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US FATCA article in Guadian...

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PNGMK
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US FATCA article in Guadian...

Postby PNGMK » Thu, 25 Sep 2014 10:12 am

MY wife has been closing bank acocunts for months it seems thanks to FATCA (even though she has less thant $10,000 in most of them she has been forced to close down 3 already).

This article gives some idea on how this is affecting real people - not the fat cats it was meant to catch.

http://www.theguardian.com/money/2014/s ... ?CMP=fb_gu

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Postby GSM8 » Thu, 25 Sep 2014 11:09 am

FATCA is not the underlying issue, the antiquated dogmatic US policy of Citizenship Based Taxation (CBT) is. In fact FATCA's original intention of catching tax evaders in America stashing money abroad is in itself laudable. EU is also in the process of implementing a similar information exchange model, but one that is based on residency not citizenship. It is the CBT regime that results in legitimate expats being caught in a "US person based" FATCA reporting morass, ruining investment/savings options at best, and criminalizing minor unintentional mistakes (for both the bank and customer) at worst.

US is the only country in the world (other than Eritrea which the US has castigated for precisely that reason) that taxes its citizens regardless of where they live in the world:
http://en.wikipedia.org/wiki/Internatio ... itizenship

US needs to adopt Residence Based Taxation (RBT) like the rest of the world, and CBT needs to get scrapped not FATCA.

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Postby PNGMK » Thu, 25 Sep 2014 12:29 pm

GSM8 wrote:FATCA is not the underlying issue, the antiquated dogmatic US policy of Citizenship Based Taxation (CBT) is. In fact FATCA's original intention of catching tax evaders in America stashing money abroad is in itself laudable. EU is also in the process of implementing a similar information exchange model, but one that is based on residency not citizenship. It is the CBT regime that results in legitimate expats being caught in a "US person based" FATCA reporting morass, ruining investment/savings options at best, and criminalizing minor unintentional mistakes (for both the bank and customer) at worst.

US is the only country in the world (other than Eritrea which the US has castigated for precisely that reason) that taxes its citizens regardless of where they live in the world:
http://en.wikipedia.org/wiki/Internatio ... itizenship

US needs to adopt Residence Based Taxation (RBT) like the rest of the world, and CBT needs to get scrapped not FATCA.


Did you read the comments in the artciel? A lot of hate out there for 'expats making it big by not paying taxes" and a lot of disinformation.

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Postby GSM8 » Thu, 25 Sep 2014 12:49 pm

PNGMK wrote:Did you read the comments in the artciel? A lot of hate out there for 'expats making it big by not paying taxes" and a lot of disinformation.

Yes, some of the comments are just deja vu. There is a lot of biased propaganda against expats within the government and among the public in America. The false impression of all us being "fat cat tax scamming expats" has always evoked a certain nationalistic fervor (goes back to Civil War, then 1920's opulence, Cook vs. Tait etc). There is also a huge misconception in the US that somehow paying taxes is a patriotic duty. It isn't. Paying taxes is indeed a duty and a very important one for that matter; providing the state with the cash flow it needs to run itself and ultimately provide the citizens (residents) with the services they expect to receive in return for their tax money. However, we pay our taxes as citizens not patriots and therefore one must use the appropriate adjective. Paying taxes is a civic duty not a patriotic one. In any case, this has contributed to making CBT the preferred policy line for our lawmakers, despite the underlying premise being inherently baseless. And majority of us expats unfortunately take a passive approach ourselves, often convincing ourselves with defeatist attitudes like "oh well, it isn't so bad, I can put up with it". This is worsened by the lack of any political leverage whatsoever.

Which brings us back to main issue that CBT is THE problem. FATCA is just another tool that is being (mis)used to target expats who lack any political leverage whatsoever.

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Postby bgd » Thu, 25 Sep 2014 12:57 pm

There have always been Americans who have renounced citizenship because of the tax regime. Since FATCA there has been a spike in such cases. I guess people just reached that tipping point.

I don't remember the numbers now but they were insignificant given the overall population.

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Postby PNGMK » Thu, 25 Sep 2014 4:38 pm

bgd wrote:There have always been Americans who have renounced citizenship because of the tax regime. Since FATCA there has been a spike in such cases. I guess people just reached that tipping point.

I don't remember the numbers now but they were insignificant given the overall population.


3999 last year. The 'cost' has gone up though (if you announce offically).

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Postby movingtospore » Tue, 30 Sep 2014 1:50 pm

The husband and I were talking about a US opportunity the other day (we're Canadian). Though in theory we could become dual citizens we were looking through how to make absolutely sure we never become or are considered as US citizens because of FATCA. Not because we are crooks (or rich, for that matter) but because of the enormous headache this would create for us and potentially our children.

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Postby PNGMK » Tue, 30 Sep 2014 2:16 pm

movingtospore wrote:The husband and I were talking about a US opportunity the other day (we're Canadian). Though in theory we could become dual citizens we were looking through how to make absolutely sure we never become or are considered as US citizens because of FATCA. Not because we are crooks (or rich, for that matter) but because of the enormous headache this would create for us and potentially our children.


Once you work in the USA and pay taxes you risk being stuck in that system as I understand it.

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Postby Strong Eagle » Tue, 30 Sep 2014 8:09 pm

movingtospore wrote:The husband and I were talking about a US opportunity the other day (we're Canadian). Though in theory we could become dual citizens we were looking through how to make absolutely sure we never become or are considered as US citizens because of FATCA. Not because we are crooks (or rich, for that matter) but because of the enormous headache this would create for us and potentially our children.


How would you become dual citizens? If you are claiming citizenship by right of descent (under certain conditions, foreign born to one or two American citizens), you already have that if you meet the conditions and are doomed with respect to taxes if the USA finds out about you.

Otherwise, your only course is naturalization and that cannot be obtained unless you have been a permanent resident for at least five years preceding your application.

You must be legally able to work in the USA and there are two ways to achieve that. You can come in as a temporary worker under one of the visa programs. As a non-resident alien you will pay US income tax but only on income you earned in the USA. When you leave, you file a "sailing permit", a notice that you are leaving, and you must file a final annual return showing that all your tax obligations have been satisfied.

If you opt to become a permanent worker through a visa program or obtaining a green card (relatively easy for Canadians to obtain), then you are subject to the same tax rules as a citizen, including the fact that your world wide income will be taxed by the USA. If you elect to give up permanent residency, you may be subject to expatriation taxes if you've been in the USA longer that 8 years.

This is only the basics, and the alien taxation laws have many "ifs" and "buts", most of which seem to be designed to ensnare as many as possible into the US tax system.

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Postby GSM8 » Tue, 30 Sep 2014 9:08 pm

Strong Eagle wrote:if you meet the conditions and are doomed with respect to taxes if the USA finds out about you.

Doomed is an understatement as to your fate if US ever finds out

Strong Eagle wrote:You must be legally able to work in the USA and there are two ways to achieve that.

For Canadian and Mexicans in many professional categories, NAFTA visa is much easier and quicker not subject to quota restrictions like other worker visa categories including the most common H1B
http://travel.state.gov/content/visas/e ... nafta.html

Strong Eagle wrote:If you opt to become a permanent worker through a visa program or obtaining a green card (relatively easy for Canadians to obtain), then you are subject to the same tax rules as a citizen, including the fact that your world wide income will be taxed by the USA.

This is normal and almost every country in the world (although not Singapore) taxes you on worldwide income once you are resident in that country (and this is justified as you are enjoying the civic amenities of that country, so why should any of your income be exempt). What is abnormal is for that country to chase you around the world with a secondary claim on tax and penalties on whatever you earn anywhere in the world as long as you live (whilst the country in which you are living is already legitimately taxing you). Such distinction belongs only to the US and Eritrea (and a few other countries in the past including Third Reich)

Strong Eagle wrote:This is only the basics, and the alien taxation laws have many "ifs" and "buts", most of which seem to be designed to ensnare as many as possible into the US tax system.

Not all that complicated in terms of "ifs" and "buts" actually, so even if ensnared one can at least avoid being stung (i.e. penalties)


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