NRP’s Morning Edition, and Planet Money have continued a series they are doing on Offshore Tax Havens. This provides an opportunity to educate NRP readers and journalists, that some of the issues they talk about also apply to Americans Abroad. Here is the link to their most recent story..
I posted this comment, and it is in moderation. Just trying to inform those that bother to read.
Well, dear Planet Money, welcome to a reality that impacts millions of Americans abroad, who have ordinary mundane accounts in what you Homelanders call “offshore.” Even if your country of residence is not considered a “Tax Haven”, like Canada, or New Zealand, or Australia, to be in compliance with U.S, Tax laws that apply to U.S. Citizens no matter where they live, you have to fill out a LOT of forms. The cost for doing this, even if you owe no taxes is not inconsequential, and the penalties for even benign failures are DRACONIAN!
BTW, no other country in the world requires this of non resident citizens!
You have your FBAR form which you have to send to Detroit by June 30th, and report on all your bank accounts and highest aggregate balance. $10K penalties for non-willful non compliance, and up to 50% account confiscation for willful failure to report.
It doesn’t stop there.
Now, this year, you have the duplicative IRS FATCA form to fill out with your 1040, that asks for the same information, and that takes hours to do just for some normal checking and savings accounts. If you are in a foreign countries retirement program or own mutual funds, you have other complex IRS forms to complete. Again, serious penalties for failure.
If you are going to try to offset some of the taxes you pay in the country of your residence, so as not to be totally doubled taxed, you have the complex Foreign Tax Credit form to fill out, and then their is the Foreign Earned income exclusion form that the IRS likes to disavow, so you have lots of extra work to do that the Homeland U. S. Citizen knows nothing about.
And, by the way, don’t even consider not being compliant, as the IRS will include you in its offshore jihad and search you down, by having all the worlds financial institutions report on you via the FATCA legislation that was enacted in 2010 that you never heard about here on NPR, sadly enough.
Yes, indeed. By the simple act of living abroad, you also just “Walked into an IRS sinkhole.”