Skip to content

Citizenship Based Taxation and FATCA, i.e. the Bane of My Existence

So I just filed my US tax return and now I need stiff drink to recover. I made this little video earlier today to complain about it to the world.

I hope it doesn’t seem like I’m just whining in the video, because citizenship based taxation (CBT) and FATCA are actually serious problems for many Americans and green card holders abroad. Thanks to FATCA, a lot of ordinary American expats can’t get a mortgage or business loan; in some cases, they can’t even open a simple bank account in the country where they live and work. Although many countries have a tax treaty with the US, which means only US citizens in a high income bracket are taxed twice (for once, I feel sorry for the rich ūüėČ ), the filing requirements are crazy complicated, so if you have something like, say, a 401k, life insurance, a mortgage, investments, etc. you sure as hell better hire an accountant, even if you know you won’t have to pay any taxes in the end. Oh yeah, and make sure it’s a specialist accountant who understands everything, because if they fuck up, you’re still liable in the end. And the fees and fines can be enormous, all the way to imprisonment and/or being stripped of your citizenship.

More than eight million US citizens live and work abroad and, yes, many do vote. But their vote only counts in the state where they were last a resident (not quite sure how it works for accidental Americans…) If the US is going to make us file our taxes and enter our bank account information over the Internet, shouldn’t we at least have our own members of congress? If it were up to me, I’d make the expat seat in Iceland because who doesn’t like volcanoes, elves and Bj√∂rk? Ok, probably some people. I’d be more than willing to vote on it.

For now, it’s discriminatory taxation without representation. Uh, d√©j√† vu. Maybe us expats should toss chests of tea into harbors across the world in protest. It probably wouldn’t have the same effect as it did in Boston back in the day, but I think it would get us noticed (#ytexpats, #expatstcrazy).

Filing US taxes abroad is an annoying hassle at best and an absolute nightmare at worst. Some argue it’s a road that leads to renunciation whether you want this or not (and, trust me, very few do.) I’m not entirely sure this won’t be true for me in the future‚ÄĒespecially when my husband and I retire‚ÄĒnot to mention my dual citizen daughters. I just hope the US comes to their senses and switches to residence based taxation like the rest of the world, except Eritrea. Nice bedfellow, America…

For more reading on this lovely subject, click here, here , here and especially here. My first-ever blog post was also on this wonderful topic.

And now, Björk. Go Iceland!

 

Be First to Comment

Leave a Reply

Your email address will not be published. Required fields are marked *