Have any American's felt any impact from the FATCA rules yet, or have any idea what to do about it? I just heard the acronym for the first time today, and if half of what I hear is right, pretty much all Americans living abroad are up sh*t creek without a paddle. The practical choices seem to be (1) go back to the US (after paying big fines to the IRS for not having filed various forms for many years) (2) naturalize and renounce US citizenship, and hope the IRS doesn't find a way to squeeze fines out of you anyways (which they apparently will try to do) or (3) hire some expensive international corporate tax consultants to sort out the reporting, and pay a bunch of fines for not having filed forms in the past.
Since I just heard about this today, I am still trying to figure out how alarmed to be. Looks like if you've ever had more than 10000$ in a non-US account, you could be liable for 50% of that amount in penalities. Or perhaps a lot more. And that is just the start, lots of other transactions of the sort a normal, middle class professional living in Finland might do routinely, require reporting, with $10,000s penalities for failing to report. If you want to try and clear yourself, you can go and report to the IRS Criminal Investigations, where your wrongdoing can be assessed (because depositing your monthly salary into your bank account so you can pay your mortgage is a crime, and you are a criminal).
Fortunately, Nordea seems to have no reference to FATCA compliance on its website. Switzerland, for example, eager to comply, has seen banks shedding US customers, so that expats living there can no longer do their banking.
FATCA and the American expat panic
Re: FATCA and the American expat panic
What panic?Form 8938 is facta.Taxpayers who do not have to file an income tax return for the tax year do not have to file Form 8938, regardless of the value of their specified foreign financial assets.
Sounds normal.
Re: FATCA and the American expat panic
Nordea will comply on FATCA and seems you are panicking over something what doesnt apply or target on expats who dont try to hide their income/investments. US expats have always been under taxation of US if their income is big enough but now US will see that.Godzilla wrote:
Fortunately, Nordea seems to have no reference to FATCA compliance on its website. Switzerland, for example, eager to comply, has seen banks shedding US customers, so that expats living there can no longer do their banking.
Caesare weold Graecum, ond Caelic Finnum
Re: FATCA and the American expat panic
So sorry to jump in here - but the original poster is correct. FATCA is a HUGE deal to US Expats who are living overseas.
This is not about taxes. Most US Expats do not earn enough to meet the threshold for double-taxation (although the US is the only country in the world beside Eritrea to tax based on citizenship and not residency).
This issue is about reporting. If you are an American living anywhere and you have 'foreign' accounts (i.e. accounts not on US soil), and the total of all your accounts go over $10,000 at any point in the year, then you are required to file a document called an FBAR with the US Treasury department. The FBAR requires the name of the financial institution, the highest amount in that account during the year and the account number for each and every account you own overseas. If you have a joint account (even with a non-US person) the entire balance of the account must be reported. If you are a signatory on an account (perhaps an account for work) then that account must be reported too. If you are an expat living overseas your 'local' accounts are considered 'foreign accounts' to the US government.
Most people have no idea that they were required to file FBARs. There is no education process for expats regarding their filing requirements. Most professional tax preparers didn't even know about FBARs until recently.
The IRS/Treasury departments had not been actively pursing FBAR filing until 2008 when the economy hit the wall and a whistleblower turned over a bunch of Swiss bank accounts to the IRS. Suddenly they dusted off the FBAR form and started chasing down non-filers. And the fines for not filing the FBAR are draconian. People are being forced to bay 200-300% of the account balance as a fine for not filing. It is crazy.
FATCA is a new law whereby all foreign financial institutions must turn over the names/account balances/financial transaction/account numbers of any US person in their bank to the IRS. There is a $50,000 cut off for reporting, but the word on the street is most institutions are just going to turn over all US person because having yet another criteria point costs extra money to implement. If a foreign financial institution does not turn register their institution with the IRS and turn this data over, then they will lose 30% on all financial transactions with the US. So, FATCA is catching out the millions of Americans living overseas who had no idea they were required to report accounts that are considered 'local' to them and will be due fines in excess of their holdings. And foreign banks are quite frankly not interested in paying billions to come into compliance with FATCA and are dropping US accounts.
I just wanted to clarify
This is not about taxes. Most US Expats do not earn enough to meet the threshold for double-taxation (although the US is the only country in the world beside Eritrea to tax based on citizenship and not residency).
This issue is about reporting. If you are an American living anywhere and you have 'foreign' accounts (i.e. accounts not on US soil), and the total of all your accounts go over $10,000 at any point in the year, then you are required to file a document called an FBAR with the US Treasury department. The FBAR requires the name of the financial institution, the highest amount in that account during the year and the account number for each and every account you own overseas. If you have a joint account (even with a non-US person) the entire balance of the account must be reported. If you are a signatory on an account (perhaps an account for work) then that account must be reported too. If you are an expat living overseas your 'local' accounts are considered 'foreign accounts' to the US government.
Most people have no idea that they were required to file FBARs. There is no education process for expats regarding their filing requirements. Most professional tax preparers didn't even know about FBARs until recently.
The IRS/Treasury departments had not been actively pursing FBAR filing until 2008 when the economy hit the wall and a whistleblower turned over a bunch of Swiss bank accounts to the IRS. Suddenly they dusted off the FBAR form and started chasing down non-filers. And the fines for not filing the FBAR are draconian. People are being forced to bay 200-300% of the account balance as a fine for not filing. It is crazy.
FATCA is a new law whereby all foreign financial institutions must turn over the names/account balances/financial transaction/account numbers of any US person in their bank to the IRS. There is a $50,000 cut off for reporting, but the word on the street is most institutions are just going to turn over all US person because having yet another criteria point costs extra money to implement. If a foreign financial institution does not turn register their institution with the IRS and turn this data over, then they will lose 30% on all financial transactions with the US. So, FATCA is catching out the millions of Americans living overseas who had no idea they were required to report accounts that are considered 'local' to them and will be due fines in excess of their holdings. And foreign banks are quite frankly not interested in paying billions to come into compliance with FATCA and are dropping US accounts.
I just wanted to clarify
Re: FATCA and the American expat panic
The concern I have is 1) I haven't been filing tax forms, because I just heard about it yesterday and 2) there seem to be 5 figure penalities for each instance of not having filed. I wouldn't owe the US any taxes, not that high an income, no investments, but normal bank account and retirement savings, which is why I haven't been paying any attention. So my worry is the fees for not having filed.
There are a lot of websites decrying FATCA and predicting the end of the world from it. It may be the case that they are trying to rally support against it by overstating the case, because it will put an end to their tax avoidance strategies. But as the previous poster, who seems to have a better understanding of the situation than I do, lays out, it seems likely to touch American overseas who has at least a middle-class standard of living. And the requirements for compliance by banks may well make some banks decide not to do business with Americans anymore - making it hard to get a bank account. I am all for tracking down tax evaders and shaking out their pockets, but since I pay my taxes to Finland, and pay quite a lot, I don't see myself as a tax evader.
There are a lot of websites decrying FATCA and predicting the end of the world from it. It may be the case that they are trying to rally support against it by overstating the case, because it will put an end to their tax avoidance strategies. But as the previous poster, who seems to have a better understanding of the situation than I do, lays out, it seems likely to touch American overseas who has at least a middle-class standard of living. And the requirements for compliance by banks may well make some banks decide not to do business with Americans anymore - making it hard to get a bank account. I am all for tracking down tax evaders and shaking out their pockets, but since I pay my taxes to Finland, and pay quite a lot, I don't see myself as a tax evader.
Re: FATCA and the American expat panic
Godzilla,
Most US Expats are not aware that they should have been filing US tax returns, even if they owe nothing. Here is a 'helpful' website by the IRS that explains what you should be doing and god forbid if they decide you are a 'compliance risk'. http://www.irs.gov/Individuals/Internat ... -Taxpayers
You may want to seek professional advice, especially regarding retirement funds, because foreign retirement funds are viewed very differently by the U.S. And believe me, the whole thing stinks like rotten fish.
Is FATCA the end of the world? For most people, probably not. FATCA has gained a lot of support from other countries that want to track down their 'tax cheats' - which is a noble cause. However, the difference between the US and every other country in the world is that the US taxes based on citizenship, not residency - so the US considers your 'local' accounts that you need to pay your rent/bills/food/etc. to be 'foreign accounts' and hence, turns all expats into 'tax cheats'.
There are an estimated 7-8million US Expats. It is estimated that only 5% of those are actually earning enough to owe tax. That leaves the other 95% who are in the poor to middle class range but still fall under the same rigid reporting requirements and draconian fee structure for non-reporting that the rich fall under.
I would encourage you to google FATCA and FBAR if you wish to learn more. And the resistance that you hear is not from the rich. They are already finding ways around FATCA.
BTW, I too have no problems at all with shaking out the pockets of rich people in the US hiding their squillions in overseas accounts in order to evade taxation. But I have a HUGE issue with the US applying the 'solution' to 7-8 million people who are not the problem.
Most US Expats are not aware that they should have been filing US tax returns, even if they owe nothing. Here is a 'helpful' website by the IRS that explains what you should be doing and god forbid if they decide you are a 'compliance risk'. http://www.irs.gov/Individuals/Internat ... -Taxpayers
You may want to seek professional advice, especially regarding retirement funds, because foreign retirement funds are viewed very differently by the U.S. And believe me, the whole thing stinks like rotten fish.
Is FATCA the end of the world? For most people, probably not. FATCA has gained a lot of support from other countries that want to track down their 'tax cheats' - which is a noble cause. However, the difference between the US and every other country in the world is that the US taxes based on citizenship, not residency - so the US considers your 'local' accounts that you need to pay your rent/bills/food/etc. to be 'foreign accounts' and hence, turns all expats into 'tax cheats'.
There are an estimated 7-8million US Expats. It is estimated that only 5% of those are actually earning enough to owe tax. That leaves the other 95% who are in the poor to middle class range but still fall under the same rigid reporting requirements and draconian fee structure for non-reporting that the rich fall under.
I would encourage you to google FATCA and FBAR if you wish to learn more. And the resistance that you hear is not from the rich. They are already finding ways around FATCA.
BTW, I too have no problems at all with shaking out the pockets of rich people in the US hiding their squillions in overseas accounts in order to evade taxation. But I have a HUGE issue with the US applying the 'solution' to 7-8 million people who are not the problem.
Re: FATCA and the American expat panic
Does that mean a non-citizen residing in the US pays no tax? Or do they want the best of both worlds, grabbing tax off foreigners based on residency and from citizens based on citizenship?kyla4u wrote:However, the difference between the US and every other country in the world is that the US taxes based on citizenship, not residency
Re: FATCA and the American expat panic
Hi,
If you are living in the US, then you either have to be a permanent resident or a citizen - and yes, you would pay taxes to the US under both conditions. So, you are right in saying that the US taxes on both residency AND citizenship. And the US is the only country (beside Eritrea) to do this.
US citizenship is an interesting thing because you can actually be a US citizen without ever having lived in the US. US citizenship is given to those born within the US or to those born to a US citizen outside the US. So, if your mother was born in the US, but moved to Finland at the age of two and then had you years later, you would be a US citizen and owe taxes to the US government on your 'foreign' income and 'foreign' bank accounts - although you never lived in the US.
Obviously if you are this person, it is unlikely you ever had a social security number or a US passport - so it is unlikely you will be 'caught out' ........ but I think you see the point.
If you are living in the US, then you either have to be a permanent resident or a citizen - and yes, you would pay taxes to the US under both conditions. So, you are right in saying that the US taxes on both residency AND citizenship. And the US is the only country (beside Eritrea) to do this.
US citizenship is an interesting thing because you can actually be a US citizen without ever having lived in the US. US citizenship is given to those born within the US or to those born to a US citizen outside the US. So, if your mother was born in the US, but moved to Finland at the age of two and then had you years later, you would be a US citizen and owe taxes to the US government on your 'foreign' income and 'foreign' bank accounts - although you never lived in the US.
Obviously if you are this person, it is unlikely you ever had a social security number or a US passport - so it is unlikely you will be 'caught out' ........ but I think you see the point.
Re: FATCA and the American expat panic
Just saw this in the Nordea website.I have an appointment for a mortgage loan next week. I wonder if Nordea will tell me to go somewhere else even though I have been banking there 7 years.
"Important information for US Persons
The offering, sale and/or distribution of many of the products or services described on this website are not intended to any US Persons. If you intend to obtain any product or service from Nordea that is described on this web site, you must first inform Nordea whether you are a US Person.
This website and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or a solicitation of any offer to sell any securities to US Persons. Any brokerage and investment advisory services described herein are not intended for US Persons. Furthermore, any solicitation on this web site of banking services (including accepting and/or soliciting deposits), insurance services, mortgage and/or consumer lending services or credit card services is not intended for US Persons, who are physically in the US.
“US Persons” are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed “US Persons” under certain rules."
http://www.nordea.fi/About+Nordea/Gener ... disclaimer
"Important information for US Persons
The offering, sale and/or distribution of many of the products or services described on this website are not intended to any US Persons. If you intend to obtain any product or service from Nordea that is described on this web site, you must first inform Nordea whether you are a US Person.
This website and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or a solicitation of any offer to sell any securities to US Persons. Any brokerage and investment advisory services described herein are not intended for US Persons. Furthermore, any solicitation on this web site of banking services (including accepting and/or soliciting deposits), insurance services, mortgage and/or consumer lending services or credit card services is not intended for US Persons, who are physically in the US.
“US Persons” are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed “US Persons” under certain rules."
http://www.nordea.fi/About+Nordea/Gener ... disclaimer
Re: FATCA and the American expat panic
Interesting 
http://www.pwc.com/us/en/financial-serv ... ml#finland
Final negotiations underway
The US Treasury announced on November 8, 2012 that US Treasury and Finland were in the process of finalizing an IGA and had hoped to conclude negotiations by the year end of 2012. On April 29, 2013, the Minister of Finance announced that Finland was in the process of negotiating an IGA with the United States. However, it appears no agreement has been finalized.
I guess it's a case of "You scratch my back and I'll scratch yours". Finland will no doubt get something in return for the IGA. Other wise it's all a bit "one-way". I mean, it's not as if those big American corporations (Starbucks, Amazon, Google etc) are queuing up to pay Company Tax in Europe... So, if European countries all sign the IGAs, then maybe the US will agree to collaborate in sorting out the transfer pricing issues and other tax avoidance schemes that American companies are abusing.
That doesn't help you lot much though.
http://www.pwc.com/us/en/financial-serv ... ml#finland
Final negotiations underway
The US Treasury announced on November 8, 2012 that US Treasury and Finland were in the process of finalizing an IGA and had hoped to conclude negotiations by the year end of 2012. On April 29, 2013, the Minister of Finance announced that Finland was in the process of negotiating an IGA with the United States. However, it appears no agreement has been finalized.
I guess it's a case of "You scratch my back and I'll scratch yours". Finland will no doubt get something in return for the IGA. Other wise it's all a bit "one-way". I mean, it's not as if those big American corporations (Starbucks, Amazon, Google etc) are queuing up to pay Company Tax in Europe... So, if European countries all sign the IGAs, then maybe the US will agree to collaborate in sorting out the transfer pricing issues and other tax avoidance schemes that American companies are abusing.
That doesn't help you lot much though.