FATCA

[TMHeimer]

Anyone done like me and renounced U.S. citizenship because of the draconian U.S. law of requiring citizens to file (and sometimes PAY) U.S. taxes even though they live and work entirely outside the U.S.?--and the FATCA deal forced on many countries in 2010 by the Obama admin.?  Any Americans here heard of FATCA without googling it first?
Anyone aware that the only other country in the world that taxes it's citizens based on citizenship rather than residency is the African dictatorship Eritrea?  Or that this law came into effect during the CIVIL WAR to tell draft dodgers that they still must file a tax return?

[71 dB]

FAT CAT was hungry and ate the T?  0:)

[JBS]

1) The UK does it too.
https://www.gov.uk/tax-foreign-income/non-domiciled-residents
Probably other countries, too.

2) Your US taxes paid in part for all the services and protections the US government provides its citizens who live abroad. This may not matter that much if you live in Canada, but other countries can be quite different.

[JBS]

FAT CAT was hungry and ate the T?  0:)

[TMHeimer]

Re-- the U.K.-- A lot to read, but, show me where it says if you live permanently outside the U.K. and have nothing to do with bringing in any money, working in, or having anything to do with the UK,   that you have to FILE UK taxes.  I don't see it.  It talks about what you do when you come back to the UK and bringing in amounts of money for whatever reason.

Re-- paying U.S. taxes for the services I get outside the country--
I suppose that means Embassies/Consulates.  Anything else? And how often will I (or anyone who lives in a country OTHER than Canada make use of these?--Yes, I suppose it COULD happen. I haven't ever had a need for a US consulate in my 43 years in Canada. Guess I should have paid taxes ...er FILED at least... all those years for the priviladge of having one here. You said "services"-- what OTHER services. Will the $2,800+ I paid in the returns I had to file to get back in good with the IRS perhaps help pay for those snow plows that come up from Maine to clear my streets?  Seriously, there are NO priviledges.

Please list all the services and protections you talk of for those outside the U.S.
Please explain why only one other country in the world requires non-residents to FILE (and possibly pay) taxes--and why the U.S. does this.

[JBS]

Re the U.K.-- A lot to read, but, show me where it says if you live permanently outside the U.K. and have nothing to do with bringing in any money, working in, or having anything to do with the UK,   that you have to FILE UK taxes.  I don't see it.  It talks about what you do when you come back to the UK and bringing in amounts of money for whatever reason.

Re paying U.S. taxes for the services I get outside the country--
I suppose that means Embassies/Consulates.  Anything else? And how often will I (or anyone who lives in a country OTHER than Canada make use of these?--Yes, I suppose it COULD happen. I haven't ever had a need for a US consulate in my 43 years in Canada. Guess I should have paid taxes ...er FILED at least... all those years for the priviladge of having one here. You said "services"-- what OTHER services. Will the $2,800+ I paid in the returns I had to file to get back in good with the IRS perhaps help pay for those snow plows that come up from Maine to clear my streets?  Seriously, there are NO priviledges.

If you have income over 2000 pounds, you need to file, even though you pay no taxes and live outside the UK.

As for the rest...if that is your attitude, why did you wait 40 plus years to become a Canadian citizen?

[TMHeimer]

If you have income over 2000 pounds, you need to file, even though you pay no taxes and live outside the UK.

As for the rest...if that is your attitude, why did you wait 40 plus years to become a Canadian citizen?


                          *********************my reply (sorry, hit wrong button)



First, I became a Canadian Citizen in 1981, not that it's relevant.

I believe you are wrong about the 2,000 pounds. That's for UK Expats living in the UK. Or possibly for British subjects living outside the UK but maintaining a UK residence.
In googling "UK taxes for non residents" you'll find this section:
"You are not a UK resident for tax purposes" (if)-----
I would qualify under these requirements.  I read that as I wouldn't have to file a UK return because of being "not a UK resident for tax purposes". These UK requirements amount to the same as Canada's and all but two couuntries-- If you don't live, work, or have a residence in the country, you don't have to FILE (let alone pay) taxes.  That has been my situation since 1977, and the situation of many Americans abroad.
I BELIEVE Canada has similar wording on it's tax books.  At any rate, I know of several Canadians who have moved to the US and ceased filing Canadian returns. It is common knowledge here that it works that way, so I guess it does--haven't ever heard of anyone getting in trouble.  Now, if you have a residence in Canada, you can still legally avoid filing taxes here, but have to go through a procedure to prove this and that, mostly that you don't live or work here at all during said calendar year.

Filing a US return that's anything but very basic is frightfully expensive if abroad. For me, $1,750 each time. Plus what I owed ($2800US+)considering 6 U.S. returns (the last AFTER renouncing)--you have to read up on FATCA to find out why I had to file 6 to get in on the "streamlined" program to get right with the IRS--plus the $2,350 US fee to renounce, and I'm out about $20,000CAD.  Oh by the way, the next highest fee to renounce is Jamaica at $1,100, then a few countries at 1 or 2 hunderd, the rest either like $10 or free. Up until 2010 US renounciation was free, then it went to $450. In Sept. 2014 it jumped to $2,350--the reason being consulers were being overworked due to the vast increase in renouncers--almost all due to FATCA.

Funny I was explaining much of this to a U.S. border guard during my "preparation" period prior to renouncing citizenship (my Canadian passport has a US birthplace, raising eyebrows, and was unable to get a US one until I filed 5 tax returns because to get one your US taxes have to be up to date). The guard looked over all my paperwork and said "Jeez, looks like taxation without representation to me".  His exact words.

[Daverz]

Anyone done like me and renounced U.S. citizenship

Good riddance.

[drogulus]

     The primary service is citizenship, which will be valuable if you need to return for any reason.

     

[TMHeimer]

I started a thread on this 3-4 years ago on a SCUBA forum and of course got similar replies.
First, Daverz, thanks for your kind words. I'm sure you feel that my renouncing US citizenship means I hate my native country and not simply that I can't afford this archaic tax situation.
Fine--heard it before. Some basically saying "how dare one ever renounce citizenship of the greatest country in the world".

drogulus, OK, I guess one could consider citizenship of a country a "service". Fine. But, Canadians and everyone else in the world (except U.S. & Eritrea) get that same service and don't have to file tax returns if they're work and permanent residence is out of their country.  How come all these other countries still can provide the "citizenship" service without this tax requirement?

I refuted the U.K. example and haven't seen a reply.
I still have read nothing regarding the US tax law from the Civil War. Does anyone think it is right for a country to require tax filing and at times charging actual taxes to citizens who are not residents--those who permanently live outside the U.S.? Citizens who file and pay taxes to the country where they live and work (and get services in return of course--the whole idea of taxes)?

Anyone who has read up on FATCA will find that the U.S. bullied Canada and at least 35 countries (last time I checked) into signing that bill (in 2010--it was piggybacked onto something else and got little notice back then)--or, those countries would be cut off from the U.S. banking system. It in fact "connects" the IRS to our CRA, and requires banks and investment countries in Canada to identify clients who may be U.S. citizens. This "reaching across the border" by a foreign government has angered many Canadians, some who are not even dual citizens. These are facts, not my opinions.

When I am in the States I mention all of this to people, including my American freinds. None to date have been even aware of the "Civil War" law, much less the recent FATCA deal.
And understandably-- why should they--they live and work in the country where they have to --and should-- pay taxes. It's a non-issue for them. When they understand what I'm saying they say wow, really--I had no idea. Yes, I know I poke the bear by starting this thread--call it trolling if you like. But my original question stands--Anyone else here renounce because of FATCA or at least heard of it and the old tax law?

On a personal note. It was no fly by night decision for me to renounce US citizenship. For 36 years I was a dual citizen and loved both my native and adopted countries. I still do, just am not a citizen anymore of one of them. I could've remained a US citizen and continued to file (and at times pay) US taxes to the tune of $2K a year. If I managed to live another 20 years that would be $40,000 in accountant fees and taxes. As mentioned, accountants in foreign countries well-versed in US taxes are very expensive. My motive was strictly financial well being--nothing more. Both my brothers were in the US military, one a retired US Navy Captain and Annapolis Grad ("Go Navy"). But I do admit that when I see the Stars & Stripes I do feel a little betrayed. I'll bet I'm not alone as THOUSANDS have been renouncing yearly since about 2015--for the same reason as me (again fact, not my opinion).

[drogulus]

drogulus, OK, I guess one could consider citizenship of a country a "service". Fine. But, Canadians and everyone else in the world (except U.S. & Eritrea) get that same service and don't have to file tax returns if they're work and permanent residence is out of their country.  How come all these other countries still can provide the "citizenship" service without this tax requirement?

Does anyone think it is right for a country to require tax filing and at times charging actual taxes to citizens who are not residents--those who permanently live outside the U.S.? Citizens who file and pay taxes to the country where they live and work (and get services in return of course--the whole idea of taxes)?

    I don't have an easy answer about the relative worth of citizenship in different countries, or what make a particular tax scheme right. I'm interested in how a tax system acts efficiently with how money is spent, so the currency valuation is as close to Goldilocks levels as feasible.

    The IRS is not helpful about the theory of taxation they use. They're acting according to the laws passed by Congress. Your average Congressbot has no idea of how the system works. There are experts who do, but in order to communicate with pols, well, let's say something is lost in the translation.

[TMHeimer]

    I don't have an easy answer about the relative worth of citizenship in different countries, or what make a particular tax scheme right. I'm interested in how a tax system acts efficiently with how money is spent, so the currency valuation is as close to Goldilocks levels as feasible.

    The IRS is not helpful about the theory of taxation they use. They're acting according to the laws passed by Congress. Your average Congressbot has no idea of how the system works. There are experts who do, but in order to communicate with pols, well, let's say something is lost in the translation.

You sound very well educated on the subject and I believe a agree with you completely. Though I am just a dumb musician who only spouts all of this about the old law and FATCA because I researched it extensively as it applied to ME. But yeah, what you say makes sense to me.
My "U.S. expert" accountant showed me a pamphlet of what was the Canadian tax rules from like 1920. Said the current "book" is about as thick as a telephone book. Whereas the IRS' version is about 10 telephone books thick. According to him, there is no one alive who knows everything in there without having to look some things up. B
But, that's a different discussion than FATCA.  Be back in a while-- time for my daily clarinet practicing....

[drogulus]

You sound very well educated on the subject and I believe a agree with you completely. Though I am just a dumb musician who only spouts all of this about the old law and FATCA because a researched it extensively as it applied to ME. But yeah, what you say makes sense to me.
My "U.S. expert" accountant showed me a pamphlet of what was the Canadian tax rules from like 1920. Said the current "book" is about as thick as a telephone book. Whereas the IRS' version is about 10 telephone books thick. According to him, there is no one alive who knows everything in there without having to look some things up.
But, that's a different discussion than FATCA.

     In addition to citizenship the major service available to citizens and non-citizens alike is the US dollar, by almost universal acclamation the worlds greatest "port in a storm" currency.

[TMHeimer]

     In addition to citizenship the major service available to citizens and non-citizens alike is the US dollar, by almost universal acclamation the worlds greatest "port in a storm" currency.

Well, agree about the "universal acclamation" part (since Nixon took the US off the "Gold standard" early 70s). I guess you could call the US Dollar service, but as you say, it "serves" citizens and non-citizens as well, so not sure how this relates to FATCA.
A part of my rant I forgot to mention (not in reply to your posts)  that some folks my age (65) or so, who obtained US citizenship because one of their parents was American, but who have never set foot in the U.S., have been finding out that they were required to file US tax returns for like 50 years and would have to go through the costly process I just went through just to be allowed to set foot in the country.

As well, some Americans living and working abroad permanently have either had their bank accounts closed out or have been fired if they worked for institutions. The institutions (banks, etc.) sometimes find that going that route is easier than dealing with the requirements of the forced FATCA agreements. These "Expats" (I don't like that term--they aren't necessarily "ex Patriots" at all--that would be Tom Brady--sorry, couldn't help it) have simply been hung out to dry by their country.
Countries who didn't sign FATCA would be assessed a 30% charge each time for doing business through the U.S. banking system.  That may be where the US Dollar thing really comes into play. I know I paraphrase on these things, but I'm pretty close to the exact wordings if one looks this stuff up.

But, others please feel free to dispute this stuff, but please present some contradictory facts if you do. Or if you believe me, perhaps offer something defending these things as good things that should exist....

[mc ukrneal]

What is your purpose for this thread? It sounds like you made your decision many years ago. So I am not clear what you want to accomplish here all these years later. Some parts of your posts seem designed to instigate, some to rant and others to inform. The fact is that very few people know about this (FATCA), because very few deal with it in any way. As someone who has lived and worked abroad, I am fairly familiar with the rules, but changing them (if that is what you want to accomplish) is an uphill battle at best.

[drogulus]

What is your purpose for this thread? It sounds like you made your decision many years ago. So I am not clear what you want to accomplish here all these years later. Some parts of your posts seem designed to instigate, some to rant and others to inform. The fact is that very few people know about this (FATCA), because very few deal with it in any way. As someone who has lived and worked abroad, I am fairly familiar with the rules, but changing them (if that is what you want to accomplish) is an uphill battle at best.

     I'm sure you're right. My inclination is that while citizens abroad should file returns, there should be little or no tax owed for people with modest means. From that position I'm willing to hear arguments. Perhaps we should expand the foreign tax credit to accomplish this.

[TMHeimer]

What is your purpose for this thread? It sounds like you made your decision many years ago. So I am not clear what you want to accomplish here all these years later. Some parts of your posts seem designed to instigate, some to rant and others to inform. The fact is that very few people know about this (FATCA), because very few deal with it in any way. As someone who has lived and worked abroad, I am fairly familiar with the rules, but changing them (if that is what you want to accomplish) is an uphill battle at best.

My purpose was simply my question as stated. Anyone renounce because of FATCA and anyone know what it is without googling it? Yes my decision to leave started about Dec. 2014 when all of this began to come to light. I agree that very few know about all this because very few deal with it. So yes, I admit I do enjoy informing Americans of it and watching their reactions. Also agree that changing this 160 year old law is very uphill since we that live permanently out of the US have no real representatives to complain to--and I imagine not that many "expats" absentee" vote as well--so the incentive to remove the dusty old law doesn't exist. But, things COULD'VE just "slid along" with nobody caring had FATCA not happened.

drogulus, Must disagree with you here. I don't think US citizens who are permanently abroad with no residential or working ties to the U.S. should file returns. As I said, only one other country in the world requires this--Why? Keep in mind, I think others (not necessarily you) here may be talking about people who may maintain US residences or otherwise somewhat deep (financial/work?) ties with the US. Possibly folks out of the US for a year or two, etc. with likely intentions of returning to live there.
Don't know where that fits in, but I'm only referring to those like myself who have resided and worked only in Canada for decades.
As far as paying taxes based on modest means or wealth should therefore be not applicable.
The reason I owed U.S. taxes on two of the 6 returns I filed was explained to me. Had to do with the interest payments money I made those years for my investment loans, and possibly with the value of the Canadian Dollar. Essentially, I was told by the accountant that Uncle Sam deemed that I had "not paid enough taxes to Canada" those 2 years. Figure that one out....

As I've said before, I still await hearing from someone who will comment on the Civil War law or FATCA directly. Is it good?  Why?  Or do you agree with me (I know why on that).  We've been talking about other things such as the ins and outs of some tax laws, my "patriotism" or reasons for renouncing, services for "expat" citizens, my reasons for this thread, etc.   What about the old law and FATCA everybody?  Hey, maybe I should simply start a poll, -- not sure if that is done on this forum.

[JBS]

Whether you think you did or not, you benefited by your US citizenship. If you ever needed it, you had the right to the full power of the US on your behalf.  Just because you never needed it doesn't mean it was not available to you.  It just means you never needed it. Your complaint is that you had to pay taxes, so what? Exactly how many people like to pay taxes?

So stop whining. You renounced your citizenship, you are a full Canadian, that's the end of it.

ETA
If you do want to make a poll, there is a specific section of the forum for polls.
https://www.good-music-guide.com/community/index.php/board,17.0.html

[drogulus]

drogulus, Must disagree with you here. I don't think US citizens who are permanently abroad with no residential or working ties to the U.S. should file returns.

     How are US citizens to know they owe no tax or some tax if they don't file a return?

     In relative terms, the only ones that matter, the US tax system is honest and aggressive, which are related. Perhaps people elsewhere are less inclined to depart their homes for tax reasons, or governments don't care as much. Some tax regimes have low compliance rates, and aggressive enforcement measures would backfire as people ran for the exits.

     One of the reasons dollars are so valued is how well taxes drive it to stable valuation. We could do much better, though, as I will continue to point out in a series of many lectures on the Nest Egg Principle as we will now call it.

[TMHeimer]

Whether you think you did or not, you benefited by your US citizenship. If you ever needed it, you had the right to the full power of the US on your behalf.  Just because you never needed it doesn't mean it was not available to you.  It just means you never needed it. Your complaint is that you had to pay taxes, so what? Exactly how many people like to pay taxes?

So stop whining. You renounced your citizenship, you are a full Canadian, that's the end of it.

ETA
If you do want to make a poll, there is a specific section of the forum for polls.
https://www.good-music-guide.com/community/index.php/board,17.0.html

Honestly, where in here have you answered either of my two simple questions? Your point about me having the benefit of the "full power of the US" should I ever have needed it-- I guess you're saying that I should file and pay at times taxes to have that benefit. Yet all other countries (except Eritrea) give that benefit to non-resident citizens WITHOUT requiring a tax return. But, you probably won't comment on that.
I have paid my taxes in full, on time every year to the Canadian Govt., where I live. Your statement "Your complaint is that you had to pay taxes, so what" is not true. My complaint is I had to FILE and PAY taxes to a country I hadn't lived in for decades. There IS a difference.
"Exactly how many people like to pay taxes" you ask. I ask, what does that have to do at all with my two questions?
I ask two simple questions and get a variety of semi-off topic responses and address them. I'm just a whiney Canadian.
Re-- "and that's the end of it"-- Well, the thread will die when it does. Eventually it did on the SCUBA forum. Maybe before that does occur I'll at least read of someone who agrees with me on the laws, or someone who thoroughly understands them and what I'm saying and really points to something solid as to why I'm wrong.

drogulus, I sort of agree and kinda understand most of what you say. Except the first sentence asking how US citizens would know if they owe no or some tax if they don't file a return?
Again, this doesn't address the question of why the US and Eritrea are the ONLY COUNTRIES that tax people based on citizenship rather than residency. The only two that require non residents to do a costly FILING of tax returns every year. Regarding a point I made earlier, if this old law and FATCA are in fact a right and just thing, why have so many thousands renounced because of this situation and continue to do so?  The numbers are unprecedented in U.S. history. A couple of years ago certain consulates in Canada had up to 6 months to a year wait for people wishing to renounce. No one on the thread has addressed that point either.
So, as I said, on 2 of those 6 returns I did, the IRS determined that I had not paid enough taxes to the Canadian Govt.  So, why not send me a note saying I should contact the CRA and offer them the said difference? Why would I pay this money they figured I should have paid to the U.S. GOVERNMENT?