Us Expats And Fatca Act?

[chris49]

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

 

The principle there is that you could put money in before tax, and the concept is that when you take out the money eg monthly or maybe yearly you will be in a much lower tax bracket. So you may or may not pay tax, depending on the amount.

[robert k]

 

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

 

The principle there is that you could put money in before tax, and the concept is that when you take out the money eg monthly or maybe yearly you will be in a much lower tax bracket. So you may or may not pay tax, depending on the amount.

 

Roth IRA contributions are post tax. You get taxed on it before it goes in and it is supposed to be tax free to withdraw.

Edited February 10, 2016 by robert k

[OnMyWay]

Roth IRA contributions are post tax. You get taxed on it before it goes in and it is supposed to be tax free to withdraw.

 

Tax free and penalty free as long as you are over 59.5 years old, which for me is March 16th!   :)

[Maxheadspace]

OK, this is starting to gel in my head.

 

There was a 20% increase in Americans renouncing US citizenship in 2015, a total of 4,279 according to the US Treasury. 

 

What appears to be happening is that FATCA is snaring those foreigners who happened to be born in the US, but never lived there nor paid into the US tax system.  Example:  French model Fabien just happened to be born in California while his mother was visiting, but he never lived in the US, never paid taxes to the US, does not have an SSN.  Technically he is a US citizen by birth.  Now he is forced to renounce his US citizenship in order to preclude being taxed by the US Government.  I wonder if he could now be charged with tax evasion for all those past years?  And now that I think of it, I know a large number of people I worked with overseas who were born in the US but never lived in the States nor contributed to the US tax system.  Usually their foreign parents intentionally wanted to have their child born in the US just to have the benefit of being a US citizen, sort of as a golden parachute.  So it seems it will have little impact on normal US expats, but may prove problematic for US birthright citizens who have not been a part of the US system. 

[robert k]

I don't have the US census in front of me but if we stipulate that there are 300 million US citizens and 4,279 of them renounced their citizenship, that would mean a rate of 1/70k. We have more unbalanced people than that.

[davewe]

 

 

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.

 

On a Roth IRA (I have one) you paid taxes prior to putting the money into the Roth. So correct - the principal + anything you earned (unlikely in today's stock market lol) are not taxed, since you already paid the tax. 

[earthdome]

Just to be clear there are two different issues being discussed here.

 

1. FACTA - This is a new requirement for US Citizen's to report annually their financial assets in country's outside of the USA if at anytime the sum of all those financial assets exceeded $10,000 USD. This increased reporting burden is why some people with US citizenship but long time residents in other country's are renouncing their US citizenship.

 

2. Income Tax - If the money you earn originates from the US then you pay your taxes as you normally would. If your money originates from outside the USA then you are exempt from paying US taxes if it is less than ~$108,000. This limit usually increases annually.

[chris49]

There was a 20% increase in Americans renouncing US citizenship in 2015, a total of 4,279 according to the US Treasury. What appears to be happening is that FATCA is snaring those foreigners who happened to be born in the US, but never lived there nor paid into the US tax system.

 

Thanks for reply which clarifies the situation. Those who hold another nationality can easily do that.

[jon1]

OK, this is starting to gel in my head.

 

There was a 20% increase in Americans renouncing US citizenship in 2015, a total of 4,279 according to the US Treasury. 

 

What appears to be happening is that FATCA is snaring those foreigners who happened to be born in the US, but never lived there nor paid into the US tax system.  Example:  French model Fabien just happened to be born in California while his mother was visiting, but he never lived in the US, never paid taxes to the US, does not have an SSN.  Technically he is a US citizen by birth.  Now he is forced to renounce his US citizenship in order to preclude being taxed by the US Government.  I wonder if he could now be charged with tax evasion for all those past years?  And now that I think of it, I know a large number of people I worked with overseas who were born in the US but never lived in the States nor contributed to the US tax system.  Usually their foreign parents intentionally wanted to have their child born in the US just to have the benefit of being a US citizen, sort of as a golden parachute.  So it seems it will have little impact on normal US expats, but may prove problematic for US birthright citizens who have not been a part of the US system. 

 

http://money.cnn.com/2016/02/08/news/americans-citizenship-renunciation/index.html?iid=ob_article_footer&iid=obinsite

 

I do not get where the "mountain of paperwork" comes from that is quoted from the above article. How hard is it to file taxes on a pension? Can't be that hard. Filing an FBAR is painless and you do not want to have any financial concerns in the PI above 500,000php anyways as it is not insured. Also, the PI is receiving reciprocal reporting from FATCA. In other words, they are getting data on their citizens with US Bank accounts (which is not allowed in the PI). So the money grabbing politicos can't hide their $ in the US anymore.

 

Some other interesting numbers on Americans abroad https://en.wikipedia.org/wiki/American_diaspora, so we are less than 2% of the US population. 

[Maxheadspace]

What ticks me off is that this is typical, rediculous Congressional legislation for political purposes.  All US citizens are already required to pay their legitimate taxes, whether in the US or overseas.  The stated purpose of this act is to stop those rich Americans who are hiding money overseas, which is ALREADY ILLEGAL.  What makes our Congress believe that enacting this legislation will suddenly bring these tax evaders in line?  If they are intent on illegally hiding funds overseas the FATCA will not stop them.  In the meantime the Act becomes an additional burden for a lot of tax-paying Americans overseas.