Many Americans Abroad Surprised by Tax Code's Nasty Bite
Here is a well-researched and presented article by Brian Knowlton of the New York Times. It is journalism like this that tells our real story and the often tragic consequences for children born to US parents living in another country or those born in the US to parents from another country. None of these accidental Americans asked to be US citizens and somehow are not given a choice in the matter. Being born by this accident of birth, wouldn’t it be fair if there were a choice for them to accept or not that US citizenship at some point? A choice should be theirs, not that of the US!
It starts,
“As Americans abroad chafe under sharply increased U.S. pressure to declare foreign holdings and catch up on back tax filings, one group with tenuous ties to America and the benefits of citizenship is feeling particular pain and unease.
They might be called “accidental” Americans, born during their foreign parents’ brief stay on U.S. soil, or born abroad to American parents who long ago settled elsewhere…”
Thank you Brian for telling this aspect of the consequences of US citizenship-based taxation and reporting.
@thatisme…
You analysis of the penalty inside the OVDI program is not correct.
It is NOT an “in lieu of” penalty of 27.5% plus $10K a year for 8 years. It is ONLY the “in lieu of penalty” of 27.5% . Now that only is still a lot, but it is not double enmity. Hope that clarifies for you.
You are definitely right, however, that the penalty is not associated with the taxes owed, and therein is one of the many faults with the entire stupid process.
@Thatisme, it’s naive to think that few Americans abroad owe no tax to the IRS…after all, many will have mutual funds and personal pension plans that entail the awful PFIC taxation (which I was hit with for thousands, in spite of foreign tax credits.) Also, many could have tax-free or tax-deferred investments that thus be open to US taxation. Plus capital gains taxes on the sale of their homes.
I suspect that a lot more will face US taxation than they realize which is all the more why Shulman is waving his club.
I meant ‘it’s naive to think that few Americans abroad owe ANY tax to the IRS’.
I essentially think that the US government are becoming a bunch of thugs. I’m not personally prepared to stick my head out, especially when my disclosure was somewhat messy and that I face several years of statutes of limitations, etc. I resent that I am forced to abandon my ideals because I live in fear.
But I admire people who are prepared to risk everything to stand up for their principles, whereas I’m more pragmatic, perhaps because I still have so many ties to the US due to family. Everyone I know over there is sympathetic to my plight but also of the opinion that as I chose to come to Britain, I’ve just got to take the rough with the smooth. ‘Sure, double taxation and compliance costs suck but don’t forget who you are’, etc.