Us Expats And Fatca Act?

[Maxheadspace]

I was just reading about the US Fatca Act which was enacted in 2012, where the US can tax expats for income over $106,000.  I thought that after 330 days outside of the US there was no income tax?  It also stated that foreign banks that didn't cooperate in reporting US expats to the US Treasury faced stiff penalties, supposedly resulting in many foreign banks refusing to accept accounts for US expats.  Is this something my fellow Americans in the Philippines are having problems with?  According to the article, many US expats are renouncing their US citizenship to avoid harsh, unwarranted taxation.  I'm kind of surprised I've never heard of this.

[Tukaram (Tim)]

The only 330 day I have heard of is if you are out of the country you do not have to use the ACA (Obamacare).  There are jobs that are tax exempt, up to certain amounts (some government contractor jobs in particular).  But the US expects income tax from pretty much any job you have - anywhere.

 

The Fatca really won't affect many expats.  Most of us seem to be retired and do not make enough to even worry about it.  There is some bank account reporting to be done - but only if you have over $10k in a foreign account.  Again, not an issue for most expats I know.  There are too many benefits to US citizenship I seriously doubt many are renouncing citizenship... I read a similar article, the one I read was more of a scare tactic article.   :tiphat:

[scott h]

Good question Max, and as always we can only give you our impressions and experience. So for me it is no problem (so far). For example: I am US Military retired, drawing pension, My home of record is here in the Philippines so I only pay federal taxes. My wife is dual citizen and not drawing pension yet. I have my Federal and State taxes (we have rental property in California) done by my tax preparer (used them for years) back in the States. For the past 3 years all we have had to report is the amount of money we might have in Philippine banks. The form was filled in by us, and to the best of my knowledge the banks were not required to do anything. We currently have accounts at two different places, one bank, one credit union, have not heard a peep from them about USA interference.

 

I thought that after 330 days outside of the US there was no income tax?

 

Income is income I believe, (at least in my case) so to my understanding as long as my pension is considered as income by the USA I will have to file taxes.

 

Bottom line Max, for me anyway, the Fatca has zero impact on my life in retirement here. 

 

:cheersty:

[OnMyWay]

Piggybacking on what the others said....

I was just reading about the US Fatca Act which was enacted in 2012, where the US can tax expats for income over $106,000.

 

Do you mean U.S. income or foreign income?  Foreign income tax can vary by country, dependent on tax treaties.

 

I thought that after 330 days outside of the US there was no income tax?

 

No, U.S. will look for some no matter where you live.

 

 It also stated that foreign banks that didn't cooperate in reporting US expats to the US Treasury faced stiff penalties, supposedly resulting in many foreign banks refusing to accept accounts for US expats.  Is this something my fellow Americans in the Philippines are having problems with?

 

Not really.  The Philippines is tightly tied to the dollar and dollar remittances from OFWs / expats.  The banks here need these accounts so they will open accounts for expats and also comply to FATCA.  There is a little bit of paperwork to fill out but not much.  My bank, BPI, is compliant.

 

 According to the article, many US expats are renouncing their US citizenship to avoid harsh, unwarranted taxation.  I'm kind of surprised I've never heard of this.

 

I have never heard of expats renouncing for this reason.  Not retired expats.  If you have a high income and are an expat, maybe something to consider.  Retirees normally don's have high income and the taxes are what any U.S. citizen would expect.

 

What I have heard is that dual citizens renounce the U.S. citizenship for the taxation reasons.  E.g., someone who has grown up in another country and has U.S. citizenship.  The IRS chases them even though they may not have ever lived in the U.S.

[intrepid]

I was just reading about the US Fatca Act which was enacted in 2012, where the US can tax expats for income over $106,000.  I thought that after 330 days outside of the US there was no income tax?  It also stated that foreign banks that didn't cooperate in reporting US expats to the US Treasury faced stiff penalties, supposedly resulting in many foreign banks refusing to accept accounts for US expats.  Is this something my fellow Americans in the Philippines are having problems with?  According to the article, many US expats are renouncing their US citizenship to avoid harsh, unwarranted taxation.  I'm kind of surprised I've never heard of this.

I believe income is the main word.  Taxable income.  Accounts with transfered monies will have to be reported but I don't think they will tax them if it was say, retirement savings which were transfered.  JMHO

[robert k]

I believe the 330 days applies to money solely earned outside the US while you lived at least 330 days outside the US.

 

If the money was earned in the US it wouldn't matter where you lived, you would owe US tax.

 

Some countries have a tax treaty with the US where you would pay the local tax and if the US tax were higher you would pay the difference to the US.

 

Bottom line is if the money comes from the US, it can be taxed.

[jon1]

The 330 day rule is for two things; OBama care exemption and qualifying for the Foreign Earned Income Exclusion (at the bottom of this

 

page https://www.irs.gov/uac/Newsroom/In-2016-Some-Tax-Benefits-Increase-Slightly-Due-to-Inflation-Adjustments,-Others-Are-Unchanged for

 

2016 $101,300 up from $100,800 in 2015). You can only claim this if you earned income overseas. Pensions, 401Ks, IRAs, Social Security, do not

 

count.

Edited February 10, 2016 by jon1

[chris49]

many US expats are renouncing their US citizenship to avoid harsh,

 

Let me call total bullsh&t on that first of all.

 

 

The tax ruling has been in place forever and they just keep raising the amount. And if you renounce your US Citizenship what would be the status of SS for example? SS can be paid to US Residents and Green Card holders outside the USA, but it is not paid to a non citizen, non resident. And these ex;pats who renounce their citizenship would have to take up another citizenship and that is not so easy eg the Philippines.

 

 

I left Saudi in 2006, 2005 was my last taxable year. The limit then was $75 k.....I was getting just below that. But there were bonuses, school fees, holiday pay, free air tickets, free accom, which per the US SS ruling or opinion at the time should all be included. The bottom line was that most of those allowances were paid separately and we were never over the limit. The Doctors were caught, but most of them had accountants doing their taxes (they did pay)

 

An American Citizen, unless he was CEO level, would not reach $106, 000 in taxable income even if getting Military Reirement, SS and a private pension. The maximums are well below anything that would reach $106, 000.

Edited February 10, 2016 by chris49

[chris49]

The 330 day rule is for two things; OBama care exemption and qualifying for the Foreign Earned Income Exclusion (at the bottom of this

 

page https://www.irs.gov/uac/Newsroom/In-2016-Some-Tax-Benefits-Increase-Slightly-Due-to-Inflation-Adjustments,-Others-Are-Unchanged for

 

2016 $101,300 up from $100,800 in 2015). You can only claim this if you earned income overseas. Pensions, 401Ks, IRAs, Social Security, do not

 

count.

 

I agree. And how many retirees have $100 k income outside the USA.

 

As for Pensions etc within the USA even if living OS, they are taxed over $25,000 total. And I would assume every US Citizen would know this because there are periodic reminders from SS by mail. We received our annual letter last week telling us how much we had received including the kids money (totaled separately).

[jon1]

 

The 330 day rule is for two things; OBama care exemption and qualifying for the Foreign Earned Income Exclusion (at the bottom of this

 

page https://www.irs.gov/uac/Newsroom/In-2016-Some-Tax-Benefits-Increase-Slightly-Due-to-Inflation-Adjustments,-Others-Are-Unchanged for

 

2016 $101,300 up from $100,800 in 2015). You can only claim this if you earned income overseas. Pensions, 401Ks, IRAs, Social Security, do not

 

count.

 

I agree. And how many retirees have $100 k income outside the USA.

 

As for Pensions etc within the USA even if living OS, they are taxed over $25,000 total. And I would assume every US Citizen would know this because there are periodic reminders from SS by mail. We received our annual letter last week telling us how much we had received including the kids money (totaled separately).

 

I think that Roth IRA withdrawals are not taxable but not 100% on that. I will have to research that one.