GAO begins doublespeak already in the title “Economic Benefits of Income Exclusion for U.S. Citizens Working Abroad Are Uncertain ” The entire report –investigating removal of the FEIE “tax expenditure” reads like the script of 1980’s shortwave Radio Moscow—full of “some experts say” and “it can’t be shown” doublespeak. Already on the 1st page “GAO made no recommendations in this report.” . GAO doublespeak already says that “uncertain” in its title means it has “No recommendations.” The table of contents itself is full of doublespeak conclusions.
In order to fully understand what the 74 page General Accounting Office (GAO) report is saying, one really needs to have fluency in doublespeak—-to grasp the real meaning. For those who can read doublespeak, this report might best be read alone in that quiet place after having your morning coffee. Otherwise, I will attempt to provide a translation.
May 20, 2014, The Honorable Jim McDermott, The Honorable Michael Honda. The Honorable Carolyn Maloney, House of Representatives
Apparently the report was commissioned by the well-meaning, yet passively-aggressively naive Abroad Caucus, in response to repeated visits by ACA/AARO.
The immediate cause of the caucus naive error is in commissioning the study to G.A.O. –the General Accounting Office. This band of merry men has a self-interest in making as much form filing work as possible, even though its extra-territorial taxation method might never create any tax revenues.
GAO then went on to interview the normal lackeys “government officials, experts, and stakeholders, including groups representing citizens working abroad and employers”. The list (described in Appendix 1) is stacked with “experts” in creating complicated compliance law in their own interest. The last on the list is American Citizens Abroad who has been profiling itself as “THE Voice of Americans Overseas” . AARO with a similar approach. As we know, there are still no other expat organizations than these two 40-yr-old organization
As the biases are built into the report by its authors and experts, it understandably comes up with a list of options in Appendix 1, Table 7, which range from worse to bad:
-Repeal the FEIE & tax all foreign earned income.
-Reduce the maximum exclusion
-Increase the maximum exclusion
-Restrict eligibility,
-Expand eligibility
-indexed for the cost of living.
– convert the exclusion to a credit
-targeted to employees of selected industries. —(oil & gas, construction, engineering, UN work)
-Uncap the exclusion and exclude all foreign earned income from taxation (but not enact RBT).
-Impose an exit fee on U.S. citizens and U.S. resident aliens living in a foreign country & exclude all foreign income for eligible individuals living overseas (ACA proposal).
Note that well-meaning-but-submissive RBT-ish ACA proposal created some GAO interest–mostly the GAO was excited about an expat proposal for an exit tax upon its own (read closely–GAO empasis is on exit tax)
The title page already clearly states Treasury’s (GAO’s) incoming CBT given-assumption : “Because section 911 reduces income tax liability through special tax provisions, both the Department of the Treasury (Treasury) and the Joint Committee on Taxation (JCT) identify section 911 (FEIE) as a TAX EXPENDITURE. The costs and benefits of this tax expenditure have been the subject of policy and economic discussion. Some have defended the tax expenditure on the grounds that it enables U.S. workers overseas to better compete for jobs with non-U.S. foreign nationals (who typically pay no taxes on overseas earned income) and that it thereby encourages the overseas employment of Americans, who play an important role in promoting exports. However, others have highlighted that some of these claims lack evidence, or are based on outdated assumptions, given changes in the global economy over the past several decades. From a tax policy perspective, some have debated whether or not the tax expenditure provides economic and other benefits to the United States when compared to its costs.”
If the writer (GAO) already comes in with that given-assumption (that FEIE is an expenditure), it would be quite pointless commissioning that writer to produce a 78-page document which questions GAO’s own fast-held principle. Basically, it commissioned a confirmation of GAO’s previous beliefs.
I have translated some of the GAO doublespeak (in italics)
On the title page: “While about half of those GAO interviewed said that employers make overseas hiring decisions based first on the candidates’ qualifications, or that the cost of prospective employees was not a primary consideration, about half also told us the added tax costs of employing U.S. citizens could influence some employment decisions.” (We present this information at the end of a sentence to discount its importance, and early in the document so as to be able to discount its importance and validity with the rest of the document)
…”However, uncapping the exclusion could compound the challenge that IRS has in administering the tax expenditure, given the
misconception that those with excluded income do not have to file and report income to IRS. (GAO doesn’t want people to just experience RBT, it demands the right to continue demanding their tax-form slavery)
…”uncapping the exclusion could create incentives for higher-income professionals to move abroad to deliver their services” (the rats are leaving the ship!) “and to shift some investment income to be paid as earned income.”(gibberish)
…..”It would also reduce federal tax revenue (we need your money), and any perceived unfairness could erode voluntary compliance for domestic taxpayers (Homelanders are jealous over those who’ve left the plantation).
“In terms of good tax policy, there is room for debate regarding how potential revisions to the current tax expenditure may affect choices about where to work and who to hire. (Don’t forget that it is the U.S. government who shall decide where you should live). The current tax expenditure (just slipping it in that FEIE costs us money) may have positive and negative effects on both the efficient allocation of labor resources and on equity. The magnitude of these effects is unknown, making it unclear whether the tax expenditure provides any net economic benefits. (our “experts can’t prove that their FEIE gift is beneficial). These uncertainties also make it difficult to draw definite conclusions about certain policy alternatives. Repealing the tax expenditure (eliminating FEIE) would reduce the tax inducement for U.S. citizens to relocate to lower tax countries (leaving the plantation), but would also make U.S. citizens more costly for any employer to hire than citizens of most other countries, which do not tax foreign earned income. Removing the maximum limit ($99,200 for 2014) for the exclusion would eliminate the tax cost differential with other countries, but would allow high-income individuals to avoid U.S. taxes on foreign earned income (the entire expat policy is driven by the progressive chase after the 1%’ers). Targeted tax relief may be justified for extreme cost of living areas, and the design of any alternative would affect the complexity for taxpayers and the Internal Revenue Service (IRS), as well as the federal tax cost.” (we could try to recognize that some low-tax countries are also high-cost of living, but that would be too much work for us)
Regarding the GAO desire to unfairly tax citizens abroad, which begins on p 67: Is the Tax Expenditure Fair and Equitable?
……….. “In order to apply any of these equity principles, it is necessary to identify individuals who benefit from the exclusion. This identification is complicated by the fact that the individual or business that is legally obligated to pay a tax—or that receives a tax benefit—is not always the one (or, at least, not the only one) that bears the ultimate burden of the tax or receives the ultimate benefit. The ultimate burden or benefit is known as the incidence of the tax policy, and it depends on how various individuals and businesses respond to the policy. For example, in the case of the tax expenditure, even though individual employees claim the exclusion on their own tax returns, the resulting reduction in their total taxes may make them willing to work abroad for a lower pretax income than they would have accepted without the tax expenditure. As a result, the foreign employers may share in at least some of the benefit by being able to pay lower salaries than would otherwise have been needed to hire U.S. citizens.” (This isn’t really hurting you, this is hurting your corporation)
….”In terms of the benefits principle, some of the experts we interviewed noted that U.S. citizens working abroad for the long term receive significantly smaller benefits from U.S. government services than those living in the United States, and that this difference may justify some tax relief for the former. Other experts noted that a large portion of federal revenues pay for services—such as national defense, foreign affairs, income maintenance, and basic research—that produce social or humanitarian benefits that are not directly apportioned to specific individuals. U.S. citizens living abroad likely benefit from some of these services. Many of those citizens also benefitted from years of public investment, for example, in their education, the cost of which is typically recaptured from citizens over their lifetimes. (your American education makes you an indentured servant.) Moreover, some observers note that the choice to retain U.S. citizenship while living abroad provides some insurance with respect to being able to return and live within the United States whenever one wants. They maintain that citizens abroad should be willing to pay some tax for this insurance.” (“Some of the experts” say that homeland research and the wars in Syria Ukraine, Somalia, Yemen, and Libya are for your benefit)
….”Citizens living abroad benefit from services provided by their hostcountries’ governments to which they pay taxes. Given that credits for
foreign income taxes paid reduce the amount of tax that these citizens pay to the U.S federal government, any attempt to quantify discrepancies between federal benefits received and federal taxes paid should account for the foreign tax credit.” (You got the foreign tax credit crumb, now go eat it and be happy)
Appendix 3 analyzes 3 different tax situations — implying that each situation represents 33% of the situation. But, the 0% tax example only represents 2.2% of the expat population. And the 10% example represents less than 2.2% of the expat situation. (we “analyze” by looking at 4% of the population and make it look like it is 2/3rds of the population)
We could go on and on.
What to learn from all this? Recognize that GAO and other lackeys will always respond in its interest and against ours (we already know that) Recognize that the GAO stacks the cards against us. Recognize that other small groups have tried but with little success. More resistance, stronger resistance organization, litigation, flight, and voices louder than the big machine are needed.
I ran across this work of fiction while searching for something else. Hope that it hadn’t been posted by someone else when it was first fabricated. Or not. Sometimes you read a fiction one year, forget it, and need to read it over again later.
@ Polly
All but two of the score or more USC I know in Japan want nothing to do with this. They are in total disbelief that any of this effects them. They are completely unconcerned about the personal information sharing between gov departments without due process, which is what led me to this whole mess.
As I see it, the IRS has a three year head start. I renewed my passport 3 years ago and was extorted into giving them all the information the need, along with what FATCA delivers to get me. It is my belief that my choices may be to just try to get every ounce of enjoyment I can with my family until I am taken away from them or I waste what time I have left in a futile effort trying to improve my Japanese to the fulfil the language requirement for citizenship and then the rest of the requirements and then get a clean break from the US before I lose my passport or bank accounts.
@Norman Diamond
“I think Bobby Fischer’s experience answers that for us.”
I don’t think Bobby Fischer’s case has anything at all to do with Japan T’s situation. At least a couple of people posting on IBS over the years have said that they became stateless and had no problems. In my country being stateless will actually get your citizenship application accelerated. Of course, if you feel like the only two options you have are suicide and becoming stateless, the latter is probably not such a bad choice. Having said that, however, I think there are many other, better options. I sure don’t claim to be an expert, and there’s certainly plenty of information on this site to sift through to come to your own conclusion, if you’re willing to dig for it.
@ ND
I kept that stupid letter for over ten years. After it was known that my wife was pregnant I started to clean out what would become our expected child’s room. Knowing that it was now very unlikely that I would ever be moving back to the States, I threw out all my old US and State tax stuff except for the actual completed returns. This letter among whatvI threw out.
I have been trying to tell people of the contents of that letter for well over a decade before getting rid of it and no one ever asked to see. No one would even look at it when I tried to show it to them.
With in a week, a couple of days if memory serves, I finally found the application to renew my passport and l thus learned of FATCA and the rest.
After finding it useless to me for over a decade I threw it out only to find it extremely useful just days after doing so.
However…I recently ran across some of the paperwork I thought was it the stack I threw out. I will dig through it again and pray that I had a last minute change of heart or a distraction that resulted in this letter being spared the incinerator.
@Japan T,
I get the sense you need some solid ground to stand on. I also get the sense that “don’t worry, be happy” will not work for you — your recruitment experience taught you that you need unassailable absolutes to fall back on, not assurances that “oh, they’d never do that to you.” If I’m wrong, ignore the rest of this message.
To get to an unassailable position of safety, where nobody can capriciously take away your ability to stay in your own home with your own family, you may want to get a new citizenship. This is doable without dealing with the tax issues, so start working on this first.
If you go for Japanese citizenship, you will need the cooperation of your wife. There are certain documents she will have to be willing to provide, plus a short interview for her.
If this will be a problem, then your next best bet is whatever ancestral citizenship you may be eligible for. Even if you don’t speak the language, if you have a birthright to another citizenship, you might as well take it. Actually, there is a good chance that this will be quicker than taking Japanese citizenship. You could also do so as a backup even if you do decide to pursue Japanese citizenship. At least you would have something that provides a legal basis for existence that is not subject to the whim of the form-generating computer at the IRS. Though if you do seriously contemplate taking Japanese citizenship, it is probably best not to be seen as actively shopping for citizenships just before doing applying. So decide which route you want to go (Japanese or ancestral citizenship), and start the process. Most likely, either way you go, the first step will be to get official birth certificates for you and your parents, so you can start by doing that, just to feel like you are doing something productive.
Once you have started on the above, and have achieved a little feeling of being in control of the situation, you might consider trying to do last year’s tax returns and FBAR just on paper, without filing. Take it in small bites, one line a day if needed. If you find this manageable, then you can do 5 years’s worth and submit them all. This will enable you to make a cleaner break, though is not absolutely necessary. In any case, don’t think about this step until after settling on the citizenship course, though you can work on it in parallel if and as you have time.
By the way, as we have discussed before, you CAN use average yearly rates for the 1040.
The US embassy in Tokyo provides the following exchange rate for 2015: 121.05 yen/dollar.
See http://japan.usembassy.gov/e/acs/tacs-7126b.html for more.
You could also work on the above in reverse, of course. Start on tax filings, then work on citizenship later if you still feel the need. Whatever helps you feel in control the quickest. But the important point is that the two solution paths are parallel, independent ones. Break the mess facing you down into manageable bite-sized ones, and start taking bites.
“At least a couple of people posting on IBS over the years have said that they became stateless and had no problems.”
In Japan?
“By the way, as we have discussed before, you CAN use average yearly rates for the 1040.”
The last time I read the rule for that, if a salaried employee is paid every two weeks or more frequently, that is allowed. As far as I could tell, a salaried employee who is paid once a month or even twice a month isn’t eligible (except in February in non-leapyears). As far as I could tell, a self-employed person isn’t eligible.
The IRS should have penalized me for illegal honesty on my 1982 return, declaring that an attached form was false and incorrect[*]. The IRS should have penalized me for using average yearly rates on my 1984 and 1985 returns. Either way, they would have let me know to renounce before things got worse. Sadly, they didn’t.
I hope Japan T can find that letter.
[* I worked in the US for 6 weeks in 1982 and the false form was a W-2 from my employer’s US subsidiary.]
Over the past three years I have gone down many potential paths out of this woods only to find that in one way or another, they are not open to me. In the beginning, I was able to explain why each was blocked. As the number of blocked paths have increased, I have not bothered with more than “I can’t do this either”. It is possible that I have started down the path to renounce without satisfying the IRS but found it closed to myself and left it at that. However, it seems to warrant another look.
There are other issues that I have been reluctant to mention. Mainly because they are Japan specific and not directly connected the issues we face here. However, as my starting point in this race differs greatly from what you believe it be, rightly so as you have no reason to know differently, I will explain.
I returned to Japan a little over a year before the 9/11 attacks. At the time I was employed full time by a large eikaiwa company. Shortly after arrival I learned of a fierce debate among the expat community over whether we were required to enroll in the National Health Care (NHC) scheme. There were only two points of view on this topic. One was that all residents of Japan must enroll the other that while all residents must have health insurance, nonJapanese could fulfill this requirement with either company provided insurance or private insurance.
There were many creditable arguments for either made by long term residents, lawyers and others . So I asked my employer and was told that I did not need to enroll in the NHC as they provided insurance. I also went to my ward office and asked there. I was told the same, as long as I had health insurance I met the obligation. That settled, I left that issue alone and got on with my life.
A few years later a coworker’s bank account was emptied by his ward office. He was not enrolled in the NHC and they pulled out several years of back payments from it. Welcome to Japan. A couple of years later, the same happened to a close friend. Both had private health insurance.
It seems to me now that BOTH sides of the earlier argument were correct. If you were here for only a short time, then at that time you were not required to be in the NHC. But after some undefined period of time, determined by each city or ward independently, you became a long term resident and must be enrolled. This designation is independent from your visa. At no point had I heard or read of one’s status effecting this requirement.
Enrolling in the NHC is not just a matter of going to the office and signing up. You must pay 2-5 years (determined by the city or ward) of back payments. When I learned of this, I would have had to pay for time when not required to have been enrolled. Beside the injustice of this, how many can afford to pay 2 to 5 years of health insurance premiums at one shot? I could not. I can not.
The close friend I mentioned earlier paid $20,000 for two years of back payments and now has a monthly premium of $600. As I am also married and have a child, my monthly premium will be the same. Once I too am caught, which will be soon with the “my number” system, the combined total of my income tax, NHC and nation pension payments will exceed 25% of my yearly income. Plus I have to come up with the back payments.
My wife is aware of this as I shared this info with her as I learned of it. She has generously offered to pay the back payments. So my wife is already paying and will be paying a huge amount of money to keep me out of trouble. Trouble that I am in because I could not get the correct information, information that I sought out and, I believe, had every reasonable expectation to be correct. My actions were based upon advice from my ward office, why would I have done differently?
Indeed, every major problem I have can be traced back to instructions received from people paid to know.
Back to the issue. I can not become Japanese before I settle the NHC issue. If I can take citizenship from a EU country, I still have to settle the NHC issue. I do not want my wife to pay that huge sum only to find that I am still on the hook for FBAR fines, back taxes, fines and fees to the US. I fear becoming something akin to a “money pit” house. At some point it will advantageous to her and our children to just sever ties and stop pouring money in a situation that brings no benefit. Who wants to be that kind of a burden to their family. Well, sadly there are many but I doubt very much any are on this site.
There is a pumping shanty from the days of sail that I sing to myself in times of trial. The chorus is,
“Pump me boys, pump her dry!”
“Down to heaven and up to the sky”
“Bend your backs and break your bones”
“We’ve just 10,000 miles to go!”
Pumping was one of the worst tasks on ship. The pump referred to in this shanty looks like an old railway hand car, thus the “down to hell and up to the sky”.
The ship is leaking and “chips” hasn’t been able to fix them all. You’ve been pumping watch on watch for days. No skin remains on your hands and the burning pain is just bearable as you grasp the pump handle, your legs shake from over exertion, your back could not hurt more if it were broken. Sea biscuit and salt junk the only fare your belly has known for many weeks. Fresh water on 1/4 rations. There is nothing you can do but pump but unless relief comes and comes soon, the ship will founder.
That was my situation before I learned of FATCA and FBAR. So please read that little story again and add,
Off to windward, the sky darkens.
FATCA and FBAR are those dark clouds. A storm severe enough to overwhelm many a well found ship with a healthy and steady crew. What will it do to a ship that is already in a sinking state?
Pump me boys pump her dry, down to hell and up to the sky, bend your backs and break your bones, we’ve just TEN THOUSAND miles to go. Pump me boys…….
A well dressed man-o-war chances upon what at first is thought to be a derelict.
As the two vessels close, on deck they hear “pump me boys, pump her dry…”
Captain: “Mr. Smith, away the boats to render assistance”.
Mr. Smith: “Aye, aye!, Away all boats to render assistance!”
Capt. “Mr. Jones, my hailer, if you please.”
Mr. Jones: “Your hailer, sir”.
Capt. (To the other vessel) “What ship is that!”
The other vessel: “S.S. CBT 140 some years out of Washington D.C. bound for the far side of hell, pray sir, we require assistance”.
Capt. “BELAY away all boats! BELAY! Silence fore and aft, beat to quarters, cast lose and provide, out tompions and run out the starboard battery, prepare to repel boarders! Helm, steer clear of that vessel, keep us well to windward of her!
As the man-o-war gathers way keeping the contaminating threat of the S.S. CBT under the gun, a couple of verses of the pumping shanty waft across the waves.
“Sometimes as I lay in bed,
Thinking of my day ahead”
“I wish that I could wake up dead,
But pumping’s all I get instead”
Chorus
“Oh how I wish that I could die,
The swine who built this tub to find”
“I’d bring him back from where he fries,
And make him pump till the bugger’s dry!”
Chorus
No how many here wouldn’t just love to grab all those responsible and force them to turn to filling out forms until they are 100% compliant.
“By the way, as we have discussed before, you CAN use average yearly rates for the 1040.”
The last time I read the rule for that, if a salaried employee is paid every two weeks or more frequently, that is allowed. As far as I could tell, a salaried employee who is paid once a month or even twice a month isn’t eligible (except in February in non-leapyears). As far as I could tell, a self-employed person isn’t eligible.
This is very interesting.
This the first time I have heard anyone other than myself state that the average does not always apply. All of my current employers pay just once a month. Additionally, apparently I am self employed by virtue of have several employers. It seems that I am not in compliance with this requirement in either country. Just more joy for the party.
However, I was the only one of the several USC working at that school at the time that got this letter. The others may not have had theirs tax return packet sent to them in Japan as they were not in country as long as I was. When I tried to alert them to this requirement they treated my like the crazy uncle who lives in the darkened basement.
This all reminds me so much of the discussion of Japanese National Health Care enrollment requirements. There are many people here very knowledgeable of the requirements that apply to THEMSELVES and assume the same apply to everyone. Not having any reason to suspect that another set of rules may even exist, why would we, we fight each other trying to prove that it is “I”and not “you” that got it right when in fact we both may be correct for people in similarly situated as ourselves.
Having been told by the IRS that I could no longer use the average exchange rate, I went no further to see if this was different for others. I did ask “why?” but not if it applied to some and not others. Am I wrong in assuming the same of those on the other side of this debate?
The knowledge ND shared on this is bitter/sweet for me. Sweet because after ten plus years I have final,y found someone who knows this requirement exits and has detailed information that I did not. Bitter as it makes those clouds gathering on the horizon all the more darker.
“Pump me boys, pump or drown”
“Can’t you the black clouds, the black are a rising”
“Away, away haul away, we’ll haul away Joe”
“At the time I was employed full time by a […] company.”
Then my understanding is that the company has to register you in kosei kenko hoken[*1] in whichever health insurance company or cooperative they deal with, they don’t get a choice and you don’t get a choice, and the government cannot claim that you owe premiums for kokumin kenko hoken[*2]. Even if your employer doesn’t pay the premiums they owe, my understanding is that the government cannot take it from you.[**]
If you’re part time and/or self employed and/or unemployed, you have to pay for kokumin kenko hoken. In this situation I don’t know if those advertisements for, shall we say nonstandard, private health insurance companies were true or not.
I would guess that if you have less than 3 months permission to stay in Japan, and don’t overstay, then you don’t get a residence card (formerly an alien registration card) and that would be a reason for not needing to get one of the standard kinds of health insurance.
“the combined total of my income tax, NHC and nation pension payments will exceed 25% of my yearly income”
Surely you’re not complaining about that?
If your annual income goes below 1,300,000 yen then you can be your wife’s dependant so your health and pension premiums will be zero. If your annual income goes below 1,030,000 yen then your income tax will also be zero. (If those two numbers look alike, look closer.)
But yes, you have to work out those back payments.
[* 1 public welfare health insurance, 2 national health insurance, and to me both English translations look alike but in Japanese they aren’t.]
[** In contrast, if your employer deducts prefectural (provincial) and municipal income tax but doesn’t pay those to your municipality, your municipal government can collect that from you. Even though your employer can be punished criminally, you still get to pay twice.]
@Japan T,
https://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad
Damned typos
“The black clouds, the black clouds are arising.”
And arising they be.
@ND
Most of my employers do not deduct my national income tax and none duct my city tax. I get a refund from the national income tax each year but have to walk in my city tax payments. In previous years these have totaled 12% of my income. I do know how much this year’s refund will be and using previous years as a guide I have a very good idea of how much my city tax will be.
I can not be my wife’s dependent.
25% of your income in tax may not be too big if you earn enough to have enough left after taxes. As I am sure you are aware, regular employees receive loads of benefits we freeters do not. Not only does my wife make many times more than I do, her company pays for her commute. Not all of mine do and when they do they do so from my residence and not from the job location I leave to get to theirs nor the next location I leave theirs to go to.
Although they skimp on the amount and often cheat their employees of some of the overtime earned, the employees generally get at least some overtime pay. I may work “overtime” hours but as they are not all for one company I do not get any ot pay. Managers generally do not get ot pay but do receive higher salaries and bigger bonuses. Both managers and non managers receive bonuses. I do not.
Many regular employees get some kind of house support from their companies. I do not.
If my wife has to work over time her company pays for her dinner and taxi home or hotel room. If I am in the same situation, it comes out of my pocket.
Years ago now, while drinking with Japanese friends who were discussing a trip together I was nvited to go along. I declined because I could not afford it. Having used this reason many in the past for declining invitations they asked me how much salary I earned. I told then and replied that that was the same they made same and they could not believe that I could not afford what the could. As the discussion progressed, they finally asked how much my bonus was. Their jaws drooped in disbelief when I replied that I do not receive bonuses.. All of a sudden their questions o why I could not afford things they could changed to “how can you survive on your salary alone with any bonuses?”. Things got really silent when I told then that I was still paying off my $33,000 school loan as well. Their parents paid for their schooling.
It is very, very difficult to dig out of that kind of a hole. More so when most around you receive many benefits well above and beyond their salary and you have to pay for everything out of your pay. It takes a very, very long time to do so and the recent constant increases in costs and added new costs while my pay is shrinking both by virtue of fewer hours and less pay for the remaining hours the water is gaining on the pumps.
@foo
“Taxpayers GENERALLY….” What does “generally” refer to? It refers to something, otherwise it would read ‘taxpayers USE…”. Getting a letter telling you that you can not use the average would be one of those instances outside the general situation.
And as ND reports, does not apply to those of us who are paid monthly bu our individual employers.
Please do not take this as a personal challenge, I ask this only to drive the point home. If I use the yearly average and am fined as the IRS told me I would be, can I send you the bill? If not, you are getting closer to understanding my reluctance to expose myself to them again. It will be me that has to come up with the money to pay the fines. Again, I was directed by the IRS to not use the yearly average. That is, for me anyway, a very big thing to try to ignore.
But, as a decade has passed, maybe they’ll miss…or maybe they won’t.
@JapanT
I am sorry for all the twists and turns of your situation-but there is a german saying that goes:
“Lieber ein Ende mit Schrecken als ein Schrecken ohne Ende”
Which means: Better to have an end with a bang than a never-ending bang.
Standing still won`t alleviate your anguish but only increase it. You have to start to be active and do something because only this will give you any sense of control. ( Not feeling in control is the worst feeling ever!) And I am guessing a big part of your paralysis is the feeling you have been lied to repeatedly and nobody is trustworthy. But even with this, you have to begin to “clean your house”. Only then will you find any kind of peace. And you might find out that things are less dire than you imagined- meaning although it could be painful- it might be less painful than you thought.
Oh, and as a part timer, most of my jobs are hourly and one pays me the same kind of pay that celebrities receive. Tends to freek out the tax people at the city office. I have a salaried job too. I am sure that these facts gum up the works even further. Which are and which are not allowed to use the yearly average?
Don’t worry, just a $10,000 fine for each mistake.
“Better to have an end with a bang than a never-ending bang.”
Oops, I know you mean well, but that saying is out of place here. Remember J.
“Oh, and as a part timer, most of my jobs are hourly and one pays me the same kind of pay that celebrities receive. Tends to freek out the tax people at the city office. I have a salaried job too. I am sure that these facts gum up the works even further.”
I don’t see any reason for Japanese tax people to be freaked out by that. Since you have two or more employers you have to do a tax return (there can be other reasons too but this is enough for you), so you get freaked out, but they shouldn’t be.
“Which are and which are not allowed to use the yearly average?”
That’s dealing with the IRS not Japanese tax people. The IRS’s letter said you’re the one who can’t use the yearly average.
@Japan T,
I would like to see documentation for Norman Diamond’s interpretation. I get paid once a month, and have always used the average rate with no problems. But, I have also never gotten a letter like the one you did.
I might argue that whatever the policy may have been 10+ years ago, the current guidance from the IRS (above) indicates that average is fine, unless one WISHES to use more fine-grained rates. Guidance changes. Of course, there is always the problem that IRS guidance is formally useless, and of no defense in an audit.
Anyway, for your situation, I think the more important question is whether your wife would be willing to cooperate if you were to apply for Japanese citizenship. If yes, then I think that being a citizen of the country one lives in would provide the greatest security — can’t get kicked out of one’s own country. If not, I’d start thinking about ringing up the embassy of my ancestor’s country as a fall-back position. At least then you’d have another leg to stand on if it comes to a shouting match with the mindless IRS computers over how to calculate exchange rates, and they start threatening your passport.
@Polly
I agree and you are so very correct in much of what you say. I am indeed paralyzed. I need to run at full speed ahead yet can not as I am in a fog bank surrounded by racks and shoal with breakers sounding in the distance. So I am reading, ready and reading in this and reaching out for those who may have sailed these waters for advice and hopefully a chart. If nautical references are lost on my land lubberly fellows, I’ll quote one of the plaintiffs in one of the lawsuits, “I feel like I am in a mine field.”.
But even more accurate is my analogy with manning the pumps on a slowly sinking vessel. If I remove my hand from the pump handle to run aft to the tiller to steer clear of the rocks ahead, I sink. If I let go the pump handle to shoo away the gull trying to peck my eyes out, I sink.
FYI, I should be checking the document my boss sent instead of conversing with all of you. Dentist appoint in 40 minutes.
The water gains.
@ND
“Which are and which are not allowed to use the yearly average?”
That’s dealing with the IRS not Japanese tax people. The IRS’s letter said you’re the one wHi can’t use the yearly average”
True. But I received the letter while a salaried employer paid once a month. Does the same hold true for different kinds of pay? I don’t know but would have to find out before filing.
I agree, it shouldn’t freek them out. Didn’t freek me out, I know the work I do and that it has no nothing to do with being a celebrity. In my naivety, I thought yen was yen and that was the end of it. Nope, guess not. Actually that’s not true. I knew that pay for different services would be treated differently. I had no idea that I could perform the exact same service for two different entities and that the way they chose to treat it changes the tax (local) rate.
@foo
I fully understand your desire for documentation on ND’s point, but for me the letter from the IRS is all the documentation I needed.
@foo
Yes, actually I am doing just that. Trying to make time to work on gaining JN while putting together what is need ped to become European. But I can not let these other issues lie dormant and to solve them at the last minute.
I do not have the resources to do what is required, so I surely can not waste any on what is not required. A. Lincoln said something along the lines of “If I had 6 hours to chop a quantity of wood, I would spend 4 of those sharpening my axe”. I am sharpening my axe, or am trying to anyway. While I have read that he may have meant that it is useless to continue when worn out, i.e. Cutting with a dull axe, I think he meant preparation is the key to success. I am trying to learn what is truly needs to be prepared. But there is this fog that I need to contend with that makes nothing clear.
Off to pleasanter things, the dentist! Pleasanter that FATCA etc, not you folks:)
“I would like to see documentation for Norman Diamond’s interpretation.”
I read it when making my 1999 US return. It’s probably buried in Publication 54.
I also never got a letter like the one Japan T describes. If I had, I wouldn’t need a copy of his ^_^
@Japan T,
I understand that the letter renders your situation somewhat special, but I am trying to offer a way for you to justify changing to their most recent published guidance, should you try to get caught up on paperwork. Anything to reduce the distance you have to pump.
@foo
” Anything to reduce the distance you have to pump.”
Is GREATLY appreciated.
The scariest thing is the realization that I very well may have no other choice than fire up the boilers and charge full steam ahead though the straights with my eyes closed and hope for the best. I may never be able to learn anywhere near enough that make me comfortable ignoring that letter from the IRS.
Not the best option in any circumstance but especially distasteful doing so with my wife’s money.
@JapanT – “They find no filers, like myself, through our passport renewals. That is how I learned of this. Printed right on my passport renewal form were statements that State will share all information with Treasury. Now they also have info from FATCA to pair with the info from State. Those who have not renewed their passports with in the past couple of years are probably not on the radar yet. Those of us who have are on the IRS radar. Is anyone looking at the screen, who knows but they do have my information.”
Yes, I agree, there are various ways the IRS may be able to identify non-filers, including FATCA data. But it’s a long way from identifying a person as a non-filing US citizen, to being able to build a prosecution case against them for non-payment of taxes, spelling out each incident of non-payment in exact $ and cents, and justifying each separate charge of tax code violation. For that, the IRS needs detailed information, not just bank balances. If the non-filer decides to start filing and clear up their situation, then the IRS will get the information they want, but if the person decides to ignore the whole business, then the IRS has to decide whether it’s worthwhile opening a time-consuming investigation.
That’s why I think FATCA streams probably won’t currently help the IRS to target individual non-filers. But I repeat, I’m only speculating.