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Comment by muststopmyths | Hacker News Reader

So, these people chose to keep their US citizenship, but chose to not follow the rules ?

The woman was brought over as a baby, but chose to keep the citizenship into adulthood, presumably acquiring a passport or other citizenship documents. Otherwise how are the banks finding out ?

Why should she be surprised if the IRS eventually comes for her ?

Seems like giving up citizenship is the right solution for these people.

Not debating the merits of whether the US should be taxing expats, this does not seem "accidental" to me in the least.

Also as far as owing onerous back taxes go, aren't taxes you paid in your country of residence deductible ? For most EU countries wouldn't that result in net zero US taxes ?

Edit: as pointed out by commenters, you have to list your place of birth in documents. stupid me

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> but chose to keep the citizenship into adulthood, presumably acquiring a passport or other citizenship documents

That is ... not how citizenship works. Once you are a citizen, it can be very difficult to get rid of that status (souce: born in the US, will end up paying an arm and a leg to get rid of mine). Failing to get a passport, file returns with the IRS, etc. can lead to you getting ignored, but it can also lead you to getting into serious hot water in the future.

Example: most passports list the place of birth of the holder. If you are an American citizen, you must enter the US on a US passport. Because of American citizenship law, someone trying to enter the US on a Dutch passport with a place of birth listed as being in the US is going to have to do some explaining, and possibly provide documentation of renouncing their US citizenship. "I never applied for my American passport" is probably not going to cut it. It's a huge pain!

> Also as far as owing onerous back taxes go, aren't taxes you paid in your country of residence deductible ? For most EU countries wouldn't that result in net zero US taxes ?

It depends! But you still have to file, and there are still penalties for filing late, and even if you do, IRS reporting requirements to other banks mean that many European financial institutions won't touch you with a 10-foot pole no matter if you are also a European citizen.

Ones that will (like my bank), still won't offer you much beyond current account services and a basic savings account. If you want to do any kind of real saving for the future or basic investing (ETFs, for example), you are going to have trouble. The supposed disruptors in the market for this kind of thing (Trade Republic etc.) certainly don't have the resources or the interest in dealing with you either.

>Example: most passports list the place of birth of the holder. If you are an American citizen, you must enter the US on a US passport

ooh, good point. I'd forgotten about that completely.

This seems true in 99% of cases, but it seems the rule is not quite as simple.

"If you are an American citizen, you must enter the US on a US passport" is true for air travel. If you travel by land or sea, it is possible to enter with other documents (driver's licence, birth certificate... see https://help.cbp.gov/s/article/Article-3618?language=en_US).

This is especially important in times of pandemic when the US government elects to stop processing passports and dual citizens may hold a passport of another country to be able to travel out, only to have re-entry problematic upon return...

What’s super fun is that if you’re a US citizen who is an EU resident, no US-domiciled mutual fund is allowed to be sold to you because they don’t meet the EU's customer disclosure requirements, but you’re an idiot if you buy the EU-domiciled ones you’re allowed to because of US-assessed PFIC.

Closest solution I’ve found is a Schwab International Account based in the US, and buying Berkshire Hathaway shares, because it's so broadly invested in lots of other companies.

"presumably acquiring a passport or other citizenship documents" Why are you being so bold as to assume that? I'm not saying that either way is the case, but you can't assume that that's the case. Also, as stated elsewhere in this thread, dropping the citizenship is expensive. Why should someone have to pay money to not be taxed by a country they have no relationship with, other than having been born there?

You don't have to choose anything, if you're born in the US you're a citizen whether you get a passport or not. No affirmative steps required.

It's not surprising that banks would cotton on. The US has been very aggressive about enforcing reporting requirements on citizens abroad, and they do it via the banks.

And what's worse is that if an American has a joint account e.g. with their (European) spouse in Europe, strictly speaking the bank shouldn't release information on that account as it violates privacy laws, which is part of the reason European banks aren't keen to hold accounts for US citizens.

> Also as far as owing onerous back taxes go, aren't taxes you paid in your country of residence deductible ?

No, the USA has treaties with only some other countries that result in net-zero taxation of self-employed people. If you live in a country with which a tax treaty has not been concluded, and you are self-employed, you are liable to both your local country for income taxes etc., and to the USA for Social Security and Medicare.

OTOH, isn't there a poverty-line amount in USA that makes some income level practically tax-free (through deductions, etc.)? I imagine that in most countries $15.000 / year is a rich person's income, while in USA it puts you under "starving". What I want to say, if you're living in, say, Kazakhstan, earning a good fat paycheck of $1000 a month and living like a king, shouldn't you file "I'm starving poor at $12000" to the IRS and get zero taxes, or, perhaps, even some food stamps or something like that?

(Just guessing, I don't have experience with this)

Kazakhstan is not a cheap country, at least not the cities of Almaty and Astana where foreigners are likely to live. They regularly appear on "Most expensive cities" lists.

Social Security and Medicare is paid by American workers regardless of their total income. That is, there is no poverty limit under which they do not have to send that money to the IRS.

According to google, the average salary in Kazakhstan is 212894 KZT/month, which is $500. How much does an American worker making $500/month have to pay to the IRS for SS and Medicare?

> but chose to keep the citizenship into adulthood

I don't believe it's possible to renounce US citizenship until adulthood, in which case there is no choice.

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