Renounceuscitizenship has found a news story about the form 8839 which will make the filing threshold much higher and provide relief to many living overseas.
I will write an analysis of this once I have taken the time to understand it, but for the moment the outline of the proposal is here.
From the Forbes article by Robert W. Wood:
This will exempt most of us I think from form 8938. But nevertheless, it is still a violation of our rights, in that even the rich have rights. Now one should have to give the IRS or anyone in government a list of their assets unless they have a warrant based on reasonable suspicion that you have committed a crime (see Fourth Amendment). But it is good to know, for myself, that at least I would not be required to the damn 8938!
I don’t consider this relief at all, unless i am mis-interpreting the definition of a ‘foreign asset’.
I would think that, once you include your house, car, RRSP, and a few bank accounts…..400k or more comes quite easy…especially if you live in Toronto or Vancouver where the housing market is expensive.
This 400k ceiling would be easily breached by most of us on this forum who are well established but not what I would consider rich by any means.
If you have a house that is worth 350k (which is nothing out in NS)…maybe an rrsp that is worth 100k, the throw in a bank account here and there…and there you go…back to the 8938 form as the IRS considers you rich!
Especially if the US dollar continues to fall…..once you factor in the exchange rate……..
Am I on the wrong track here?
The draft instructions don’t seem include real estate assets unless they are for investment purposes. I think that excludes one’s primary residence.
However, you cannot list debts on this form. So if you use leverage for investments you could quite easily exceed the threshold for filing this damn thing.
Also should be noted that the Forbes article is mistitled. This is not FATCA relief but 8938 relief. Hey, Renounce, don’t you think we should rename this post too?
Even if real estate assets are excluded, someone who is of our age and has worked and saved all of there life into an RRSP could reasonably have 300 or 400K saved for retirement.
Regardless, Its a mute point to me, as I will definitley have to fill this form out.
All this exclusion does is allow them to spend more time on myself and others.
“All this exclusion does is allow them to spend more time on myself and others.”
Yep. That’s true. I’m mean there are several ways to go about resisting the IRS. One would be to get everyone to file and flood the IRS with useless endless paper–but I’m pretty sure they would find you and me in any case.
While the draft instructions do not seem to mention real estate, the above link does indicate that with regard to unused land and real estate, it is unclear if they need be included on 8938 and that IRS guidance is pending. Personal property such as art, jewelry or car, unlikely with regard to being included on 8938 and that IRS guidance is pending.
I don’t see any mention of real estate on the draft instructions. Petros, can you point this out to me? I do see that in general, assets that are investments are to be reported; are you thinking that a principle residence is not an investment and therefore, not reportable?
I think many of us fear the idea that once they see what assets they can tap into, they may change the Tax Code. Is that possible? Can they do that?
The draft guidance that I read does not explicitly say that a primary dwelling must be included. I would therefore not include it. Even if you were to include, you should only include yourself as half owner, presuming that your spouse is half owner.
Personally, I will never fill out this form. The day they make an US person in the US fill out a list of their assets like this is the day that the IRS will be strung up and hung. It is an outrageous violation of the 4th Amendment and it unfairly treats US citizen abroad for special filing requirements.
I am wondering what law they are using to require this report, or whether it’s something that they just thought was a good idea. That’s a question for our research team.
Laws passed by the US Congress are never explicit anymore. They are general ideas passed by the legislature which then must be interpreted and put into legalese by unelected staff of unknown qualifications. Something like Captain Picard of the USS Enterprise, passing his hand toward the horizon and intoning. “Make it so!” And thousands of faceless civil servants crouch over their laptops and obey.
In the case of the IRS, it has an overall objective (bring in the money) and apparently may issue “guidelines” at regular intervals to “clarify” the unreadable product of Senate staffers. Since the originators of the laws refuse to specify how their will shall be done, it is not surprising that the guidelines are often unclear and contradict previous guidelines.
It’s far worse than you make it sound. There are at least two additional problems:
1. Laws are created as “add ons” to laws with a different purpose. FATCA was enacted as part of the HIRE Act. The “neuron bomb” of the financial system was not even the result of a dedicated FATCA law.
2. The truth is that many Congressmen don’t even know what they are passing into law. They haven’t read the law. This is certainly true of FATCA. It is inconceivable that Congress could have passed this law so quickly had they known what it really implied.
That assumes that Congressmen would even understand what they are reading, which I would think can’t possibly be the case for the majority. The ramifications of FATCA only arise out of much study and consulation. Since Congress did virtually no consultation before passing this, they can’t possibly have known what the detrimental effects would be.
Which is precisely why the US Congress of today is a frightening spectre and why the laws of the land, already a hopelessly large and convoluted tangle, continues to add impossible demands on individuals and businesses who must devote increasing amounts of their valuable time understanding them, complying with them, and coping with the unintended consequences. The term “public servant” no longer applies to politicians and government employees but to the hapless population that is forced to carry out their directives and pay them as they find more ways to divert us from living our lives.
I am reading a very interest book by Douglass Schoen called “The Political Fix” – recommend it to you.
Also have a look at this “hot off the press” article.
By the way, I find your comments to be very lucid.