Comments on: Republicans, Expatriates and FATCA

By: Rachel Heller

Rachel Heller — Thu, 19 Oct 2017 19:24:29 +0000

In reply to Gary. Really? The US doesn't automatically withdraw 30%? I wonder if they have a different deal with Canada...

By: Gary

Gary — Thu, 19 Oct 2017 13:35:48 +0000

In reply to Rachel Heller. I have renounced and I still receive my usual Social Security checks. No witholding here in Canada. Gary

By: Rachel Heller

Rachel Heller — Thu, 19 Jan 2017 19:15:31 +0000

In reply to Tony. Too late for me! I've already renounced. I'm sure there are plenty of others who could do it. I'm still sceptical they'll actually repeal it. It would be too easy for the dems to accuse them of being soft on tax cheats and they'd bargain it away. I hope I'm wrong.

By: Tony

Tony — Thu, 19 Jan 2017 02:21:32 +0000

James Bobb and Republicans Overseas appeal on FATCA will be heard soon. Also, Republicans Overseas members are meeting with US Congresssmen now to discuss repeal legislation. Both groups may require testimony of Americans damaged by FATCA. If you have given up your citizenship because of FATCA and could testify, your testimony could be helpful. Contact them at RO website

By: Rachel Heller

Rachel Heller — Tue, 19 Apr 2016 04:57:25 +0000

In reply to trevor & gina.

Each country has different tax law, and each country has a different intergovernmental agreement with the US. It gets so complicated that it’s no surprise everybody’s worried that they might get it wrong and end up getting huge fines from the IRS!

I think your first statement, though, is incorrect. You should check that. My understanding was that you can receive Social Security overseas, but that they’ll tax it 30%.

By: trevor & gina

trevor & gina — Tue, 19 Apr 2016 02:44:50 +0000

In reply to Rebecca Hall (Bex).

Rebecca Hall:
The first US$100K of annual wages by a nonAmerican employer is exempt from US tax. The problem is that interest paid on bank accounts is taxable. In some cases, all of the tax paid to a foreign government can be credited against US tax liabilities, but I can assure that that does not work for me at all. Moreover, US citizens who are expats have to file a return even if they owe no tax. It is a criminal offence not to file a return even when no tax is owed.
The main problem with FATCA is that the IRS is asserting a right to demand private information from foreign financial firms. A number of banks around the world have expelled the US customers they know about, and are not taking new customers who are American citizens.

By: trevor & gina

trevor & gina — Mon, 18 Apr 2016 23:24:47 +0000

I have been an expat American for 21 years, and am married to an American. If I renounce my citizenship, I lose my right to receive USA Social Security while living abroad. That’s a deal killer for me.
FATCA was passed in 2010, when Democrats controlled the White and both sides of Capitol Hill. My hunch is that a repeal of FATCA is not a GOP priority. The problem goes back to 1970, when Congress passed a law requiring that foreign bank accounts be disclosed to the IRS when the largest balance during the year exceeded 10K. No allowance was made for genuine expats. The law also covers foreign brokerage accounts and retirement plans. The problem is that the 10K floor for having to report to the IRS has never been raised since. The floor should be raised to 250K, better yet to 500K.
The USA signed a bilateral agreement with my country of residence, such that FACTA information requests always go to the income tax authorities here, and never to commercial banks. I am in compliance with FATCA, a nontrivial matter. I have a strong suspicion that the US Treasury is not interested in us expats, but won’t admit that fact, and is only interested in suspected big tax evaders, drug dealers, and hiders of ill gotten gains. US income taxes are lighter than those of nearly all other first world countries, and this is especialy true for income from stocks and mutual funds. Most people who invest overseas are paying more income tax to overseas jurisdictions than they would owe the IRS on similar investments domiciled in the USA.
I have filed a USA tax return every year I have been abroad. That return is complicated, but leaves me owing not much. The problem is there is now an information sharing agreement between the USA and my country of residence. Which means that my country can find out the $150 of interest my wife gets on a credit union account, that I declare to the IRS. The IRS can find out the US$1200 of interest we get on local bank accounts. On that interest I pay US$125 of local income tax. But Form 1116 allows me to claim only US$6.50 of that $125 as a credit against my US income taxes. So much for no double taxation.
The information sharing agreement required that I come clean to the local authorities about my USA mutual funds. While local income taxes are vastly simpler than the USA, that is not the case for foreign mutual funds, whose taxation is so complex that I have my local return done by a partner with a well known multinational accounting firm. He is friendly and competent, but charges $300/hour. Thus investment activities that generate around US$1000/year of USA tax liabilities, generate around US$20K in local tax liabilities. For reasons that would take me to far afield, I cannot credit the $1000 I pay the IRS against that $20K. The country I live in agrees to defer income tax only on IRA and 401k balances accumulated while one lived and worked outside the country. The local taxation of USA Roth and Coverdell accounts has yet to be determined.

By: Rachel Heller

Rachel Heller — Sun, 20 Mar 2016 16:34:23 +0000

In reply to R. Really? I didn't know that. But does it really matter whose idea it was? The idea, as you say, was to grandstand by going after those evil tax evaders. The question is if we can make either party see that we "little people" are getting caught in a net that isn't intended for us!

By: R

Sat, 19 Mar 2016 12:36:58 +0000

Contrary to much of the information on this blog, FATCA was a bipartisan effort from the start as indicated by the idea starting with Nixon and McCain being a co-sponsor of the legislation. Republicans, including Republicans Abroad, are grand-standing to make a political issue of it. The Paul/Bopp law suit is ill conceived and has little chance of success.

By: Rachel Heller

Rachel Heller — Mon, 01 Feb 2016 08:59:07 +0000

In reply to Rebecca Hall (Bex).

Because of treaties between countries, I can file a form to be exempted from US taxes on the first $100,000 or so, so I don’t owe taxes in the US. People who earn more than that sometimes do. The bigger problem comes in countries where some things are taxed differently than in the US. For example, some people end up double taxed on pensions they’ve earned in other countries because the US considers them UNearned income. And the US taxes capital gains after a house gets sold, but capital gains are taxed earlier–while you own the house–in other countries. So yes, people get doubly taxed in some cases, and yes, sometimes it seems that we’re being punished for moving abroad!