By Helena Bachmann Jan. 31, 2013
Why is Tina Turner switching from American to Swiss citizenship? The legendary singer, a longtime Zurich resident, told the Blick newspaper that she has been very happy in Switzerland and “can’t imagine a better place to live.” But some observers believe she may be one of thousands of American expatriates who have taken the drastic and irrevocable step of giving up their citizenship because of what they consider to be the unjust and discriminatory taxation practices of their government…
Read more: Time
Interesting, the article cites some guy named Peter Dunn. I can assure you that this was not Pete the Planner.
@Petros Perhaps Mr. Fatbardt is allergic to Peter Dunn’s cats. Maybe they will scratch him or make him sneeze. Serves him (Fatbardt) right, they are Canadian cats, not fatcats.
Anyway, I was pleased that Amy Webster’s story was mentionned in the Time article, along with yours and the comments from Jackie at ACA. Sombody already posted comments with a link back to other IBS articles, I will post too with other links, including to Olenick matter.
I just found this thread discussing FATCA on a site dedicated to “…sci-fi, science, and mockery of stupid people” http://bbs.stardestroyer.net/viewtopic.php?f=22&t=157549&start=0
I put a comment there (pending moderation) listing out IBS, ACA, Maple, and several other website links.
Here is another article from late December, I think we already got to it, but just to be sure: http://reason.com/blog/2011/12/28/stupid-new-washington-law-blocks-america#comment
Something wierd. http://www.fatca.com/ goes to a site that looks like it is in Farsi (the links that look like checks and cards on the left-hand bar lead to .ir pages). Hence Iran. Can anyone at IBS read Farsi and tell us what the site is about? (Be careful, it looks like there are a number of links to executable files on the site, who knows what those programs do).
What could the site possibly be about?
*@Jefferson, wow, that really freaked me out!! Perhaps the FATCA site’s been hacked!!!
I agree that having to list out full account details on our fbars and 8938s could lay expats wide open to identity theft and hacked accounts….:'(
@monalisa1776 Well, maybe it is a site giving advice on how to steal money using data stored for FATCA compliance purposes. Who knows. Maybe there is some acronym with the same letters that refers to something else (like truck transport, see the truck on the left or international trade). Maybe fatca corresponds to an abreviation or word for something in Farsi. Again, it looks more like Farsi than Arabic, I don’t understand either, but have seen plenty of types of writing.
*’Jefferson, at the very least, I think the IRS and FINCEN should allow FBARs to leave out actual account numbers on the forms with the proviso that they can subsequently make enquiries, rather like when the simplified Fbar form is filed when one has over 25 accounts. Perhaps Fincen have concluded that those who declare more than 25 accounts aren’t making any efforts to conceal anything and/or are less likely to have huge amounts stashed away in any particular foreign account.
At first, one would have presumed the opposite. One would have thought that FINCEN would be sending out loads of FBAR audits to expats declaring more than 25 accounts, but maybe this is where form 8938 comes into play.
“Even though expatriates can claim a $97,000 exclusion on their U.S. taxes, most Americans who work in high-cost nations earn salaries far exceeding this amount, for which they already pay hefty income taxes in their countries of residence.”
Rubbish. How many Brockers earn >$97K? I’d like to know where she got her stats from. I doubt that more than 50% of those USP’s in Canada who even file earn more than $97K, let alone all USP’s working in Canada. Consider that in 2009 only 15% of the world’s 7M USP’s living abroad filed a US tax return.
Read more: http://world.time.com/2013/01/31/mister-taxman-why-some-americans-working-abroad-are-ditching-their-citizenships/#ixzz2JZJJu6YJ
@Bubblebustin, it is likely true of many places, especially Switzerland, where 97K is at poverty wages. When I lived in Swizterland, where Helena Bachmann currently lives, costs were easily double what they are in Canada, for housing, food and cars (if you own one).
In the Switzerland, salaries exceeding current forex equivalent of USD97’000 are still at the very bottom level of what would be considered middle class in terms of purchasing power. The same is true in especially in major cities across Europe. In Switzerland, the tax burden is not enough to offset US double taxes above that amount (where FTC can be applied, see exceptions to the FEIE so called “unearned income” such as welfare, disability and unemployment benefits as well as pension income) then in Switzerland and even more so in higher tax countries you have the US AMT (alternative minimum tax) and the new Obamacare Medicare surtax that persist in creating double tax burden even if foreign taxes are paid.
@Petros you forgot to mention petrol (gasoline) which easily costs 3-4 times what it does in the US, not to mention other higher maintenance and tax costs on vehicles. This is why the Swiss federal (and many cantonal) governments allow generous deductions for commuting expenses (which are not deductible from the parallel US tax burden, thus negating the Swiss deductions). In Switzerland, an unemployed person is required to look for work in locations up to 4 hours round trip from their domicile. Otherwise they could be penalized on their benefits.
I forgot to mention the Swiss fortune tax which kicks in at about 160k (pension plans excluded) and which is not deductible from USP abroad tax returns.
*@Bubblebustin, exactly!! They just further the myth that we’re all a bunch of rich tax-dodgers who value saving taxes over any patriotism to America. I don’t even earn an average wage by British standards, let alone American ones! I’m getting more fed up by the day.
As i was saying on another thread, I’m losing hope that we’ll ever be listened to. I’ve concluded that if one can get out of dodge that they have every reason to do so but should do it quietly because I won’t put it past Congress to try to stem further surges of renunciations by passing laws to make U.S. personhood impossible to shed. They’d still allow expatriations but may still try to require tax filing for life so there’d no longer be any incentive to renounce.
@monalisa1776 If you earn less than 97k, then have you ever gotten child allocations, welfare or even unemployment dole money? Such allocations are likely not to be taxed in your home country or not be taxed as much as in the US. So, you have to pay the difference, the 97k FEIE will not work as such sources are “unearned income”.
@Jefferson, I used Google Translate, the website is in Farsi/Persian. It looks like it’s from an Iranian company called Ariana that provides software for payments and shipping to transportation companies. That’s why there are images of credit cards and trucks and links to executable files. Nothing to do with FATCA.
@Shadow Raider Thanks for that. I am so used to reading things in multiple languages myself that I rarely need Google for the languages in which there might be anything that interests me.
*@Jefferson, I’m agreeing with you! 🙂
@jefferson & petros
If she’s basing her opinion (because I believe that’s all it is) on solely the situation on the ground in Switzerland, she’s not doing her job. I still want to see her stats. She can start with a summary of all the ‘high cost countries’.
Okay I know this article can be nitpicked but overall it tells the story pretty well. One part bothered me though …
One way to stave off the surge in renunciations, ACA’s Bugnon points out, is to tax expatriates on the same basis as non-resident aliens, who maintain a tax home in a foreign country and benefit from the same tax laws as American citizens within U.S. territory. That’s the proposal the ACA will push during the Overseas Americans Week, to be held in Washington D.C. the week of February 11.
I just don’t get that. Non-resident aliens should not be taxed at all or even have to file if they have no US source income. First of all, they are aliens which means they are not US citizens. Second of all, they are non-residents which means they do not live in the USA. Anyway I was curious about the 1040NR so I looked it up. Yuck! It’s as bad as a regular 1040. Why would the ACA be promoting this kind of a solution? So what if you get through the 1040NR and owe no tax. It’s the forms stupid! The real solution is NO, NO and NO — NO IGAs, NO FATCA and NO more US citizenship-based taxation. Please ACA, try to understand that expatriates should not be required to file taxes at all if they have no financial ties to the USA. I suspect I am missing something here but I get easily confused when aliens and residency are involved. That was how I got myself into the IRS mess to begin with. USA, for gads sake, LET YOUR PEOPLE GO!
And to top all of this off I just found the following at the IRS site. Needless to say I didn’t know about these “sailing permit” forms either. It just gets worser and worser. 🙁
Before leaving the United States, all aliens (with certain exceptions) must obtain a certificate of compliance. This document, also popularly known as the sailing permit or departure permit, must be secured from the IRS before leaving the U.S. You will receive a sailing or departure permit after filing a Form 1040-C (PDF) or Form 2063 (PDF).
As for the FEIE, well we never used it because our tax zeroed out without it. We looked at that form once and said yuck to that too. We negotiated the lll6 form as best we could (probably did it wrong) and left it at that. Besides, FEIE doesn’t help a retiree whose income no longer comes from a salary. And look what happened to Victoria when she collected France’s unemployment insurance for awhile — the US taxed that for gads sake! A 97K exemption on an FEIE sounds good but it isn’t exactly the bees knees.
Does the US have a culture of punishment?
ABC News: “7-Year-Old Handcuffed Over $5, Says Suit”
$97,0000 is very low wages for a US worker who is doing his best for a US Company in places like the mideast or Singapore or Korea or Algeria or Nigeria. Tax credits in such places range from negligible to zero. It’s definitely not a benefit. And there you can be assured that middle level software programmers have already begun accumulating your data.
Any of the ambassadors were chosen by Obama to swear an oath that they will find rich AMericans by also finding all the middle income and poor ones, too.
The embassy and the ambassador are part of the enforcement regime.
I think it is great that such an article made it into Time Magazine. Not going to quibble with the wording.
@Em, That explanation was confusing. Nonresident aliens who don’t have income from US sources are not taxed by the US and do not have to file anything to the US. They are only taxed by the US on some kinds of income from US sources, and even then, they only have to file form 1040NR if their US income is “effectively connected” to the US. This term includes, for example, salary from temporary work, business profits, and rental income in some cases. If their US income is not “effectively connected” to the US, such as interest, dividends, capital gains, royalties, pensions and social security benefits, they don’t even have to file. In that case, tax is simply withheld (in general 30%, but may be less according to a tax treaty), except on most interest and capital gains which are not taxed at all from nonresident aliens. And of course, nonresident aliens are not required to file any “information returns” such as FBAR and are not subject to FATCA. That’s the system that ACA wants to be applied to nonresident citizens as well.
The “sailing permit” is an obnoxious little requirement created in 1921, unenforced (there are no penalties for not filing it) and useless. Even the name is an anachronism, and senator Daniel Patrick Moynihan (D-NY) already proposed abolishing it in 1995.
@ Shadow Raider
Thanks for that explanation. When I married and moved to the USA I took what little I had to the USA and when I moved back I brought what little I had back with me. Surely I’m not the only one who thinks it’s best to keep one’s money close to home? Although I know those who are in the higher income brackets might retain some US ties because they can afford to have a rental property or something. You simply amaze me how you can drill through all the documents you do and understand them so well.
Pardon me if this has been posted before. Helena Bachman wrote a similar article in April or 2010. It could have been written yesterday:
Shadow Raider is an engineer. The most straightforward professional profession. Kudos.