I love to share my concerns with you all. I am a dual citizen Brazil/USA and I always saw the USA as a fair country, like they say, Americans always do the right thing after trying everything else. But lately I have been questioning this belief because of the enormous difficulties I am having trying to comply with the IRS demands on Americans Living Abroad.
They seem so unfair to me. My reactions so far can be summed up under FEAR. And perhaps CONFUSION. Love to exchange ideas with you all.
@markpinetree, Totally unjust. I could not agree more. That is why everytime and everywhere I have the opportunity I speak to anyone who will listen against the citizenship based tax system enacted by the United States Congress. The prospects of getting it changed are not at all encouraging, but I shall not keep silent as long as God continues to give me breath.
Thank you Roger. I just received this letter from US Social Security telling me that I have to pay self employment tax if I am self employed but “your benefits are not affected by your work because you are over full retirement age”. This means that I am making a donation, both in Brazil and in the USA. Another example: in Brazil, where I am residing and working I pay no Income Tax on the interest I receive on Savings. This is because Savings gives less return than let´s say Money Market in Brazil. Well, the USA comes in, in the country I am living and working, and tax me on the interest I receive from Brazilian Savings Accounts. I am not going to start telling you about the forms and more forms I must fill now every year. I wrote a letter to Rep, Van Hollen from Maryland who was very nice and answered me. I told himthese thingst and he sent my letter to the IRS (without my name). They replied to him in formal letter that I had an income exclusion and tax credits but I had to pay taxes to the USA if they were due. I then wrote back and told Rep. Van Hollen about the SS Self Employed Taxes, the Brazilian Pension Tax ( not applied to Americans in France) and the Brazilian Savings accounts tax. Rep, Van Holled (who is in the Americans Abroad Caucus) sent my second e-mail to the IRS. He said that he was going to send me their answer. It has been now more than one month (maybe two) for sure and so far no answer. I am trapped because I have Tax Sheltered Plan in the USa, as well a SS income and family there. I don´t have many alternatives. But to conceive me going through this year in year out is impossible.
Still trying to see what I will do. Many thanks! You have been a big help. And to think that I used to love the USA!
@markpinetree, I am afraid Congressman Van Hollen will do more than forward to you the responses he gets back from the IRS, but regretfully is is unlikely he will lift a finger to do anything to get the tax laws changed. When the Tax Reform Act of 1976 was enacted I was living in Brazil. My senators and congressmen forwarded my complaints to the IRS and sent me back the IRS replies, but did nothing to address the source of the problem which is the unique-to-the-US policy of citizenship based taxation which leaves the US citizen living abroad at a terrific economic disadvantage. That is why I came back home. Some of my American friends, including one who was editor and publisher of the Brazil Herald in Rio, chose to become Brazilian citizens and formally renounce their US citizenship. He was married to a Brazilian and all of his children were born there. My wife is American and all of our children were born in the US. So his roots in Brazil were a lot deeper than mine. Self-employed US citizens living and working abroad have an especially rough time because of the double social security taxation making it virtually impossible to survive abroad unless you are swimmming in money.
A dual Canadian-US citizen worked in the US from age 20 to 40 then moved to Canada. Now, at age 62 learns of the IRS requirements. She was advised to back file IRS returns for EVERY year of the 22 years in Canada; and if she does not do that she will not be able to collect her pension from her 20 years working there. Does anyone know if that could possibly be true?
peg11Sorry but I don´t believe this is true. Please let us know.
@peg11
A question for you – are you referring to her social security pension benefits? If so, I don’t believe receiving them is at all contingent on filing tax returns. I certainly know of quite a few Canadians (in some cases considered duals) who have never filed US returns since coming to Canada and have applied for and received social security benefits.
As far as pensions perhaps from corporations, I am not sure of those.
I recently encountered an individual in Canada who (1) receives Social Security payments from the US (2) hopes to remain an ostrich at ground level who does not blip on the radar. What are the odds?
Thanks for the replies – I am going to ask our mutual friend to have her contact me because the advice just doesn’t ring true although it is second-hand and perhaps it has been distorted.
@All,
do you guys think reporting form 8938 can trigger an audit on previous tax years on which foreign income wasn’t reported by ignorance about FBAR? After reading JustMe’s ordeal in the ODVP program, it’s simply terrifying thinking of having to go through something similar. I am not a US citizen, but a green card holder. It really is challenging trying to do the right thing and not being unfairly punished by the system. By the way, I am a minnow and have already reported TD 90-22.1 last year.
@Usxcanada, I’m wondering the same thing myself, I know someone in the same situation. The Canada/US tax treaty does cover people receiving US social security benefits, so there must be a lot of them, especially if you count beneficiaries of US citizens. If the person doesn’t have a US tax id number, or US passport, etc, I wonder if that’s enough to keep them off the radar… This person became a Can citizen many decades ago, and receives the SS as beneficiary of her deceased husband, who remained a US citizen. I’m still hoping that the US will recognize that people who became citizens of other countries decades ago should have no obligation for any of this to the IRS. Probably a forlorn hope, but, there’s a tiny ember of hope that refuses to go away….
I am under the impression that GreenCarders living in the USA will have to enter the FBAR program. What is not clear is how they can enter it – I suspect the great majority never heard of this program – and what they should do to comply. It is not clear either how much this will cost them in terms of time and money.
It is the end of May and I still am not clear about what to do. I have a CPA EA in NYC and so far the IRS return is not done. I leave in fear, not sleeping at night.
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