5 ms·

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

by 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.
    - nvarsj 6y ago
      I think you have a very narrow view of an expats life. If you live in a country for 10+ years, it is impractical to not have a local bank account. You can't even get a rental contract easily without a bank account. Buying property exposes you to capital gains tax, which is essentially double taxation, because the UK taxes the buyer unlike the US. GILTI tax is limited to company ownership. Which is what hit me. I realize that won't affect a lot of people, but for those in the IT field it is very common in London to have a one man or small group consultancy. Because of this, I was essentially retroactively taxed on all company revenues despite not having access to that money (since it's in the company, obviously). Truly insane. Then to pay the retroactive tax, you have to withdraw money from your company which obviously incurs local taxes. Massive double taxation. This is all the tip of the iceberg. There are many ways to get screwed as an American abroad.
      - dkarp 6y ago
        Genuine question, have you considered giving in and going to work in the USA? As an American, working as a software consultant in the UK is swimming against the tide. You could be free of the tax burden and earn more by working practically anywhere in the USA. I know money isn't everything, but would be curious to know what is keeping you in London (as someone in an analogous situation asking myself the same question).
        nvarsj 6y ago
        My wife is British, and my kids are thoroughly integrated with the local community. So that's what keeps me here. If I was single I'd definitely go back at this point, it's too much of a headache, and my earning potential would be way higher in the USA like you say.
    - wheybags 6y ago
      > FATCA can be completely nullified by not maintaining foreign bank accounts. That is not even remotely feasible. You pay forex fees every time you buy milk? Lots of government stuff / utility companies will only accept local bank accounts. The hassle and expense of having only a foreign bank account in a foreign currency is massive.
R0b0t1 6y ago
Your situation isn't normal. You need to be making quite a bit of money to be taxed. If you don't have any desire to return to the US why not just ignore it?
- nvarsj 6y ago
  The taxes are the least of it. The expense and time it consumes to file the various forms is a huge pain. Anyone who has investments, a business, or property abroad will suffer from this. My net taxes were very low, but I have spent thousands on accountancy fees and hundreds of hours of my own personal time. GILTI was just the latest landmine. I net in the low 6 figures, via my own consultancy. I have a one man shop which basically incurs the wrath of the IRS because it doesn't fit into the IRS tax code worldview. This is not abnormal, in fact many experienced software people in the city work this way. I also can't just ignore it. The IRS under the Obama administration launched one of the most aggressive foreign tax ramp ups ever. With FBAR/FACTA, they know everything you have. It is incredibly risky to ignore filing and paying your US tax obligation - they can do all kinds of horrible things, with minimum 10k penalties and foreign agreements in place for enforcement. Plus I have retirement accounts in the US which could be affected.
  - R0b0t1 6y ago
    You don't have to come back to the US. If it's not worth it to do so, don't. But if it is keep filing your taxes. I could see improving things but your perspective still sounds like whinging. Accounting and filing is the cost of doing business. More troublesome is the SS and other tax contributions you're responsible for, but that just means you should charge more. To give you a comparison, this sounds to me like people stating we should wipe out student debt. Doing so is inherently regressive. Already well off people go to college anyway and people with a degree make more over their lifetime. They are not the people who need help the most. Likewise, if you are encountering serious financial strain because of this you need to charge more, but you're still making more than most people do.
- academia_hack 6y ago
  Even paying zero dollars you still have to file taxes, send in FBAR, invest in a FACTA compliant way, sort out redundant pensions, and deal with the IRS - all at comically inflated costs since software products (e.g. Turbotax) don't do overseas taxes well, if at all. And if you make a mistake navigating an incredibly complex web of under-documented treaty law and ambiguous paperwork you can quite literally end up imprisoned by a country with one of the developed world's most comically broken justice systems the next time you go on holiday. I once won a random prize drawing for a modest amount of cash ($15k) and ended up paying nearly $3k in accountant fees to navigate the double-taxation process safely. My US tax burden was $0, but the filling burden was way beyond that. I haven't benefited from US public services or anything in many years. The US is essentially the only country on the world that inflicts this nonsense on people.

by nvarsj 6y ago

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.
  - nvarsj 6y ago
    I think you have a very narrow view of an expats life. If you live in a country for 10+ years, it is impractical to not have a local bank account. You can't even get a rental contract easily without a bank account. Buying property exposes you to capital gains tax, which is essentially double taxation, because the UK taxes the buyer unlike the US. GILTI tax is limited to company ownership. Which is what hit me. I realize that won't affect a lot of people, but for those in the IT field it is very common in London to have a one man or small group consultancy. Because of this, I was essentially retroactively taxed on all company revenues despite not having access to that money (since it's in the company, obviously). Truly insane. Then to pay the retroactive tax, you have to withdraw money from your company which obviously incurs local taxes. Massive double taxation. This is all the tip of the iceberg. There are many ways to get screwed as an American abroad.
    - dkarp 6y ago
      Genuine question, have you considered giving in and going to work in the USA? As an American, working as a software consultant in the UK is swimming against the tide. You could be free of the tax burden and earn more by working practically anywhere in the USA. I know money isn't everything, but would be curious to know what is keeping you in London (as someone in an analogous situation asking myself the same question).
      - nvarsj 6y ago
        My wife is British, and my kids are thoroughly integrated with the local community. So that's what keeps me here. If I was single I'd definitely go back at this point, it's too much of a headache, and my earning potential would be way higher in the USA like you say.
  - wheybags 6y ago
    > FATCA can be completely nullified by not maintaining foreign bank accounts. That is not even remotely feasible. You pay forex fees every time you buy milk? Lots of government stuff / utility companies will only accept local bank accounts. The hassle and expense of having only a foreign bank account in a foreign currency is massive.

R0b0t1 6y ago

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

nvarsj 6y ago
The taxes are the least of it. The expense and time it consumes to file the various forms is a huge pain. Anyone who has investments, a business, or property abroad will suffer from this. My net taxes were very low, but I have spent thousands on accountancy fees and hundreds of hours of my own personal time. GILTI was just the latest landmine. I net in the low 6 figures, via my own consultancy. I have a one man shop which basically incurs the wrath of the IRS because it doesn't fit into the IRS tax code worldview. This is not abnormal, in fact many experienced software people in the city work this way. I also can't just ignore it. The IRS under the Obama administration launched one of the most aggressive foreign tax ramp ups ever. With FBAR/FACTA, they know everything you have. It is incredibly risky to ignore filing and paying your US tax obligation - they can do all kinds of horrible things, with minimum 10k penalties and foreign agreements in place for enforcement. Plus I have retirement accounts in the US which could be affected.
- R0b0t1 6y ago
  You don't have to come back to the US. If it's not worth it to do so, don't. But if it is keep filing your taxes. I could see improving things but your perspective still sounds like whinging. Accounting and filing is the cost of doing business. More troublesome is the SS and other tax contributions you're responsible for, but that just means you should charge more. To give you a comparison, this sounds to me like people stating we should wipe out student debt. Doing so is inherently regressive. Already well off people go to college anyway and people with a degree make more over their lifetime. They are not the people who need help the most. Likewise, if you are encountering serious financial strain because of this you need to charge more, but you're still making more than most people do.
academia_hack 6y ago
Even paying zero dollars you still have to file taxes, send in FBAR, invest in a FACTA compliant way, sort out redundant pensions, and deal with the IRS - all at comically inflated costs since software products (e.g. Turbotax) don't do overseas taxes well, if at all. And if you make a mistake navigating an incredibly complex web of under-documented treaty law and ambiguous paperwork you can quite literally end up imprisoned by a country with one of the developed world's most comically broken justice systems the next time you go on holiday. I once won a random prize drawing for a modest amount of cash ($15k) and ended up paying nearly $3k in accountant fees to navigate the double-taxation process safely. My US tax burden was $0, but the filling burden was way beyond that. I haven't benefited from US public services or anything in many years. The US is essentially the only country on the world that inflicts this nonsense on people.