I thought I would take a few moments and talk about how all these issues impact U.S. spouses of foreign nationals living outside the U.S. I’ve seen this addressed in other places but from the comments I see it’s usually about how the foreign spouse will suffer because he/she married an American. Believe me, it isn’t fun for the Americans (very often women) either.
Roger Conklin has referred to the double taxation of Americans abroad as a “sin tax.” I think in the case of American spouses (in particular women) we are being punished for having the audacity to marry foreigners – a fine for the crime of exogamy. I’ve had conversations with Americans who think I should lose my U.S. citizenship since I married a foreign man (a Frenchman no less). There was even a time in U.S. history when American women who married foreigners lost their U.S. citizenship even if they stayed on U.S. soil (see the 1907 Expatriation Act). The rules have changed but the prejudice is still alive and well.
How does the tax system, FBAR and FATCA impact us? Well, here are a few things to think about based on my experience.
1. Exacerbates Inequality: Many of us live in countries where even the relationships between men and women who are citizens is not equal. Immigrants are in even worse shape. So a foreign women is, relative to her husband, in a very vulnerable situation. Becoming a dual can help things but won’t necessarily erase all the discrimination and even unequal treatment under the laws of that country. So when we have to prepare our U.S. tax returns or ask for account information from our foreign spouses, sometimes we literally have to beg them to help us. Please give me the information on our taxes here so I can prepare my tax return. Please let me list our joint accounts on my FBAR. And so on.
2. Impacts our Careers: Many of us have already experienced a phenomenon called “de-skilling.” This is what happens in a foreign country in the beginning when we don’t speak the language well or our credentials are not recognized by HR department in foreign companies. It’s a long hard road to rebuild. But because we are U.S. citizens some avenues are closed to us (or are just too hard and too complicated to contemplate): working as an independent contractor, starting a business or building a successful career and making too much money (putting us above the FEI cap). These things make it very hard to have a career and we usually end up in low-paying jobs where we make much less money relative to our husbands which leads us back to Point 1 above.
3. The Price of Returning to the U.S. is too high: Let’s say we wanted to return to the U.S. but our spouses are not willing to move. What is the outcome? Well, many of us have ALL our assets in the foreign country. If we leave, we will lose much of our money (in some countries we might lose everything) and we will be paupers in the U.S. If we have children, their country of residence is the foreign country and we do not have the right to bring them back to the U.S. without the foreign spouse’s permission. So going home means leaving our children behind which is almost unthinkable for most of us (though I do know one woman who did it).
I’ve heard people say, “well, you put yourself in this situation and you shouldn’t have married him in the first place and left the country.” That has to be the most asinine statement I’ve ever heard. You are asking us to regret, and to accept punishment for, exercising our right to marry the person we fell in love with and chose to raise a family with. That’s not the right of a U.S. citizen or a French citizen, it is a human right. If we had known that all this would cause so many problems, would we have made a different decision? No, but we would have planned better and taken steps to mitigate.
So here we are today with better information and we are fearful, having uncomfortable conversations with our spouses, and examining our options. But for the record, my decision was made 23 years ago to marry the man I fell in love with and I do not and will never regret one whit what I have today as a result of that decision: a good marriage and my two beautiful Frenchlings.