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New US law, if you're abroad you must be a resident of that country to open a bank account to avoid having to give out your social. I personally just tried opening an account the other day and was asked to give out my social, which I neglected to.
http://www.economist.com/news/leaders/2 ... tcas-flaws
IN THE depths of recession in 2010, a jobs-obsessed Congress passed the Hiring Incentives to Restore Employment Act. Bolted on to it was the arcane-sounding Foreign Account Tax Compliance Act. There was scant debate about FATCA, as it is more commonly known, because it was touted as a way to bring in money by curbing offshore tax evasion. In tough times, such â€œrevenue-generatorsâ€ are no-brainers.
Going after tax dodgers is understandable. But FATCA, which will take effect on July 1st, is overkill.
America is the only large economy to tax its citizens on everything they earn anywhere in the world. FATCAâ€™s purpose is to ensure that not a centime or rouble that a â€œUS personâ€ has stashed away goes undetected by the IRS. In a piece of extraterritoriality stunning even by Washingtonâ€™s standards, the new law requires banks, funds and other financial institutions around the world to report assets held by American clients or face a ruinous 30% withholding tax. America is, in essence, using threats to outsource its financial policing. This is working: so far, more than 77,000 financial institutions have agreed to pass information to the IRS.
Last edited by eurobrat on July 3rd, 2014, 6:08 pm, edited 1 time in total.
I don't think that mere residency will exempt you from the restrictions on accounts owned by Americans. The bank will still report your account to the Feds.
I think that to avoid being reported, you will need to give them a foreign passport, which is usually (not always) based on citizenship. That way the bank "never knew" you were American.
(Haven't read the actual law though.)
If you mean that countries often require you to be a resident to even open an account, that is true. But that is not exactly based on FATCA I think. It started some time ago here in Mexico for example. Yes, it was probably for the same (apparent) purpose as FATCA, to discourage foreign bank accounts for the masses, and only allow them for those who live abroad and really need them.
I believe Eurobrat now has Italian passport (in addition to USA one). That document will show him as having been born in USA most likely. So banks may even perform some due diligence for cases where prospective new client was merely born in USA to find out whether or not he is in any way a US person for tax purposes.
If he really wants to escape the USA tax and reporting requirements as well as the barriers to opening so many types of bank and financial accounts for US persons (so many institutions refuse our business now, I know this from repeated first hand experience over last few years and have even been kicked-out of some old accounts due to rule changes), his best bet might be to:
- renounce his US citizenship at one of our embassies in Italy (I doubt hes rich enough to have to pay any exit tax lol)
- once he gets his certificate of renunciation from US Department of State, he can use it as proof to banks and financial institutions that he is indeed no longer a US person.
- as an Italian national, he can still easily travel to and spend months in USA. Up to now, I've never heard of any former national being denied entry to USA because they were suspected of renouncing for tax reasons. State Department has not gotten involved in such things to the best of my knowledge. It would likely take an extraordinary case for someone to be denied entry. Don't know though if this will change in the future.
Yes this is true, problem is I have not been able to register as a resident here in Italy due to the people I have rented my rooms from would not let give me a proper contract and let me go register. Because if they did they would have to pay 30% Italian rental tax lol so they told me no, one guy I rented from lied to me and told me he would give me a contract and then didn't. The only way I found around it was renting a place on a year contract which I haven't felt comfortable signing. This is why I'm leaving Italy because it's too inefficient and a banana republic. Look at ease of doing business country chart and you will see Italy is far below 3rd world South American countries and African countries.
You can confirm with Think Different, he has had numerous problems living in Italy finding a job or even getting a f***ing visa even though he's married to an Italian and has an Italian son. Italy is a dangerous place to live and will destroy your life if you're here any longer than a couple of weeks for a vacation. Even if you're a citizen is it very difficult to make a life here.
Now I'm moving to Berlin and I did get a rental agreement from my new place from the girl I'm renting from. I can register as a resident there. Boom, instant residency in the first week. Something I couldn't even accomplish here in Italy in a month.
The passport having my birthplace has nothing to do with it, it's about residency is where you pay taxes. When you have 2 passports you can play it this way, she wasn't going to ask for it until she asked where my residency was and I can't lie about it because they check with local Italian authorities to see if I'm actually registered.
Countdown to Berlin begins in 23 days and counting...
No I'm not
But I have to say this US law is going to make it very hard for US expats to get jobs and bank accounts now
I have already read online of European banks turning away American customers because they don't want the headache of the paperwork.
It's sad because I read the comment section of these articles and Americans cheering on the new law to catch tax cheats when in reality the average US citizen overseas is just a normal working joe.
If all you have is a US passport, then you're screwed and will have to check that little box on your tax return that says you have a foreign bank account. After you do that your life as a nomad is over with and you will be put onto a special little IRS list where if you go one year without checking that box and they catch you then there's fines and maybe criminal punishment.
There are a few countries and banks that still haven't gone into agreement with the IRS yet. Here's the list: http://apps.irs.gov/app/fatcaFfiList/flu.jsf
I suggest anyone now outside the country that has a bank that hasn't signed up pick one up before the US gets to them too.
While I had heard that this rule was coming up, can you enlighten me a little more on it's impact. If the Average Joe has money in a US financial institution and opens a bank account in his country of residence abroad for convenience sake, how does this hurt him? Or if said Average Joe is working abroad and putting his paycheck in his bank abroad, again how does the reporting requirement hurt him?
Of course in principle no one wants the IRS to know too much, but in reality what are the impacts - that is unless Average Joe is doing something illegal and hiding income or assets. Just curious...
Check out my blog @ http://www.marriedafilipina.com
Well it goes like this,
Joe in the Philippines owns a house, has a retirement ira, a checking and a savings. Joe now has to report everything. Joe was required to before but uncle same told joe that it was the honor system. Uncle sam has changed his mind and he no longer likes the honor system so he has gone all around the world establishing agreements with over 50k banks agreements to exchange information between each countries citizens connecting everything. So now the US knows about Joes life in Manila and the Philippines knows about Marco life in the US.
Time goes by and Joe is just living his life in the Philippines, uncle sam did not tell Joe about this new law. Joe, as a good ol'boy US citizen is supposed to know by himself. Joe forgets to disclose his checking, savings and IRA. Time goes by and Bank ABC in the Philippines lets Uncle Sams IRS know about Joe's.
The IRS now penalizes Joe $10,000 for each form and each year he forgot even if it was unintentional.
Even if Joe were to remember, it would cost Joe about $300-500 a form with an accountant to file them in the US. Joe has to file a form for each account and asset he if worth over $10,000 in a given year.
For me, it's a big deal because now I have to spend an extra $500 on filing taxes for no f***ing reason. I have no money over here and I'm working for a measly â‚¬22-25k a year. So basically I'm check to check but now theres the possibility I have to waste more money on IRS paperwork.
It's another headache that I will have to deal with for the rest of my life that I'm abroad. Fatca is another spying tool, a big headache and a waste of money and sadly it's probably here to stay.
Some are already doing that, but the only reports I heard where in Switzerland. Which form do you file Mr. Peabody just the FUBAR? You do it by yourself and never had problems with the IRS harassing you?
OK, this makes sense. Since I already self-file I am hoping I can continue to do this when abroad. I definitely don't want to give it to an accountant.
Check out my blog @ http://www.marriedafilipina.com
Here's some examples of the harm an average Joe US person expat like myself suffers as a result of the witch hunt against off shore account holders which commenced in 2009-10 with the UBS criminal and civil cases and culminated with FATCA.
1. Most investment banks (and all the interesting ones) no longer want me as a client because I'm tainted (a US person). I used to make a living buying and selling and sometimes holding long-term structured products, derivatives, and corporate bonds which had very high yield to risk ratios. It was easy to generate nice profits with that stuff which is not available/legal through any US institutions. But my first bank (a bulge bracket Swiss institution) forced me to close my account by the end of 2009 in transfer all assets. I found some other banks to serve me but eventually they (within 12-18 months) they gave me the same news.
2. My trading account out of Singapore allowed me to keep my account but informed me 18 months ago that I would no longer be allowed to trade any stock or fund equivalents due to my being a US person. From that point onwards, I was only allowed to trade currencies and a few metals.
Being a US person has basically destroyed my former line of work. I've had to re-invent my business model into something which does not so intimately involve foreign financial institutions.
3. The other (relatively small) downside is more paperwork. A new form (8938) is required which is largely a duplication of the FBARs we are required to send separately to Treasury.
In a nutshell, many financial institutions outside of US, especially brokers and investment banks, avoid taking on US persons as clients because of all the special paperwork and reporting it involves thanks to FATCA.
Besides FATCA, US worldwide taxation of US person sourced incomes (earned and investment) puts American expats on big packages at a huge disadvantage relative to similar expats from other first world countries. A British expat earning several hundred thousand dollars as a banker in Hong Kong pays a flat 15% income tax HK Inland Revenue and that's it. But his US expat colleague earning the same would end up paying not only the same 15% to HK government but also an additional 20-25% to Uncle Sam back home.
I filed here. I never here from them.
Here are the reporting requirements. There are potentially two forms depending on your situation.
http://www.irs.gov/Businesses/Compariso ... quirements
Figure out what you need to do, get the right version of Turbo Tax, and self file. Involving an accountant, especially an international CPA firm, only increases your risk. Cus when audit time hits, those pros you paid to do your taxes will cover their asses and incriminate you if need be. Don't share your info with anyone. That way, the IRS can only come to you and you remain in control of all your info.