepew 6y ago
  I don’t think it is unreasonable for them to not know they had US citizenship despite being born in the US. Completely unconditional citizenship based on location of birth isn’t really a thing in Europe. It is also possible they knew and they didn’t think it was a problem. The US is one of only two countries in the world that do taxes based on citizenship.
- detaro 6y ago
  Why would they definitively know that? It's not exactly a common thing and widely talked about.
- mcv 6y ago
  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 lot of bureaucratic hoops. They never received any benefit from it, and if they knew at all, they ignored it. And they have no problem paying taxes, they just pay their taxes in the country in which they live and work. They don't want to have to fill in tax forms for every random country that chooses to bestow unwanted citizenship on them. Make no mistake, the only reason this is an issue at all, is because the US is too powerful to ignore. No other country does this (except maybe Ethiopia or Eritrea, I think), and no other country would get away with this. Only the US does. It's rather odd that for a country where so many people question Obama's citizenship, the country is so eager to claim ownership over people who don't want it.
abellerose 6y ago
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 banks. Anyway I’ll be dead by cancer in the near future so I’m not that concerned but I wanted to share my experience. I contacted the US embassy by email about not being able to pay but greatly wanting to drop US citizenship because of past trauma that effects my health. The agent just sent an email that looks like a template explaining all must pay 2.5k and he didn’t respond to any following responses I sent. It feels like extortion and really should be considered unconstitutional. I’m writing from a hospital bed on my phone so I apologize for the bad grammar mistakes
- mcv 6y ago
  Are you saying a name change might be the way out of this?
  - abellerose 6y ago
    Yes, I have no way of knowing if that’s the reason why I haven’t been contacted by banks or the US but I assume it’s a good possibility. They probably just scan a list of names with birthdates. Unless you’ve already reported being a US citizen then they probably have an easy way of contacting you.
- erdos4d 6y ago
  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.
icu 6y ago
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 sharing arrangements with countries forced to comply with FATCA. In other words, the data sharing usually only goes one way. 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. This means that it's possible to shelter your assets in a remarkably secretive way the US. So in one sense, you could consider US taxes as insurance against spurious lawsuits in say the EU, or bad faith spouses wherever you get married.
- clawoo 6y ago
  Yeah, I was surprised the article completely glossed over why nobody outside the US wants to deal with FATCA, because on face value it sounded like a good tool to prevent money laundering and tax haven stashing. But based on FATCA, only the other countries have a responsibility of reporting wealth information about US citizens, while if you are a Russian or a Brit or whatever you can safely stash all your wealth in the US if the tax regime is more lenient than your own country.
  - KLexpat 6y ago
    This is generally correct. One of the main effects of CRS being separate to FATCA is that a person from a CRS country like anywhere in the EU, UK, Aus, Canada, NZ... many countries... can hold assets in the US itself which is not a CRS signatory.
- lemonspat 6y ago
  Is the Roth 401k also then a tax shelter if your tax residency is elsewhere?
  - icu 6y ago
    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!
sjg007 6y ago
I thought there were tax treaties, basically you don't pay taxes on the first $100k if you paid into the national tax system of the country you are in. I can imagine FICA taxes though might be difficult. Maybe US social security would deny benefits if you claimed them without any contributions and residence abroad.
- siberianbear 6y ago
  The $100k you're referring to is the Foreign Earned Income Exclusion [1]. If you're an American working abroad, you don't need to pay income tax on your first $107,600. The exclusion does not apply to self-employment tax or investment income. That's not even the real problem, though. The problem is that banks don't want to deal with the FATCA compliance issues and just refuse to deal with Americans, period. I've experienced this firsthand as an American expat and it is a colossal pain in the ass. [1] https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...
  - math 6y ago
    I was affiliated with a company in Singapore which had it's bank account closed, I believe due to FACTA, even though at the time no one involved with the company had ever been to the US and didn't have any ties to the US. It was simply that the size of the account was too small to justify the associated administrative burden. FACTA has impact beyond US citizens - pretty annoying.
  - sjg007 6y ago
    What about a multinational bank like Citi bank or HSBC etc... I would assume they have experience in these issues.
    - KLexpat 6y ago
      If you're in a country like Malaysia, the domestic branch of a multi-national bank may not accept US citizens, because the Malaysian branch doesn't deal with FATCA/US gov.
0898 6y ago
This happened to Boris Johnson: https://www.spectator.co.uk/article/boris-s-dilemma-relinquish-his-us-passport-or-pay-american-tax https://www.spectator.co.uk/article/boris-s-dilemma-relinqui...
- ipnon 6y ago
  First American-born PM. Oh the irony.
  - blaser-waffle 6y ago
    It does explain a lot, really
eralps 6y ago
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 income in that country. If I basically stop being a citizen of the US by moving to another country why do I need to continue paying for it? Is there any other country that does this? Edit: This post made me finally read about this scenario. FEIE [1] exclusion for about $105,000 as of 2020. Is a relief because I can never earn that amount with the exchange rate in my country of birth. 1. https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...
- elgatonegro 6y ago
  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 they will be), your US tax will be zero. You still have to file the US tax return and you still need to pay taxes on income derived in the US (such as dividends and interest) as that can not be eliminated by foreign taxes.
  - mmaunder 6y ago
    Good reply. This is a cost of US citizenship and you are not forced to acquire citizenship. You could get permanent residency. I had to make this choice and chose citizenship 15 years ago. It’s a hell of a thing swearing that you’ll bear arms to defend a country you weren’t born in. I have had many occasions to feel glad that I did. From military base tours to easier to entry/exit to Canada to buying a house or getting a loan. It generally makes paperwork much easier in this country and opens up a few doors. If you think the tax filing requirement is a big deal, consider the restrictions and obligations that other countries have. Compulsory military service, restrictions on moving money, etc.
mmaunder 6y ago
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.
- dkjaudyeqooe 6y ago
  "Selective Service" is a form of conscription in the US, but is not mandatory routine military service.
- genoissedba 6y ago
  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.
NotPavlovsDog 6y ago
US citizenship comes with a big administrative burden even if you don't live in the US. Some parents with European citizenship sometimes do not file an American birth certificate when registering their child for a European birth certificate. I.e. if the country facilitates registration of child based on parent citizenship and not birth location of child, they just never declare the child was born in the US. "It was a home birth" At international schools in some countries this is an open secret and happens quite often, as long as the parents are not feds and are not under heavy scrutiny. So the kid has two different BC & passports with two different birthplaces. Some even have different birth-dates and names. Sure saves the poor kids the nightmare of not being able to open a bank account abroad, as a US citizen. The moral is, plan your money, plan your kids, the federales will never inform on what is in your best interest. Both kids and money come with paperwork attached. Best read up now. And yes, a timely consultation with a lawyer before the fact is most often cheaper than the cost of renouncing US citizenship and the time you waste on declaring while not living in the US.
- throwawayiionqz 6y ago
  What happens the day your kid shows the wrong passport at Port of entry? TSA Officer: "Hi foreigner, you don't have ESTA?" Kid: Oh sorry this is the wrong birthplace passport. Take at look at this one plz
  - Androider 6y ago
    Plenty of countries allow dual citizenship, including the US, Canada and most of the EU, so it's not that unusual to have and travel with multiple passports.
    - throwawayiionqz 6y ago
      I wonder which countries allow dual birthplaces though
    - voisin 6y ago
      The Immigration and Nationality Act states that American citizens “shall” only enter or exit the USA with an American passport.
pts_ 6y ago
Who needs AI when there is unrelenting bureaucracy!
throwawayiionqz 6y ago
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.
- Mediterraneo10 6y ago
  > If US banks had the same reporting requirements to EU countries regarding EU dual citizens accounts US banks wouldn’t. The reason that the EU is wary of ending up on the USA’s bad side, is that European banks rely on large New York banks for clearing international transfers. They can’t not do business with the USA. American banks don’t have the same dependency on the EU.
  - throwawayiionqz 6y ago
    FATCA is an agreement signed between countries, not between the US and foreign banks. The US certainly has more leverage with the USD than the EU with the EURO but trade agreements are made of various things and the US cannot simply bully the EU and Asian countries with FATCA indefinitely. I can't wait to see how this plays out in the next 10 years.
    - eesmith 6y ago
      There's the US involvement with SWIFT, including seizing intra-EU payments - https://en.wikipedia.org/wiki/Society_for_Worldwide_Interbank_Financial_Telecommunication#U.S._government_involvement https://en.wikipedia.org/wiki/Society_for_Worldwide_Interban...
- nickkell 6y ago
  Why would the EU ask for that? They don't tax their citizens when they're not resident in the EU
  - 6y ago
EGreg 6y ago
They run a business that owes taxes to the US but can’t pay a one-time fee of $2000? This story seems to be of a very small group of people.
koluna 6y ago
> countless accidental [...] Linked article says a bit more than 3,000 around the world. So, 0.001%. Article content is clickbait. Basically, a very small part of the population complains about something that others work decades on.
- throwawayiionqz 6y ago
  Non-accidental Americans and green card holders living in the EU also face major difficulties for opening bank accounts and basic investments. The accidental ones are the tip of the iceberg, but the problem need a fix for everyone.
  - koluna 6y ago
    But that’s a whole separate problem, no? That’s like saying “Accidental lottery winners complain they have to pay taxes, but hey, we need to make sure the tax code is good for everyone” - totally, but don’t paint the article like it’s some massive global problem of lottery winners struggling.
    - throwawayiionqz 6y ago
      You can find a continuous spectrum of Americans suffering FATCA and IRS struggles while living abroad. At the end of the spectrum are these accidental Americans. In the middle you can find e everything, e.g. your kid studying in the EU that cannot open a bank account there or issues getting a real estate loan to buy a house in the foreign country you work and live in. Essentially opening a bank account abroad is a no-go unless you lie or have a lot of money. Then you have ultra wealthy tax evaders that were the target of those regulations. Obviously these people don't have a hard time opening bank relationships anywhere.
      - koluna 6y ago
        How is that different from any other country, where you can’t open a bank account unless you are a citizen or a resident?
happynacho 6y ago
I would love if there was an option to buy their citizenship for that $2350 fee, hell even double would be a no-brainer. Strange how some people want to get rid of it and how others want it no matter what.
- throwawayiionqz 6y ago
  Not so strange after you experience it. Walk into a bank to open an account where to receive your salary. In no time after mentioning your US citizenship, you are shown the exit door. Try every bank until you eventually lie about it as the only way go on with your life.
  - Mediterraneo10 6y ago
    > Walk into a bank to open an account where to receive your salary. In no time after mentioning your US citizenship, you are shown the exit door. Try every bank until you eventually lie about it as the only way go on with your life. Things are highly inconvenient, but not this hopeless. In most EU countries there is at least one bank that will open an account for (locally resident) US citizens, although the process does involve some extra forms where you have to write down your American Social Security Number as your “tax information number”.
    - throwawayiionqz 6y ago
      Regular bank accounts may not be hopeleless after some paperwork fights. Investments accounts on the other hand are actually hopeless. Source: Googling the bogleheads forums for investments options for US citizens residing in the EU.
  - blaser-waffle 6y ago
    Wasn't too bad in Australia or Canada -- but those are also US allies who have long cultural ties and tax + immigration treaties. My brother is in Denmark (previously France) and has mentioned it was a PITA but solvable.
- KLexpat 6y ago
gok 6y ago
The reason these laws exist at all is the moral outrage over rich Americans illegally hiding their money overseas. Predictably, the laws have had limited effect on rich tax evaders and huge negative impact on millions of non-rich expats. In general one should be extremely skeptical of regulations which are sold as "not even applying to most people," as the unintended consequences will almost certainly hurt a lot of people outside of the scope of the law's stated target.
- mindslight 6y ago
  The laws have limited effect on rich tax evaders by design. FATCA explicitly exempts reporting of directly held fine art. Is there any better medium for committing tax evasion?
baybal2 6y ago
You don't even have to be a citizen for US to count your foreign income to be "US linked," if you ever received income in US. Not so few people who did just some temp gigs, or worked in US on L visas.
BXLE_1-1-BitIs1 6y ago
If you were born in the US to a foreign parent before October 1953 and moved back to that parent's country, and remained there three years past the age of 22, your US citizenship lapsed. That provision of the Immigration and Nationality Act was repealed effective October 1978. Many retirees can benefit from this. Children born in the US to diplomats, and possibly foreign military on posting, do NOT receive US citizenship on birth. There are a number of provisions in the Immigration and Nationality Act where US citizenship can be lost. Elective office and becoming an officer in a foreign military (think reserves) can lose US citizenship. A careful reading of current and repealed provisions of the INA will show ways to automatically lose US citizenship.
praestigiare 6y ago
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.
- throwawayiionqz 6y ago
  Thanks for putting this into words so clearly.
- 6y ago
vanekjar 6y ago
FATCA sucks, cannot believe EU accepted something like that into the legislation. Recently, one of the banks in EU falsely flagged me as a potential US citizen. I had to file tons of forms to opt out. I couldn't figure out why, there was no reason for that since I've got no ties with US and I've visited as tourist only couple of times. Then I realized my phone number I used in communication with the bank is Canadian (live in Canada, but EU citizen). Please note that the country code for Canada and US is the same (+1). What a joke. The problem is the EU banks are forced to be compliant with this thing, but they have no clue who is US citizen and who is not. So they can just guess.
sergefaguet 6y ago
Many of my friends who are US citizens are actively trying to get rid of their citizenship and are scared of retaliation of the "we won't give you a visa anymore" kind. I can't say that for any other country. Land of the Free.
fabienlehagre 6y ago
https://m.facebook.com/Association.Americains.Accidentels/ https://m.facebook.com/Association.Americains.Accidentels/ contact@americains-accidentels.fr

135 points by stanrivers 6y ago

swiley 6y ago

How the hell do you accidentally get U.S. Citizenship? It's hard enough just getting a visa!

krastanov 6y ago
Second paragraph: "She received automatic citizenship by being born on U.S. soil, but has no other connection to the country, having left as a baby."
khuey 6y ago
Being born in the US while your parents are here temporarily is the easiest way.
- deleted 6y ago
  [deleted]
dunce2020 6y ago
https://en.wikipedia.org/wiki/Anchor_baby https://en.wikipedia.org/wiki/Anchor_baby but on accident.
- dctoedt 6y ago
  It's BY accident; "on accident" is incoherent gibberish, no matter how many young whippersnappers imagine that it's clever of them to "evolve" the language in this way. (And get off my lawn while you're at it ....)
  - dkarp 6y ago
    It’s a common mistake by non native English speakers. There are many non native English speakers on the internet. Go easy, it’s not necessarily what you assumed
- 24gttghh 6y ago
  You could have shared a more neutral article title like this[0] instead of that charged phrase: '"Anchor baby" is a term (regarded by some as a pejorative' [0]https://en.wikipedia.org/wiki/Birthright_citizenship_in_the_United_States_of_America https://en.wikipedia.org/wiki/Birthright_citizenship_in_the_...
  - dunce2020 6y ago
    Yes, I could have. But I didn't. Oh well.

ttul 6y ago

Why it must cost over $2,000 to give up something that others spend much more trying to acquire is a total mystery. Surely it does not cost $2,000 to make a note of someone’s ex-citizenship.

gambiting 6y ago
Yeah it's stupid. But many countries have similar weird rules about this. In the UK the fee is about £400 so not too bad, but for instance in Poland the only way to do this is to write a letter addressed to the current President of Poland and only they can grant it(my understanding is that they always do, it's pretty much an automated process, but you do actually have to send a letter to the president).
- est31 6y ago
  In Germany, if you are a male inside a certain age range, you first have to get a waiver from the government office responsible for the draft before you can lose your citizenship.
  - smnrchrds 6y ago
    In Iran, you have to first finish your military service, currently 2 years, then apply to the president's office, which (almost?) never approves an application anyway.
    - lixtra 6y ago
      And your children will be Iranian as well.
      - smnrchrds 6y ago
        Yes. If you are male. Children of female citizens have to apply to get citizenship.
  - hef19898 6y ago

voisin 6y ago

The US could solve most of its expat issues if they simply said foreign accounts are those accounts foreign to your current place of residence. By saying foreign means foreign to the US, they’ve made it very challenging to form banking relationships in expats’ countries of residence. The next step would be to repeal citizenship based taxation in favour of residency based taxation like every other country on earth (except for Eritrea).

C4K3 6y ago
A surprising number of Americans seem to think it's reasonable to tax non-residents, so such legislation may be hard to get passed. If you support such legislation, consider supporting lobbying groups such as American Citizens Abroad https://www.americansabroad.org/ https://www.americansabroad.org/
- Digit-Al 6y ago
  > 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 violence? Talk about extremists at both ends.
  - dasudasu 6y ago
    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.
    - Digit-Al 6y ago
      I don't buy it. We're talking here about people who have literally never lived in America since they were too young to even remember. They have lived in another country, paid taxes in that other country, and probably have a passport for that other country. If anything happens to them there would likely be an expectation that their adopted country would look after them, not the US.

muststopmyths 6y ago

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. Not debating the merits of whether the US should be taxing expats, this does not seem "accidental" to me in the least. Also as far as owing onerous back taxes go, aren't taxes you paid in your country of residence deductible ? For most EU countries wouldn't that result in net zero US taxes ? Edit: as pointed out by commenters, you have to list your place of birth in documents. stupid me

0xTJ 6y ago
"presumably acquiring a passport or other citizenship documents" Why are you being so bold as to assume that? I'm not saying that either way is the case, but you can't assume that that's the case. Also, as stated elsewhere in this thread, dropping the citizenship is expensive. Why should someone have to pay money to not be taxed by a country they have no relationship with, other than having been born there?
- deleted 6y ago
  [deleted]
_petronius 6y ago
> but chose to keep the citizenship into adulthood, presumably acquiring a passport or other citizenship documents That is ... not how citizenship works. Once you are a citizen, it can be very difficult to get rid of that status (souce: born in the US, will end up paying an arm and a leg to get rid of mine). Failing to get a passport, file returns with the IRS, etc. can lead to you getting ignored, but it can also lead you to getting into serious hot water in the future. Example: most passports list the place of birth of the holder. If you are an American citizen, you must enter the US on a US passport. Because of American citizenship law, someone trying to enter the US on a Dutch passport with a place of birth listed as being in the US is going to have to do some explaining, and possibly provide documentation of renouncing their US citizenship. "I never applied for my American passport" is probably not going to cut it. It's a huge pain! > Also as far as owing onerous back taxes go, aren't taxes you paid in your country of residence deductible ? For most EU countries wouldn't that result in net zero US taxes ? It depends! But you still have to file, and there are still penalties for filing late, and even if you do, IRS reporting requirements to other banks mean that many European financial institutions won't touch you with a 10-foot pole no matter if you are also a European citizen. Ones that will (like my bank), still won't offer you much beyond current account services and a basic savings account. If you want to do any kind of real saving for the future or basic investing (ETFs, for example), you are going to have trouble. The supposed disruptors in the market for this kind of thing (Trade Republic etc.) certainly don't have the resources or the interest in dealing with you either.

nvarsj 6y ago

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 have it much worse than me. The whole system is punitive and evil and punishes ordinary people for simply not living in the US. I can’t even open a simple retirement fund without it being a landmine. I have already made up my mind to renounce, due to the immense stress and uncertainty. But you can’t even do that because all embassies are closed until further notice. Top that with the hefty fees to file the exit taxes and the renunciation fee and it’s a giant shit sandwich. I advise never living abroad if you are an American. And think very carefully before getting permanent residence or US citizenship as a foreigner. You are becoming an inmate of the IRS for life.

elgatonegro 6y ago
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.
- nvarsj 6y ago
  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 negatively touched the entire expat community, saying otherwise just shows ignorance.
  - elgatonegro 6y ago
    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.

jancsika 6y ago

> 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 down the road. This article imbues Accidental Americans with the stereotypical dumbassery of I-Am-A-Real-American's in an attempt to get me to sympathize with people who don't want to pay taxes. Edit: added Hulk Hogan entry song reference for clarity

mleo 6y ago
I have dual citizenship with another country and haven’t given it any consideration since I have not lived there since I was 18 months old. I wouldn’t know or consider tax implications of the country since I have lived my entire life here and identify as American.
andrepew 6y ago
I don’t think it is unreasonable for them to not know they had US citizenship despite being born in the US. Completely unconditional citizenship based on location of birth isn’t really a thing in Europe. It is also possible they knew and they didn’t think it was a problem. The US is one of only two countries in the world that do taxes based on citizenship.
detaro 6y ago
Why would they definitively know that? It's not exactly a common thing and widely talked about.
mcv 6y ago
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 lot of bureaucratic hoops. They never received any benefit from it, and if they knew at all, they ignored it. And they have no problem paying taxes, they just pay their taxes in the country in which they live and work. They don't want to have to fill in tax forms for every random country that chooses to bestow unwanted citizenship on them. Make no mistake, the only reason this is an issue at all, is because the US is too powerful to ignore. No other country does this (except maybe Ethiopia or Eritrea, I think), and no other country would get away with this. Only the US does. It's rather odd that for a country where so many people question Obama's citizenship, the country is so eager to claim ownership over people who don't want it.

abellerose 6y ago

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 banks. Anyway I’ll be dead by cancer in the near future so I’m not that concerned but I wanted to share my experience. I contacted the US embassy by email about not being able to pay but greatly wanting to drop US citizenship because of past trauma that effects my health. The agent just sent an email that looks like a template explaining all must pay 2.5k and he didn’t respond to any following responses I sent. It feels like extortion and really should be considered unconstitutional. I’m writing from a hospital bed on my phone so I apologize for the bad grammar mistakes

mcv 6y ago
Are you saying a name change might be the way out of this?
- abellerose 6y ago
  Yes, I have no way of knowing if that’s the reason why I haven’t been contacted by banks or the US but I assume it’s a good possibility. They probably just scan a list of names with birthdates. Unless you’ve already reported being a US citizen then they probably have an easy way of contacting you.
erdos4d 6y ago
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.

icu 6y ago

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 sharing arrangements with countries forced to comply with FATCA. In other words, the data sharing usually only goes one way. 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. This means that it's possible to shelter your assets in a remarkably secretive way the US. So in one sense, you could consider US taxes as insurance against spurious lawsuits in say the EU, or bad faith spouses wherever you get married.

clawoo 6y ago
Yeah, I was surprised the article completely glossed over why nobody outside the US wants to deal with FATCA, because on face value it sounded like a good tool to prevent money laundering and tax haven stashing. But based on FATCA, only the other countries have a responsibility of reporting wealth information about US citizens, while if you are a Russian or a Brit or whatever you can safely stash all your wealth in the US if the tax regime is more lenient than your own country.
- KLexpat 6y ago
  This is generally correct. One of the main effects of CRS being separate to FATCA is that a person from a CRS country like anywhere in the EU, UK, Aus, Canada, NZ... many countries... can hold assets in the US itself which is not a CRS signatory.
lemonspat 6y ago
Is the Roth 401k also then a tax shelter if your tax residency is elsewhere?
- icu 6y ago
  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!

sjg007 6y ago

I thought there were tax treaties, basically you don't pay taxes on the first $100k if you paid into the national tax system of the country you are in. I can imagine FICA taxes though might be difficult. Maybe US social security would deny benefits if you claimed them without any contributions and residence abroad.

siberianbear 6y ago
The $100k you're referring to is the Foreign Earned Income Exclusion [1]. If you're an American working abroad, you don't need to pay income tax on your first $107,600. The exclusion does not apply to self-employment tax or investment income. That's not even the real problem, though. The problem is that banks don't want to deal with the FATCA compliance issues and just refuse to deal with Americans, period. I've experienced this firsthand as an American expat and it is a colossal pain in the ass. [1] https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...
- math 6y ago
  I was affiliated with a company in Singapore which had it's bank account closed, I believe due to FACTA, even though at the time no one involved with the company had ever been to the US and didn't have any ties to the US. It was simply that the size of the account was too small to justify the associated administrative burden. FACTA has impact beyond US citizens - pretty annoying.
- sjg007 6y ago
  What about a multinational bank like Citi bank or HSBC etc... I would assume they have experience in these issues.
  - KLexpat 6y ago
    If you're in a country like Malaysia, the domestic branch of a multi-national bank may not accept US citizens, because the Malaysian branch doesn't deal with FATCA/US gov.

0898 6y ago

This happened to Boris Johnson: https://www.spectator.co.uk/article/boris-s-dilemma-relinquish-his-us-passport-or-pay-american-tax https://www.spectator.co.uk/article/boris-s-dilemma-relinqui...

ipnon 6y ago
First American-born PM. Oh the irony.
- blaser-waffle 6y ago
  It does explain a lot, really

eralps 6y ago

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 income in that country. If I basically stop being a citizen of the US by moving to another country why do I need to continue paying for it? Is there any other country that does this? Edit: This post made me finally read about this scenario. FEIE [1] exclusion for about $105,000 as of 2020. Is a relief because I can never earn that amount with the exchange rate in my country of birth. 1. https://www.irs.gov/individuals/international-taxpayers/foreign-earned-income-exclusion https://www.irs.gov/individuals/international-taxpayers/fore...

elgatonegro 6y ago
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 they will be), your US tax will be zero. You still have to file the US tax return and you still need to pay taxes on income derived in the US (such as dividends and interest) as that can not be eliminated by foreign taxes.
- mmaunder 6y ago
  Good reply. This is a cost of US citizenship and you are not forced to acquire citizenship. You could get permanent residency. I had to make this choice and chose citizenship 15 years ago. It’s a hell of a thing swearing that you’ll bear arms to defend a country you weren’t born in. I have had many occasions to feel glad that I did. From military base tours to easier to entry/exit to Canada to buying a house or getting a loan. It generally makes paperwork much easier in this country and opens up a few doors. If you think the tax filing requirement is a big deal, consider the restrictions and obligations that other countries have. Compulsory military service, restrictions on moving money, etc.

mmaunder 6y ago

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.

dkjaudyeqooe 6y ago
"Selective Service" is a form of conscription in the US, but is not mandatory routine military service.
genoissedba 6y ago
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.

NotPavlovsDog 6y ago

US citizenship comes with a big administrative burden even if you don't live in the US. Some parents with European citizenship sometimes do not file an American birth certificate when registering their child for a European birth certificate. I.e. if the country facilitates registration of child based on parent citizenship and not birth location of child, they just never declare the child was born in the US. "It was a home birth" At international schools in some countries this is an open secret and happens quite often, as long as the parents are not feds and are not under heavy scrutiny. So the kid has two different BC & passports with two different birthplaces. Some even have different birth-dates and names. Sure saves the poor kids the nightmare of not being able to open a bank account abroad, as a US citizen. The moral is, plan your money, plan your kids, the federales will never inform on what is in your best interest. Both kids and money come with paperwork attached. Best read up now. And yes, a timely consultation with a lawyer before the fact is most often cheaper than the cost of renouncing US citizenship and the time you waste on declaring while not living in the US.

throwawayiionqz 6y ago
What happens the day your kid shows the wrong passport at Port of entry? TSA Officer: "Hi foreigner, you don't have ESTA?" Kid: Oh sorry this is the wrong birthplace passport. Take at look at this one plz
- Androider 6y ago
  Plenty of countries allow dual citizenship, including the US, Canada and most of the EU, so it's not that unusual to have and travel with multiple passports.
  - throwawayiionqz 6y ago
    I wonder which countries allow dual birthplaces though
  - voisin 6y ago
    The Immigration and Nationality Act states that American citizens “shall” only enter or exit the USA with an American passport.

pts_ 6y ago

Who needs AI when there is unrelenting bureaucracy!

throwawayiionqz 6y ago

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.

Mediterraneo10 6y ago
> If US banks had the same reporting requirements to EU countries regarding EU dual citizens accounts US banks wouldn’t. The reason that the EU is wary of ending up on the USA’s bad side, is that European banks rely on large New York banks for clearing international transfers. They can’t not do business with the USA. American banks don’t have the same dependency on the EU.
- throwawayiionqz 6y ago
  FATCA is an agreement signed between countries, not between the US and foreign banks. The US certainly has more leverage with the USD than the EU with the EURO but trade agreements are made of various things and the US cannot simply bully the EU and Asian countries with FATCA indefinitely. I can't wait to see how this plays out in the next 10 years.
  - eesmith 6y ago
    There's the US involvement with SWIFT, including seizing intra-EU payments - https://en.wikipedia.org/wiki/Society_for_Worldwide_Interbank_Financial_Telecommunication#U.S._government_involvement https://en.wikipedia.org/wiki/Society_for_Worldwide_Interban...
nickkell 6y ago
Why would the EU ask for that? They don't tax their citizens when they're not resident in the EU
- 6y ago

EGreg 6y ago

They run a business that owes taxes to the US but can’t pay a one-time fee of $2000? This story seems to be of a very small group of people.

koluna 6y ago

> countless accidental [...] Linked article says a bit more than 3,000 around the world. So, 0.001%. Article content is clickbait. Basically, a very small part of the population complains about something that others work decades on.

throwawayiionqz 6y ago
Non-accidental Americans and green card holders living in the EU also face major difficulties for opening bank accounts and basic investments. The accidental ones are the tip of the iceberg, but the problem need a fix for everyone.
- koluna 6y ago
  But that’s a whole separate problem, no? That’s like saying “Accidental lottery winners complain they have to pay taxes, but hey, we need to make sure the tax code is good for everyone” - totally, but don’t paint the article like it’s some massive global problem of lottery winners struggling.
  - throwawayiionqz 6y ago
    You can find a continuous spectrum of Americans suffering FATCA and IRS struggles while living abroad. At the end of the spectrum are these accidental Americans. In the middle you can find e everything, e.g. your kid studying in the EU that cannot open a bank account there or issues getting a real estate loan to buy a house in the foreign country you work and live in. Essentially opening a bank account abroad is a no-go unless you lie or have a lot of money. Then you have ultra wealthy tax evaders that were the target of those regulations. Obviously these people don't have a hard time opening bank relationships anywhere.
    - koluna 6y ago
      How is that different from any other country, where you can’t open a bank account unless you are a citizen or a resident?

happynacho 6y ago

I would love if there was an option to buy their citizenship for that $2350 fee, hell even double would be a no-brainer. Strange how some people want to get rid of it and how others want it no matter what.

throwawayiionqz 6y ago
Not so strange after you experience it. Walk into a bank to open an account where to receive your salary. In no time after mentioning your US citizenship, you are shown the exit door. Try every bank until you eventually lie about it as the only way go on with your life.
- Mediterraneo10 6y ago
  > Walk into a bank to open an account where to receive your salary. In no time after mentioning your US citizenship, you are shown the exit door. Try every bank until you eventually lie about it as the only way go on with your life. Things are highly inconvenient, but not this hopeless. In most EU countries there is at least one bank that will open an account for (locally resident) US citizens, although the process does involve some extra forms where you have to write down your American Social Security Number as your “tax information number”.
  - throwawayiionqz 6y ago
    Regular bank accounts may not be hopeleless after some paperwork fights. Investments accounts on the other hand are actually hopeless. Source: Googling the bogleheads forums for investments options for US citizens residing in the EU.
- blaser-waffle 6y ago
  Wasn't too bad in Australia or Canada -- but those are also US allies who have long cultural ties and tax + immigration treaties. My brother is in Denmark (previously France) and has mentioned it was a PITA but solvable.
KLexpat 6y ago

gok 6y ago

The reason these laws exist at all is the moral outrage over rich Americans illegally hiding their money overseas. Predictably, the laws have had limited effect on rich tax evaders and huge negative impact on millions of non-rich expats. In general one should be extremely skeptical of regulations which are sold as "not even applying to most people," as the unintended consequences will almost certainly hurt a lot of people outside of the scope of the law's stated target.

mindslight 6y ago
The laws have limited effect on rich tax evaders by design. FATCA explicitly exempts reporting of directly held fine art. Is there any better medium for committing tax evasion?

baybal2 6y ago

You don't even have to be a citizen for US to count your foreign income to be "US linked," if you ever received income in US. Not so few people who did just some temp gigs, or worked in US on L visas.

BXLE_1-1-BitIs1 6y ago

If you were born in the US to a foreign parent before October 1953 and moved back to that parent's country, and remained there three years past the age of 22, your US citizenship lapsed. That provision of the Immigration and Nationality Act was repealed effective October 1978. Many retirees can benefit from this. Children born in the US to diplomats, and possibly foreign military on posting, do NOT receive US citizenship on birth. There are a number of provisions in the Immigration and Nationality Act where US citizenship can be lost. Elective office and becoming an officer in a foreign military (think reserves) can lose US citizenship. A careful reading of current and repealed provisions of the INA will show ways to automatically lose US citizenship.

praestigiare 6y ago

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.

throwawayiionqz 6y ago
Thanks for putting this into words so clearly.
6y ago

vanekjar 6y ago

FATCA sucks, cannot believe EU accepted something like that into the legislation. Recently, one of the banks in EU falsely flagged me as a potential US citizen. I had to file tons of forms to opt out. I couldn't figure out why, there was no reason for that since I've got no ties with US and I've visited as tourist only couple of times. Then I realized my phone number I used in communication with the bank is Canadian (live in Canada, but EU citizen). Please note that the country code for Canada and US is the same (+1). What a joke. The problem is the EU banks are forced to be compliant with this thing, but they have no clue who is US citizen and who is not. So they can just guess.

sergefaguet 6y ago

Many of my friends who are US citizens are actively trying to get rid of their citizenship and are scared of retaliation of the "we won't give you a visa anymore" kind. I can't say that for any other country. Land of the Free.

fabienlehagre 6y ago

https://m.facebook.com/Association.Americains.Accidentels/ https://m.facebook.com/Association.Americains.Accidentels/ contact@americains-accidentels.fr