Subject to Citizenship Based Taxation and Requirements?

H

Hannah7

Registered Users (C)
Those of you who decided to become Americans have you also decided never to move outside the U.S. ? I am asking because what I have read recently convinces me more and more that the U.S. government simply punishes people who decide to live elsewhere.

Please, read this article:
http://cafemoi.wordpress.com/2013/10/16/a-plea-to-congress-adopt-residence-based-taxation/

I other words. If I know for sure that I will never want to leave America, getting American citizenship seems to be the right thing to do.
But what if I want to live outside America for several years even?

Who knows what the future holds. Reading such articles makes my decision process way more difficult.
 
US citizenship has advantages and disadvantages. You need to carefully consider both the good and the bad before applying for naturalization.

As a US citizen you have to file US tax returns to report your worldwide income, regardless of where you live. That doesn't mean you have to actually pay US taxes; there are tax treaties and exemptions that would usually mean you pay no US tax if all your income is from work outside the US and it's under $100K/year. But you still have to file the US tax returns and then claim the exemptions, even if the net result is zero US taxes.
 
As long as the income tax in the country where you move to is higher you shouldn't pay a cent in the U.S. But make sure that country has a double taxation agreement with the U.S.
 
You are correct about the fact when a foreign country has higher income taxation than you don't pay a cent. But you do have to file the taxes and report anyways.

And filing is rather complex, so to find a qualified accountant to do that would cost some money. I have done my homework and found the cheapest one. The cost runs from $2000 - $3000 per filing.

So that is a price tag for the citizenship at my current financial situation. If I start a business the price will very likely go up steeply.
 
I have done my homework and found the cheapest one. The cost runs from $2000 - $3000 per filing.
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Obsiously you didn't do your homework right and someone tried to rip you off.
 
Hannah7 said:
You are correct about the fact when a foreign country has higher income taxation than you don't pay a cent. But you do have to file the taxes and report anyways.

And filing is rather complex, so to find a qualified accountant to do that would cost some money. I have done my homework and found the cheapest one. The cost runs from $2000 - $3000 per filing.
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Do more homework, and you'll find some who will help you file for under $500 if you have a simple situation -- income from ordinary sources like a regular job, maybe a little bit of interest and dividends and capital gains, and the only unusual thing you have is to claim the foreign tax exemption or credit.
 
Hannah7 said:
Those of you who decided to become Americans have you also decided never to move outside the U.S. ? I am asking because what I have read recently convinces me more and more that the U.S. government simply punishes people who decide to live elsewhere.

Please, read this article:
http://cafemoi.wordpress.com/2013/10/16/a-plea-to-congress-adopt-residence-based-taxation/

I other words. If I know for sure that I will never want to leave America, getting American citizenship seems to be the right thing to do.
But what if I want to live outside America for several years even?

Who knows what the future holds. Reading such articles makes my decision process way more difficult.
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Hannah, since knowing that we have been selected for further processing on our DV application, I've been doing similar research.
This CBT (citizenship based tax) system as opposed to a RBT (residency based tax) system that the rest of the world adopts, is the ONE MAJOR issue I have with considering to go ahead and live in the USA ... as I simply feel this goes against any sense of freedom and common sense!

In our case, we are both EU and AUS citizens and while we are dreaming of a future in the US, we cannot and simply do not want to predict that we will be living in the USA for the rest of our lives. This means, just like some of the comments in your linked blog post reflect, the current CBT system the US Goverment (IRS) uses, PENALIZES "US expats" for living overseas!

It is actually not just restricted to those GC holders who took on citizenship, the same applies to Permanent Residence Holders!

So effectively, anyone here getting their green card, will be liable to file a US tax return every year...even if they choose to live in another country (i.e. their former home) temporarily or for good. That is all your income and financial accounts not only from the US but the country where you now live, despite already filing and paying taxes there already.

Most people, both US people living in the USA and new immigrants to the US do not even understand the implications!

Examples like these (ref. your linked blog post) demonstrate how insanely complex, selfish and against any sense of freedom these US tax rules are!


"The U.S. cannot seem to see a difference in a long term expat family and a drug lord and applies the same penalties to everyone regardless of the situation. "
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"Citizenship based taxation makes it impossible to live outside the U.S. and have a normal life. You can’t share accounts with a foreign spouse or child without having to report their income to the U.S. You can’t plan for retirement without the U.S. saying any gains are taxable even when they are not taxable in your country of residence. You can’t afford to file every year if you are low income because the cost of international tax preparers is way too high. The U.S. treats its long term expats as if they need to be punished for not living there."
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"Trying to live with a foreign family abroad as the U.S. person in the family makes you a liability to your spouse and children just because you are American and the U.S. taxes on citizenship not residency like the rest of the modern world. The U.S. treats expat families as if they are criminals until proven otherwise. This makes it not only expensive to show them you and yours are not criminals but, makes it far more attractive to lose your U.S. citizenship to protect your family from U.S. over reach. My spouse pays taxes here where we live and where he is a citizen, to Canada. Many people married to U.S. persons abroad feel the U.S. demands are a personal violation. If the U.S. ever wakes up and finally goes to residency based taxation it could then focus on catching those who actually live there and who are actually “off shoring” instead of saying every American all over the world is a suspicious person and so is everyone they are related to. It’s ridiculous and insulting. It has the affect of building an onerous wall around the U.S. to keep people in. Who would move abroad long term if they knew the situation the U.S. puts expats into?"
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http://www.forbes.com/sites/robertwood/2013/05/09/trending-now-giving-up-u-s-citizenship/
http://www.forbes.com/sites/robertwood/2012/12/01/high-cost-to-go-green-giving-up-a-green-card/
http://www.forbes.com/sites/robertw...s-are-undesirable-as-fatca-closes-more-doors/
http://www.forbes.com/sites/robertwood/2012/03/23/fatca-makes-banks-shut-out-americans/

http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad
http://www.irs.gov/Individuals/International-Taxpayers/Expatriation-Tax

http://expats.hrblock.com/articles/sa/foreign-earned-income-exclusion-0
http://expats.hrblock.com/articles/sa/foreign-tax-credit-0

http://www.globaltaxhelp.com/tax-basics/expat-tax-basics

http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx


"The End of Taxation without End: A New Tax Regime for U.S. Expatriates"
Bernard Schneider
Queen Mary University of London - October 1, 2012
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2186076

Abstract:
One of the most notable examples of U.S. tax exceptionalism is the taxation of U.S. citizens and legal permanent residents (LPRs) on their worldwide income, regardless of residence. The United States also imposes broad and increasingly onerous tax and financial reporting obligations on its citizens and LPRs. Worldwide taxation of U.S. expatriates dates to the Civil War. Although it may have been justified in the past, it is very difficult to justify and increasingly dysfunctional today. It is difficult to justify on economic or equity grounds, it is difficult if not impossible to enforce against many expatriates, and it sends the wrong message regarding the value of U.S. citizenship.

The United States should eliminate the worldwide taxation of expatriate citizens and LPRs and replace the exit tax on those renouncing U.S. citizenship or relinquishing LPR status with a departure tax regime that would apply to all changes of tax residence. The proposed new tax regime would be more equitable and more enforceable. It would also be more consistent with international tax norms and with the purposes of U.S. nationality and immigration law.
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OnTheGo:

You are correct. And most Americans never actually gave a thought to live in a different country, more than 80% never applied for a passport and those who applied went for vacation to Canada or Mexico. The remaining maybe 1-3% went to places like Asia or Europe. But only small fraction from that fraction ever chose to live in a foreign country. And that's why it is what it is. In sense of taxation America is narrow minded.

America is big on loyalty. You get to choose to either live in America or being punished for not living in America.

In your case, you are still far away from even contemplating of becoming U.S. citizens. You have a great opportunity to apply for your green card now and go to live to America for several years. If you like it, you can stay, if you don't like it you can always surrender your green card with no penalty.

So, I say go for it !
 
The last extended downturn and financial scandals have prompted the US to expand and enforce their tax compliance. When revenue is down, you get hungry! If you have significant assets and income overseas, you may consider not taking US citizenship. However, as mentioned, the federal taxes may offset with the local taxes of the country. BUT, keep in mind, that if you live in the US, some states will also tax you on foreign income and investments. Bizarre, right??? But you can avoid this by living in Florida or a state that does not tax income.

Also, you are getting ripped off if you even pay $1000. There are plenty on competent accountants that will not charge any more than a few hundred to file your foreign income as part of your US returns
 
Dedo said:
The last extended downturn and financial scandals have prompted the US to expand and enforce their tax compliance. When revenue is down, you get hungry! If you have significant assets and income overseas, you may consider not taking US citizenship. However, as mentioned, the federal taxes may offset with the local taxes of the country. BUT, keep in mind, that if you live in the US, some states will also tax you on foreign income and investments. Bizarre, right??? But you can avoid this by living in Florida or a state that does not tax income.

Also, you are getting ripped off if you even pay $1000. There are plenty on competent accountants that will not charge any more than a few hundred to file your foreign income as part of your US returns
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If you have significant assets and income overseas, you may consider not taking US citizenship
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Just to clarify: This also applies to anyone just taking up LPR (legal permanent resident) status, i.e. anyone getting a greencard.


keep in mind, that if you live in the US, some states will also tax you on foreign income and investments. Bizarre, right??? But you can avoid this by living in Florida or a state that does not tax income.
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I knew that some states in the US impose state income tax and that any LPR or citizen is liable to declare world wide incomes to the IRS (federal income tax) no matter where in the world they live, so I can only imagine that whatever state charges their own state income taxes, that they would follow the same principle (in that if you live in that state, your income for tax purposes will include world wide income).

The real only issue I have is the part where the tax authorities in the US would NOT consider anyone no longer liable for taxes if they live overseas! That's just insane...it's a citizenship based taxation (and that includes any LPR, i.e. green card holder).

Any greencard holder who has lived in the US for 8 out of the last 15 years and then decides to forfeit their right to permanent residency (i.e. by not returning), will also be subject to the same "exit tax" as any citizen renouncing their US citizenship. That would mean they sum up all your world wide assets and cha-ching!!! ... they calculate any tax due as if all your assets were sold on that day. So if you hold any real estate, they would see how much that would be worth today and there may be CGT (capital gains tax) applicable....etc etc.

Actually, there is a little overview of how US expats are disadvantaged by living overseas:
http://aaro.org/taxation


Here is another revealing article about the implications of FACTA on ordinary (each and ever) US "tax resident" living abroad:
http://thefranco-americanflophouse.blogspot.fr/2013/10/four-ways-to-get-fatcaed.html
 
Hannah7 said:
America is big on loyalty. You get to choose to either live in America or being punished for not living in America.
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It certainly feels that way!

Hannah7 said:
In your case, you are still far away from even contemplating of becoming U.S. citizens. You have a great opportunity to apply for your green card now and go to live to America for several years. If you like it, you can stay, if you don't like it you can always surrender your green card with no penalty.

So, I say go for it !
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Thanks for the motivation, but it doesn't seem so 'innocent' like that!

There are lot of things to consider for us, as by moving forward we will already become obligated (i.e. as soon as you enter the US with the sealed envelope and the visa in your passport, it will 'activate' the status and that comes with all the aforementioned obligations.

Sometimes I wish I was more 'sporadic' but then again, I am thankful for the information that is available to us through the Internet.
Makes it easy, but so much more complicated, too ... lol. :eek:
 
http://blogs.northcountrypublicradio.org/inbox/2014/02/09/u-s-hunt-for-tax-cheats-hurts-millions/

Good blog article explaining why FATCA and the USA's taxation system based on nationality (citizens or green cards) rather than residency means living outside of the USA gets penalized by the USA.

So essentially, every person with a green card or US citizenship will be treated like a criminal for the rest of their lives, should they choose to live overseas (back home or anywhere else in the world) ever again. Call it a penalty for daring to leave the US. That's how citizenship based taxation came about, in the first place! During times of war, they wanted to prevent people from leaving the US with their money...so they decided to impose tax (filing) obligations on them.

This citizenship based taxation will break the US economy's neck with their introduction of FATCA, as 7-9 Million mostly ordinary US expats will no longer feel patriotic enough to funnel business towards the USA. Imagine an expat in a financial controller position of an overseas based US enterprise ... they are very likely to be losing their job as having signature authority over the business's accounts means they have to transmit all account information to the IRS, too!

Yes, the details of this FATCA law are ridiculous at best, and thorough like the Stasi at worst.

I see many tens if not hundreds of thousands of renunciations of US citizenship as a result of this bullying law, that results in ordinary people getting their bank accounts terminated by their local banks, simply because those banks do not want to be an accomplice to IRS's bullying tactics.
 
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I'm trying to open an bank account in Germany and it's turning out to be a nightmare because of FATCA. Pain in the behind being an American abroad :)

I'd say they ought to make exceptions for people who have under a certain amount in the bank. That would make sense. Stupid government.
 
cafeconleche said:
I'm trying to open an bank account in Germany and it's turning out to be a nightmare because of FATCA. Pain in the behind being an American abroad :)

I'd say they ought to make exceptions for people who have under a certain amount in the bank. That would make sense. Stupid government.
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I can very much feel for you. I am currently in Germany (dual German/Australian citizen).
I would be interested in what these banks are actually telling you exactly?
Do you walk into the bank's store fronts or apply online?

The Citizenship based taxation the USA adopts is the very reason why my wife and I are more than likely to let the very real opportunity for getting green cards this year, slip by. We don't want to be hassled with these Stasi style tax hunting and harassment by banks in the future, when we might decide to be living overseas again temporarily or permanently.

While so called 'US Persons' (IRS lingo for people with US citizenship or green card status) are only required to report any financial banking accounts to the USA via a so called FBAR form each year if the aggregated value of all accounts exceeds the equivalent of $10,000 in any given year ... this is completely separate to the soon to be activated FATCA law, which bullies banks the world over to be sheriffs for the fascist IRS.

The bottom line is that you cannot blame any banks for refusing to do business with any such 'US Person' as a result, as it is especially those with low amounts in their accounts that will only cost the banks (a lot of money!) by being bullied into complying with an overseas jurisdiction (IRS).

Heck, banks in Switzerland and France and elsewhere are dropping 'US clients' with multi million dollar accounts because of this.
 
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http://www.infowars.com/globalists-unveil-socialist-backed-new-world-tax-regime/


Has the media been telling you that people are renouncing US citizenship because they are "rich"? Have they told you that 3000 are doing it per year? Well, hate to tell you this, but normal people are renouncing their slavery at the rate of 1000 per WEEK. It's a little disconcerting to them, especially those that had voted for Obama, that the administration goon's would have unleashed FATCA to find them in the Milky Way and to give them their FBAR whoopin'.
For the rest of you who have not escaped, the message from the administration is to stay put and not wander outside the borders---cause they've got both FATCA and OECD's GATCA to find you!
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Welcome to the FATCA conversation. You are writing about GATCA, which is the world's adaptation of Senator Carl Lenin's FATCA (aided by Bill Nelson, Chuck Schumer, Harry Reid, and the amateur President himself)
FATCA is just the enforcement tool of FEAR used by the administration to enforce old laws that they dug out of the punishment shed out back. They had been laying dormant, but this administration located them. The FBAR is the instrument Obama wants to use. Google it, you will find that the penalties (confiscations) are 50% of total assets per year, retroactive 6 yrs.
FATCA also enforces the global taxation of all "US persons" (read that "tax slaves") that never realized that US is the only country in the world (other than that bastion of freedom Eritrea) that chases its citizens like cattle around the Milky Way to give them their FBAR whoopin..
The objective of FATCA is to find all these tax slaves and give them penalties.
There is a plea bargain program called OVDP, where a US citizen can admit that he has not fulfilled his duties as a tax slave like all US citizens are expected to be. For this privilege, the slave must give away 27.5% of his assets in advance.
The important part of FATCA is to assume that US persons who have been living outside of USA are presumed guilty of tax evasion for having lived outside the borders. Those that FATCA identifies are required to prove their innocence.
When FATCA was passed, the government knew that its tax slave requirements were known by only 300,000 of the 7.6 million US citizens overseas and the 10's of millions of dual citizen immigrants in USA.
Obama's FATCA Treasury/IRS goon Jesse Eggert got his job in this OECD GATCA regime.
Look for my blog at wordpress for more info. Daniel Mitchell also. Center for Freedom & Prosperity.
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OnTheGo said:
While so called 'US Persons' (IRS lingo for people with US citizenship or green card status)
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For the purposes of taxes, you can be a US person even if you do not have a GC and have lived here for many years as F1, L1, H1, etc. Go ask a few accountants and you'll be surprised at what you find
 
cafeconleche said:
I'm trying to open an bank account in Germany and it's turning out to be a nightmare because of FATCA. Pain in the behind being an American abroad :)

I'd say they ought to make exceptions for people who have under a certain amount in the bank. That would make sense. Stupid government.
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Well, most of us here on this forum have 2 passports at least. When opening an account in Germany, why don't you use your other passport and never volunteer that you are American as well?
 
Wish I could, but I'm only a US citizen. But, I finally got my bank account. I opened 4-5 at the same time, and one came through. Hehe. For anyone who needs one, I opened it online with Cortal Consors, which is BNP Paribas. It is possible that they let me open an account because I have a residence permit as the partner of a German citizen. I don't know if it's true, but it could be that since I am on par with a German citizen in many aspects now, they can't turn me away. So, someone here with no connection to a German or European citizen might still face problems.
 
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