001Diana

It isn’t complicated to file FBAR, but why should we have to give all our bank account details to the US when citizens living there would only have to under criminal investigation? Also if the US decides you are owing taxes/fines and you live in a country that assists the IRS with collection, they have all your account details.

The issue is that the US can determine she didn’t file, file for her, and assess fines/tax. Once that gets to $50k she can’t renew her passport, and can no longer enter or leave the US as the law states she can’t use her foreign passport if a US citizen. If she lives in a country that assists the IRS with collection, they can reach in and take it. They have all her bank details from FBAR filing.

Yes, and if you aren’t 5 years tax compliant when you pay that $2350 you owe 20% of the value of all your assets too.

Owning a business in a country where the taxes are lower than the US corporate rate triggers double tax, as well as any passive income investments. The US can tax a residence that sells for a profit while the residential country will not. Disability support earners have been taxed on their income from their resident country as well.

This is banning reentry for those who have stated their reason for renouncing is due to tax avoidance. When I renounced I began telling them it was due to tax compliance, and they were very careful to not let me say tax avoidance. It is completely different. I’d be happy to pay an a amount to the US for citizenship every year but can’t deal with the thousands I pay accountants and the days I spend compiling and working out amounts for the calendar year as opposed to the Australian financial year. Also the anxiety over the ever changing laws and fines.

This reentry ban has never been enforced but could be in the future, if anyone has actually been able to say they renounced due to tax avoidance.

It would have sounded ridiculous to me too had I not lived it. It’s the tax compliance, not the paying of taxes that is the issue. Most of us will never pay, we already pay more in the country we live in. The tax compliance enforcement costs the US far more than it makes in collecting taxes from citizens overseas, and other countries refuse to allow dual citizens to open accounts or invest. There are MASSIVE, and I’m talking tens of thousands of dollars in fines that can be assessed if you are overseas a file a form too late. And it’s difficult for a specialist accountant to work it all out, let alone a regular person. It’s the anxiety of not knowing what is coming next. If there were a fee for living overseas and having the option of using consular assistance, sure I’d be happy to pay it.

Americans living overseas generally go by a different financial year, for example, in Australia the financial year is July1-June 30. All income and business records need to be made to fit the US financial year. We also have different much more complex forms to fill out and have far more to report than the American citizen living in the US. All our bank details and highest balances must be reported. We also have to file forms with regards to our retirement investments. If you own your own business here it’s literally days of compiling and working out amounts. And if something is wrong, look out. The trust reporting form, 3520, (which most businesses must file) is due before your tax return, and if you don’t realise this it’s a 10k fine. Even for a trust with a balance of $0. Then another 10ks every month you are late after the fine is assessed. (It’s also worth mentioning that the IRS only communicates through snail mail and sends us letters out of some strange places, such as the Czech Republic, and they take 4 months to arrive) meaning you have tens of thousands worth of fines before you even know it. I wish this were a joke or I was exaggerating. For years accountants filed that trust form with tax returns, until the IRS suddenly realised this could be a money maker and quietly introduced the fine. There’s so much more I could write but I have to go to work. I’m just trying to say it’s a never ending nightmare, and in most cases too complex for the average person.

This is not “having your cake and eating it too,” it’s much more complex. It also is never a case of “the country wasn’t good enough to live in.” I would love to live in the USA. That is not where life took me. At its simplest Americans are not free to live anywhere in the world the way citizens of all other countries are (even Eritrea, the only other country that taxes it’s citizens based on citizenship, does not subject its citizens to the same tax complexity). All Americans should be outraged over their lack of freedom in this regard. 20 years ago I could not have imagined I’d end up living in Australia, but we don’t always know where life will lead us. Many people are born to American parents overseas and are required to spend thousands yearly to file or pay $2350 to renounce. Paying double tax to two countries is unachievable for the majority of us. There are treaties in place to avoid the is happening, however the cost of having a specialist accountant file every year is astronomical. I have paid over $25k to accountants and never once owed tax to the US. There are also some seriously unconstitutional and human rights violations going on. The surprise retroactive Transition tax of 2017 has financially ruined many small business owners, in some cases taking all their retirement savings. These are people who have worked and paid taxes in their residence country for their lifetime. There is a case in front of the Supreme Court challenging this right now.