Expats:Opportunity 4 #FormCrime ! $600 fine 4 FTF 8965-coverage exemption form 4 insurance not available yet taxable! http://t.co/5mS4Y7ztYe
— Patricia Moon (@nobledreamer16) January 17, 2015
Yessiree folks, there is a new form that Americans abroad will be required to file this coming tax season. The Individual Shared Responsibility Provision of the ACA “requires each individual to have qualifying health care coverage (known as minimum essential coverage) for each month, qualify for an exemption, or make a payment when filing his or her federal income tax return.” The forms for reporting coverage, exemptions or making a payment with the federal income tax return can all be prepared and filed electronically.” (of course, expats cannot file electronically).
This is beyond belief! Is anyone in the Congress or the IRS paying attention at all? First, there is a form of insurance for which we are not eligible. Yet, we are liable for a 3.8% tax to fund this insurance from investment income (much of which is likely earned outside the United States). Due to the married-filing-separately option chosen by most since we are married to “aliens”, expats are proportionately more likely to have to pay this tax than Homelanders. And to top it all off, in true American style, if we fail to file this form to receive an exemption for insurance we cannot have yet can be taxed on there is a $600 fine.
Try explaining this to a Homelander! You just cannot make this stuff up!
Even their department of redundancy departments are redundant.
Who says expats can’t file electronically?
I might have my CLN gold plated so it glows like the beacon of freedom it has become.
@Marilyn
I should have qualified the statement. Though I seem to recall when I first became aware of this situation, this was commonly said. i do know that my first set of returns done by my accountant could not be filed online.
Technically, yes, one can. With IRS free file if your AGI is $58k or less. And if more, you can purchase software online. However, I would hazard a guess that a majority of people on this forum would not feel able to. The number one reason would be fear of making mistakes that would be very expensive. It definitely IS more complicated to file returns abroad due to the information reporting. I am not aware it is possible to file a 3520A/3520 online. Ditto for 8891 in the years leading up to this season. I cannot imagine it is possible to file 5471, 8621 or 8854 online. It is not possible to file Streamlined via efile.I have no idea about 8938.
Can you please explain what you mean by your question?
Somebody has to put the ‘free’ in health care. When you voted for Obama you just didn’t realize it was you.
I curse when I have to pay the 3.8%. I just tick the box to say I have healthcare.
@Bubblebustin
And then they wonder why they are broke. How can one run a government like this? Its chaos!
@Pukedonz
LOL- I think that often.
Yes truth is stranger than fiction, as the expats have found out. If the collective brains of the entire congress were dynamite, there wouldn’t be enough to blow their noses. I will bet a months wages that less than 50% of the members and maybe 25% of the executive branch even knows the citizen based tax exists and if you explained it to those who don’t know it exists, they wouldn’t know how to stop it.
If they had any compassion or sense, they’d have passed the FairTax years ago.
Two or three people dominate the process and the rest follows blindly
WJT
I read the link Tricia gave to the IRS site, and, if I’m understanding this correctly, we qualify for the exemption as legal residents elsewhere.
Thanks for the heads-up. I probably would have missed this without Isaac Brock. While part of me just wants to check the ‘I already have health insurance’ box (because I do and it’s free), I’m trying to stay as compliant as possible in order to renounce as soon as my family situation allows me to!
@Rachel
It is not law……. yet.
I wonder how many collective hours the articulate folks gathering here have spent over the past years with this utter nonsense. I wonder how much time the US government spends imagining all this stuff.
In terms of the 3.8% there needs to be some significant dividends/capital gains before this is triggered (such as sale of house) – so this is not everyone. Other areas where expats may more likely to pay this 3.8%: I believe the annual gain in my Australian retirement account counts toward reaching the thresholds (while in the US, annual gain to IRA, 401K, Roth IRA are not counted toward reaching the threshold). I am not sure but think any PFIC gains would count as well.
My understanding is that expats qualify for the exemption – but of course the 3.8% Obamacare tax applies if your income is high enough and applies to all rents, dividends, interest and capital gains (basically all passive income) and is on top of the regular tax that applies to these sources of income. Just yet again, a tax on non US investments to pay for something we/expats can never get the benefit of. So that sale of your rental house in Toronto would attract 20% capital gains tax plus 3.8% Obamacare tax if you hit the income level. Regarding filing electronically, my accountant did that for me for the first time last year.
More of the US form-crime regime. $600. for not filing a form that shows that one owes nothing? And applied also to those outside the US? Where no-one can qualify for US healthcare anyway? More of those imaginary extraterritorial ‘benefits’ of US citizenship again.
Reading this, and as I read about the new US tax season opening, I am feeling so relieved that I do not have to worry ever again that I will miss a new insane IRS invention, random deadline, or grapple with yet another incomprehensible US extraterritorial form subject to the usual penalties. I am only surprised that the penalty for this particular form-crime is not in a multiple of 10,000. or some confiscatory percentage of everything – as is usual. Maybe they’ll change that.
Having to keep track of only one country’s laws and demands – the one where I ACTUALLY reside, is enough.
Those deemed ‘US taxable persons’ outside the US just barely escaped being subject to the entire full Obamacare regime for coverage that they could not possibly derive any benefit from where they live outside the US (and where many already pay for and receive full healthcare via substantial taxes paid to their home country of residence). It was only lobbying by expat groups like American Citizens Abroad, FAWCO, and AARO that concessions and exemptions were made, and only successful in the end, just before the Obamacare bill passed. US politicians and Obama were not concerned about how this would effect those living outside the US who were deemed ‘US taxable persons’. Most of them probably didn’t even consider those ‘abroad’, and even if they did, they didn’t care.
I checked the instructions and it is actually correct that we have to fill out this nonsense. Also, no escaping the 3.8% surtax if you are at a higher “investment” income. I will fill out this nonsense form myself and not pay money to have someone else do it for me.
How many U.S. persons overseas (even if they wanted to be “compliant”) would have any awareness of the requirement that a form on U.S. health care needs to be filled out?
Please continue to donate to http://www.adcs-adsc for our Canadian FATCA IGA lawsuit. Two weeks left to make Feb 1 retainer fee.
Yes, we also want to initiate a citizenship-based taxation lawsuit too. It will take more money and a few brave Plaintiffs.
Stephen. I think opening a second front would seriously weaken the primary effort. The fight against CBT should wait for another day. It has a much smaller chance to succeed.
how the he$$ does america expect someone who lives outside of the homeland, has no communication with big brother, does not read this website or pretty much lives under a rock to know anything about having to fill out either one of these forms under the penalty of the fine?
i have lost track of the number of forms that the IRS expects from me were i ever to attempt to become compliant and certainly would never attempt to do it myself.
just one more reason to never go near the motherland ever again………like i needed another one 🙂
This makes it more obvious that even those in the simplest of situations need professional advice – if only to manage the forms!
That’s right Steve – we would have been liable for 8.8% more in tax had we sold our house in Canada today, as as well as the surtax, the Bush tax cuts no longer exit.
@ Stephen Kish You said “Please continue to donate to http://www.adcs-adsc for our Canadian FATCA IGA lawsuit. . . Yes, we also want to initiate a citizenship-based taxation lawsuit too.”
To be clear to us lay people, what is our FATCA IGA lawsuit specifically intended to achieve? Getting rid of the IGA Harper signed? A ruling that Canadian citizens residing in Canada with no U.S. assets/income are exempt from the IGA or U.S. demands?
Isn’t the goal for us in Canada to have RBT applied to all Canadian citizens residing in Canada no matter where they are born?
When you consider that among industrialized countries the US has the world’s most messed up tax code and the world’s most messed up health care system it is no surprise that they decided to combine the two into a total FUBAR super-mess.
Imagine Parliament deciding that the administration of our health system will be the CRA’s responsibility and then cutting back their budget at the same time. That’s exactly what they did with Obamacare down there!
Great analogy, maz57, I was trying to think of one myself. Yours is perfect.
@Jan – Our lawsuit in Canada is to strike down the Canadian IGA allowing FATCA to be applied in Canada. FATCA is, of course an enforcer for citizenship based taxation. I think when you say “CBT to be applied to all Canadians in Canada” you mean “RBT”. A CBT suit would be pursued in the US to strike down the constitutionality of CBT and force them to change to RBT. If we are successful in killing the FATCA IGA in Canada, we believe this will go a long way to defeating CBT in the long run in the US.
In Europe I believe the argument should perhaps be done in reverse. As EU citizens (with US taint) we are being robbed of the same advantages that other EU citizens enjoy.
– Tax breaks by EU governments (such as Pensioner Bonds in the UK)
– Discriminated against teaming up with other EU citizens in terms of business investment by other EU citiznes
– Can’t plan retirement / pensions the same way
– Taxed on items many EU resident citizens normally aren’t (gambling winnings, capital gains on property)
– Employment opportunities etc
It’s not going to be enough to just get an IGA struck down in a EU court if for example UK banks are making all their customers opted out of their data protection rights. The IGA gets struck down and the banks carry on has normal reporting directly to the IRS via the IRS change.
The IGAs in my opinion are a stepping stone until the banks report direct to the IRS,.
Banks, governments, and other institutions have to be stopped treating like resident EU citizens different because of US place of birth or other US connections.
There is also the problem of people lying to FFIs. I was born in the UK, grew up in the US, have both passports, but fail to reveal to the bank I’m a US citizen. That’s puts you in a situation of unfair advantage vis-à-vis other US born UK citizens.
The principle that needs to be established is if you are an EU resident citizen, institutions must treat you the same as other EU citizens within the EU for the purposes of tax / data reporting regardless whether you have a US place of birth or US connections.
You are an EU citizen only and other factors such as place of birth are not considered.
@Don – we are doing things in Canada in the exact order you describe in your comment. We are arguing that we Canadians of US origin cannot be treated differently than any other Canadians under our Canadian Charter of Rights and Freedoms, and further we cannot be treated differently than other Canadian taxpayers in Canada. That is the essence of our arguments for striking down the IGA here.
Once again, America’s overweening stupidity is breathtaking.
In Canada, any long-term resident who files tax returns (at least in Ontario and I assume in many other provinces) has (much better than the US) health insurance, funded through a compulsory premium paid annually through their Canadian tax return. My premium as an Ontario resident and tax filer is $600 a year; the premiums are geared to income and range from $0 to a max of $1200 per year. The only issue is residency; citizenship is irrelevant for these purposes, in Canada.
Any American legally residing in Ontario, Canadian citizen or not is irrelevant, pays for Canadian health care. In return, he/she gets health care anywhere in Canada, plus reimbursement (at Canadian rates though) for any health care they need when visiting another country (getting supplementary coverage for the excessive surplus-to-Canadian-rate charges in the US or other countries is essential for any Canadian resident visiting outside our borders, but there are many affordable private plans available for this).
So the American citizen residing in Canada is already paying for health care in Canada, coverage, and has health insurance not only in Canada BUT ALSO IN THE US WHEN VISITING THERE. So why in hell should he or she have to pay for Obamacare on his/her tax form? Especially since he/she normally never uses the US health care system, and if he or she does, his/her Canadian and hopefully supplementary insurance will pay for it anyway.
Wow, yet another sterling reason (see my and multiple others’ comments on the recent thread re the Logan Act), given by the US on a silver platter to permanent residents of other countries who happen to have dual US citizenship, to dump their US citizenship forever, if they never plan to return to reside in the US.
The US is terminally broken. You can’t fix stupid.