“Life planning, career planning and the reality of U.S. citizenship for Americans abroad”
“Everything I wish I had known, but couldn’t even have imagined to ask!”
During the winter, John Richardson presented a number of seminars for those concerned with the obvious problems of U.S. citizenship (including the “threshold question” of whether you really are a U.S. citizen).
Seminar topics have invariably included the problems of: FBAR, FATCA, investing, retirement planning, mutual funds, U.S. tax compliance, renunciation, etc. The official “FATCA Launch” of July 1, 2014 will surely make the existing problems worse.
U.S. citizens living outside the United States are subject to a regime of rules that diminish their “life opportunities”. These rules are such that U.S. citizens abroad live at a disadvantage relative to the citizens of any other nation. Those attending previous seminars have been primarily “middle aged” people, who have attempted to plan for their retirement, only to find that their retirement plans are threatened, because of their birth in the United States.
A shared sentiment has been:
“If only, I had known about these rules earlier … This is information that my children and other young adults need to hear! What does all this mean for my children?”
The seminar on June 7 will be a session specifically designed for your children and young adults. They will be exposed to (at least “some”) of that information that they need to hear!
U.S. citizenship can be seen as an opportunity. It can also be seen as a liability. U.S. citizenship will impact virtually EVERY aspect of your life! When it comes to the problems of U.S. citizenship abroad,”An ounce of prevention is worth a pound of cure.”
For those who DON’T understand the “rules imposed on U.S. citizens abroad”, U.S. citizenship can become a very big problem. In fact the older you get, the bigger the problems become. For those who have not been compliant with the “Rules of U.S. Citizenship Abroad”, the aging process is one of accumulating tax and penalty liabilities.
For those who DO understand the “rules of U.S. citizenship abroad”, it is possible to life a successful life. It’s just that it will require specific and specialized planning.
An awareness of the “rules of U.S. citizenship abroad” will equip you with the knowledge you need to:
• Live your life in compliance with U.S. rules; OR
• Decide that the “rules of U.S. citizenship abroad” are simply not worth the trouble.
Who: John Richardson, L.L.B., J.D – CitizenshipSolutions.ca
When: Saturday June 7, 2014 – 10:00 a.m. -12:00 noon
Where: University of Toronto – St. Michael’s College – Carr Hall – 100 St. Joseph St.-Toronto, ON MAP
Admission: $20 individual or $40 for a family of up to four people
Hope to see you and your families on June 7. Spread the word!
“….diminish their life opportunities.”
Man- doesn’t that say it all? What a shocker. Homelanders will be going nutz.
It sure does. Rather devastating when considered, eh?
I took my kids swimming on Sunday. A very young woman working as a lifeguard heard me speaking with an English accent to my kids and asked me where I was from. She was a dual American-UK citizen living in the UK but having some fun working in the US. One of her parents was American.
Apart from the ability to do something a little out of the ordinary like working in America she probably thinks of herself as English. She is so young she does have a clue what a mutual fund is or saving for retirement. When an advisor down the road suggests she invest in an ISA (like 30% of the UK public does) she probably will have forgotten that warning I gave her.
I think something has to give on these issues when the numbers become to large to ignore. The IRS can steal the savings of a few people while the numbers are small.
We have 2 sons in their 20s who need to be at the seminar but we are in Edmonton. Any chance this will be webcast or perhaps recorded for sharing?
Hopefully they will be warned never to take out, and certainly to never pay off, a mortgage outside the USA, or they will owe the IRS Exchange Rate Gain taxes if the US$ happens to be high.
@diminish their life opportunities
Hopefully these younger USPs/duals will become aware that a number of firms in their countries of residence are already quietly divesting themselves of USP employees or else not hiring them in the first place. Anyone with plans for a career involving signing authority, upper management responsibility etc would be wise to take notice asap.
In the UK the sales of your ‘primary residence’ is not a reportable taxable event to the HMRC. However the rules are changing in April for ‘foreigners’ who own properties not considered primary residence.
If you tell your UK solicitor to break up the payments into lots of say 25K GBP into different established bank accounts you should escape the FATCA net at the present. Or even take up to 10K GBP in cash.
ISAs were exempt from FATCA as were pensions. But the important thing is to spread it around for now.
But let’s get real, if you own a house in the UK, and earned UK money and paid UK taxes the IRS deserves nothing.
One other question? Was there any video posted with last week’s ACA meeting in Toronto?
Don nothing posted yet. I wonder why not since they have already posted PDF`s some speakers slides at the session held in Switzerland which was after the ACA May 2nd meeting
This was on Russian news
I can’t get it to post but the Russians are rehashing FATCA
Can you provide an example of how paying off a mortgage can result in US FX capital gain taxes? I was under the impression that any gain would be related to the value of the property in US$ terms on sale.
What a great idea. Perhaps ours might be the last generation taken by surprise.
@osgoode – simple. If US$ equivalent of C$ mortgage is higher when you borrow the money than when you pay it off due to a drop in the US$ between date of borrowing and repayment, you are treated as if the bank wrote off part of the debt or forgave the loan. The difference is income on your return. For the US, you borrowed $1 and paid back 70 cents: send the IRS a cheque for your phantom gain. The bank sees you borrowing a C$ dollar and paying back a C$ dollar because you don’t live or keep your books in US dollars or in Tahitian francs.
I hope that people will become savvy enough to avoid these traps. It’s the sense that tax traps have been laid that really gets me. When I get too grumpy about FATCA, I find an article on greencards and post a little warning about the potential tax implications and pitfalls. It makes me feel much better .
@USCitizenAbroad @Anne Frank – thanks for that, I did not know about that. Really amazing as presumably there would be a US$ gain or loss every month if you had a principal + interest repayment mortgage.
Just as all despotic regimes have come to life, they use the ”willing idiots” to support their ideas and lies. In 1913 when the Marxists were changing the U.S. constitution, to allow a tax on income, they lied continuously saying it will only affect the rich and will never be more than 2%, and we know how that turned out. Now they sold FBAR and FACTA by saying a bunch of millionaires were fleeing to keep from paying taxes. That was a lie and they knew it, but the ”willing idiots” who were jealous of successful people supported them and still do, because the politicians keep the ”big lie” going and they say it with a straight face and they know they are lying.
Marx called it ”class warfare” and the political class, especially the progressives or Marxist’s or democrats, or Liberals or whatever they will call themselves next week, love to see the successful get hosed.
One man one vote was a decision of the U.S. Supreme Court, and it was the mistake that will doom the U.S. because no democracy has lasted after those whose votes are courted, find out they can keep sending politicians to office, who will give them benefits from the treasury, paid for by a minority. The fall would have already happened if the benefits they gave out were taxpayers money. Since 1968 we have spent 17 trillion dollars on the war on poverty, all borrowed, with no ability to ever pay it back, and the poverty rate hasn’t bulged one bit.
There is one way to handle taxes and politicians are resisting it because it will affect the way they get re elected. The FairTax is a National Sales tax that everyone would to pay, giving everyone a stake in the game. Then even the ”willing idiots” would insist on sound fiscal policies and it would solve the ”overseas Americans” problem and make us prosperous again.
@osgood – it is just one more insanity associated with CBT. In theory you are mostly right (about having loss/gain every month). Nobody pays their mortgage out all in one go in reality. it is repaid via amortization payments every month with possibly a lump sum paid at the end when the mortgage is refinanced with another institution or when the house is sold and proceeds used to pay down the mortgage and clear title. Thus, to be perfectly “in compliance”, you would have to tease out of your monthly mortgage payments that amount that was principal and the amount that was interest (I assume US banks give you those statements routinely since interest is deductible: I’ve never seen anything like that in Canada!). You would then need to convert the amount of principal paid in US$ and deduct that from the US$ equivalent of your original mortgage loan – it’s like having a completely parallel bizarro universe mortgage that is amortized and paid down. If you end up losing money at the end due to a rising US$, suck a lemon. That “loss” is artificial and doesn’t exist. If you end up “making” money, send a cheque. If any of that makes sense to you, you have an exciting career ahead of you in the IRS.
To be fair, companies have to engage in accounting handstands like that all the time if they have foreign branches and multiple accounting currencies. Because even auditors’ heads can explode, they do have some rules of thumb and work-arounds that make the calculation a little less theoretically perfect but a little easier to do (eg. use one average exchange rate for the whole year).
In all honesty, I don’t see how anyone with even a moderately normal middle class life outside of the US can possibly fit themselves into the compliance regime without very material cost. Even if no actual tax dollars are paid over, the cost of having to forego proper financial planning due to conflicting tax regimes, the restricted career choices due to concerns of infecting an employer with your “dual-ness” and the continual risk of financial ruin for innocent filing errors and omissions make the costs enormous for just about anyone. Add to this all the miscelanneous types of income that might come the way of a typical middle class person: income and gains generated in a registered account, severance payments that might put them in another tax bracket for a year, employment insurance payments: the prospects for double taxation are constant. The uber rich have accountants and lawyers plotting their way through fiscal mine fields all day long anyway – I don’t wish them any greater misfortune in shedding their unwanted life passenger than anyone else, but the inability to “tax optimize” one’s financial affairs is not a material concern for them since registered accounts, pension plans, mutual funds: all of these are rounding errors for them. The poor and indigent can be threatened, but the blood from a stone adage works for them. All of this web of restrictions may not be intended to oppress and ensnare the middle class, but they are the overwhelming majority of the victims of it. Bottom line – registering ones’ children with the embassy or even retaining citizenship one day longer than necessary is an act of fiscal suicide for anyone but those with definite plans to move back behind the “Wall”. Oh what a brave new world that has such people in it.
OK, I probably knew once, but I forget the answer. I have 2 boys under 18 born in Canada to me (kryptonite card expired 15 years ago but never returned….who knew?) and my US born wife (been here since 1990 and citizen here since 1999). Is there anything I need to do (as they turn 18?) to ensure they are not infected with US citizenship? The boys were born after she was a Canadian Citizen.
How old was their mother when she left the USA? Did she ever formally renounce US citizenship?
IMHO the most you can do is to get them good information. They have to make the decision. IMHO 18 or 19 is usually too young to be making a decision to renounce US citizenship–it is an age to be getting good information but not the time to make a final decision. IMHO the right time for them to make this decision is when they accept a permanent job offer in Canada and/or when they marry a Canadian woman. Young people should not IMHO be closing off opportunities prematurely. When they acquire long-term adult responsibilities in Canada–ie marriage and/or job–that is the time to cut ties with the US.
Maintaining US citizenship abroad is a major burden for a middle aged or elderly Canadian in Canada–and that appears to be the age range of most posters on here–but the financial implications are significantly less for a young person with limited assets. But a young person should understand the consequences and understand the maintaining US citizenship may be a burden that shouldn’t be carried indefinitely if you don’t want to use it.
And–of course–the question is also whether a formal claim to US citizenship has ever been made on their behalf.
The $64,000 (or more) question here–which I’ve never seen persuasively answered either ‘yes’ or ‘no’–is whether the USG has ever enforced the responsibilities of US citizenship to someone born outside the US who has never asserted their claim to US citizenship. I’ve a layman but I’ve been following US immigration issues online for literally a quarter century. And I’ve never heard of a single case of the USG forcing US citizenship on someone born outside the US to US parent(s) unless that citizenship is actively sought. What was the practice during the Vietnam era, for example, which was the last phase before FATCA when US citizenship could carry a significant cost if living abroad. Getting definitive answers to these questions would be helpful.
Did anyone hear this story on CBC this morning — a Castlegar, BC 86 year-old (so not the subject of this post) trying to prove her Canadian citizenship?
I sent this query regarding a CBC news item I heard this morning:
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I just noticed/was reminded of a letter written by a father to his dual U.S./Canada citizen son on the occasion of his high school graduation. It certainly is apropos to the subject of this meeting.