Us Expats And Fatca Act?

[gerrysanders]

 

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

 

They tax the interest you recieve on on these foriegn accounts. You are required to report the existence of the accouts annually if the aggregate is => 10K usd.

The banks are blackmailed into reporting your accounts. If they report and you forgot or didn't know you had to, the penality is from 10K up to 50 percent of the highest balance per  year, for every year you had  them and didn't report it on the FBAR now called something else like form 114.

[gerrysanders]

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.

Sorry earth but 1. is wrong. The requirment has existed since the early 1970's to report your account annually.

FACTA was born in 2010 as the retroactive enforcement mechinisim to catch those not filing the annual form.

 

It blackmails all banks in the world to sift through their customer base to find any account with US indices and report these accounts to the FINCEN. or the treasury , I forget which.

 

FATCA is not served upon you the lucky account holder but on all foriegn financial instutions to help the US catch and punish you for having an unreported account.

 

2. is close enough, but incomplete.

[gerrysanders]

 

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. 

 

This is incorrect.

There is no reciprocal reporting in force and may never be. It was only an empty promise. There are no demands as of yet on US banks to do what is demanded of foreign banks and may actually never be.

 

This whole FACTA debacle was done in the still of the night, sneaked into the jobs act and without congressional hearing nor a cost benefit analysis.

 

It lacks congressional approval or hearing and is erroneously believed by foreign that they are signing a treaty when in fact is not nor can it be for the reasons stated above.

The foreign banks, will shoulder the costs of compliance which exceeds the pittance expected to be collect in tax by the USA.

 

It is the worst law that nobody ever heard of.

[Mike S]

Simple solution .... do like I did put ALL bank accounts in your asawa's name (or partner's) .... easy as pie .... never have to comply with any of the US stupid regulations .... or put cash in a safety deposit box in the bank .... or in a home safe or a sock under your pillow .... :hystery: :hystery:

:cheersty:

[Dave Hounddriver]

do like I did put ALL bank accounts in your asawa's name

 

A good friend of mine did exactly that, (God rest his soul).  :cheersty: But seriously, I can see the logic in what you are doing.  I'm glad that works well for you as I'm sure it does for many others.

[Jack Peterson]

 

do like I did put ALL bank accounts in your asawa's name

 

A good friend of mine did exactly that, (God rest his soul).  :cheersty: But seriously, I can see the logic in what you are doing.  I'm glad that works well for you as I'm sure it does for many others.

 

 This surprises me that a loop hole is there, i always thought in the West and Certainly here, Marriage created a Joint and Several

ie, It was a joint thing

[AlwaysRt]

 

 

do like I did put ALL bank accounts in your asawa's name

 

A good friend of mine did exactly that, (God rest his soul).  :cheersty: But seriously, I can see the logic in what you are doing.  I'm glad that works well for you as I'm sure it does for many others.

 

 This surprises me that a loop hole is there, i always thought in the West and Certainly here, Marriage created a Joint and Several

ie, It was a joint thing

 

 

It is one of those loopholes that work great - until you get caught. In this case audited by the IRS. Of course the likelihood of getting hit with an IRS audit for the majority of us is slim to none.

[Jack Peterson]

 

 

 

do like I did put ALL bank accounts in your asawa's name

 

A good friend of mine did exactly that, (God rest his soul).  :cheersty: But seriously, I can see the logic in what you are doing.  I'm glad that works well for you as I'm sure it does for many others.

 

 This surprises me that a loop hole is there, i always thought in the West and Certainly here, Marriage created a Joint and Several

ie, It was a joint thing

 

 

It is one of those loopholes that work great - until you get caught. In this case audited by the IRS. Of course the likelihood of getting hit with an IRS audit for the majority of us is slim to none.

 

So there could be a chance of a hiccup? I ask only that when ever I Complete a UK Tax form I am always asked about Joint Income and Tax paid certificates, I know all Tax Departments in different Countries work Differently But............ :1 (103): Seems we are counted as one and the same person.

[AlwaysRt]

 

 

 

 

do like I did put ALL bank accounts in your asawa's name

 

A good friend of mine did exactly that, (God rest his soul).  :cheersty: But seriously, I can see the logic in what you are doing.  I'm glad that works well for you as I'm sure it does for many others.

 

 This surprises me that a loop hole is there, i always thought in the West and Certainly here, Marriage created a Joint and Several

ie, It was a joint thing

 

 

It is one of those loopholes that work great - until you get caught. In this case audited by the IRS. Of course the likelihood of getting hit with an IRS audit for the majority of us is slim to none.

 

So there could be a chance of a hiccup? I ask only that when ever I Complete a UK Tax form I am always asked about Joint Income and Tax paid certificates, I know all Tax Departments in different Countries work Differently But............ :1 (103): Seems we are counted as one and the same person.

 

 

Yup, a hiccup with fines from failure to disclose. The bet is that the odds favor the US government never finds out about the account(s) that don't have your name on them and therefore don't get reported by the bank.

[Jack Peterson]

Yup, a hiccup with fines from failure to disclose. The bet is that the odds favor the US government never finds out about the account(s) that don't have your name on them and therefore don't get reported by the bank.

 

:hystery:  Yeah but Knowing Banks & having a Little distrust in someof them, a foreign name of a Pinay may just set the ball Rolling.

You know coffee time Tsismis, Look, another US Foreigner Account. Should we Report this?

I would hope all is well with those at do this but I know my Luck in things like this.  The UK Inland Revenue just have a  of many of us as I am sure many can feel the same about their own Countries.

Anyway I will not take this any further of Topic, just wanted to ask things really. :thumbsup:

Having said that, I am pleased we don't get the problem this issue seems to be. The UK look at this way, as it was taxed at source, what you have in the bank is Yours, we just want the Tax Payable on the Interest or is this ,what it is all about? :)