Tuesday, July 29, 2014

FATCA

The realities of being an American expat abroad really hit home yesterday when I looked over my newly arrived bank statement and read the important note it contained:


FATCA.  The dreaded "agreement" between pretty much every country in the world and the USA to force banks in other countries to share the information of any bank account belonging to an American citizen or resident in an effort to "prevent" tax evasion.  For those Americans abroad who somehow haven't heard about this law or its effects on the banking world, or for those who don't know much about it, I suggest you do a brief internet search for more information.  I would provide links here but I am in a hurry, sitting in a McDonalds shortly before closing because we lost internet in a storm on Friday and still haven't gotten it back.  It's been a true delight for someone working from home..

Anyway, back to FATCA.  I first really heard about and read up on this law last year and have been dreading its implementation and uncertain consequences ever since.  So far I've remained hopeful as La Banque Postale hadn't informed me that they were closing my bank account, and as I didn't hear anything for so long, I started to forget about FATCA.  Until I got my bank statement in the mail and saw the note informing me that American citizens would be required to provide information about their "situation" to the bank as a result of this overreaching law.  Sigh.  Still, I suppose I should be thankful I still have an account.  Now we just have to decide how to handle Lionel's situation...should he still be considered an American "person" because of the 10-year green card he had received?  Or would the US have cancelled his green card by now?  The dilemmas...I guess we will make a final decision if La Banque Postale contacts him regarding his American "personhood." 

Though I honestly have much much much more to say about FATCA, its impact and my thoughts and feelings on it, I unfortunately don't have the time.  Not to mention I will be on vacation all of next week in Italy with friends and certainly won't have any time to blog.  So, I leave you with this parting question...what are your thoughts/feelings on FATCA and have you been affected by it yet?  And maybe when I get back (assuming I have internet by then) I will do a follow up post on FATCA (and this is where I imagine all my readers will run away screaming in terror because isn't the world of international banking just oh so interesting).

Bonne vacances!


15 comments:

  1. I haven't been declaring my taxes in the US for a couple years now because it's a real waste of time to fill out complicated forms to declare that I earned 12,000€ and already paid taxes on it (so waaayyy below the limit).
    That said, I'm hoping my nationality paperwork comes through soon so I can update it with the bank. Pretty much every French person I know thinks I will lose my American nationality when I become French, so I will infer that that is the case at the bank.

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    1. You will still be a US person by the bank as they will look at place of birth even if you register with your bank as a French national.

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    2. The French people you have been talking to are wrong, you don't lose your US nationality when you take French nationality. If you want to lose your US citizenship, you have to make a formal declaration at the embassy. Otherwise you are a dual citizen.

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    3. I would think your bank would be required to report your information regardless because, as stated above, just with your place of birth they would be suspicious, and then you just need one person who knows dual citizenship laws and they will figure out that you are probably still a US citizen.

      I do agree that it is a HUGE waste of time and energy to declare taxes every year for essentially no reason whatsoever. I am also WAY under the limit so I will never have to pay, I just have to continue wasting my time, stressing myself out and cowering in fear that if I made any mistake anywhere I may get hit with an obscenely large fine that I absolutely cannot afford to pay.

      In the end I plan to continue to declare (and get pissed off about it every year) and I imagine my bank will continue to report on me, even if one day I finally complete the nationality process and obtain French citizenship. They already know I'm American after all.

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    4. This is the most destructive and arrogance law. It will make America smaller in the future.
      We need to make a lot of noise to repeal this FXXTX law.

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  2. Lionel's green card makes him a 'US person' for tax purposes:

    http://www.irs.gov/publications/p519/ch01.html#en_US_2013_publink1000222120

    "... you remain a resident alien for tax purposes even if the USCIS would not recognize the validity of your green card because it is more than ten years old or because you have been absent from the United States for a period of time."

    The legal term for what the US does here is 'having it both ways.' Lionel should think about filing I-407 with the closest US embassy as soon as possible, although if he has held a green card for more than 8 years then you have to watch closely for the US 'exit tax' (google that -- odious as FATCA is, the exit tax is even worse, believe it or not...).

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    1. Ugh...I didn't realize he actually had to apply to abandon his US Resident status! This is just out of control! I thought I had read somewhere that if he is absent from the country for more than a year it is considered as abandoned. I will definitely have to look into this further and have him do whatever is necessary to get rid of that detestable little green card. No point in having him suffer from the overbearing American government's taxation policies when he does not live there and is not a citizen.

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  3. I think America needs to reform their tax system, so I don't have to declare in the US when I'm already declaring & paying here. Megalomaniacs. I have no idea whether my bank knows or cares I'm American or not (I have dual nationality) - I imagine everywhere I had to write it, I wrote both. But no word from them as of now.

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    1. I agree! The US definitely needs to reform their tax system. It is absolutely ridiculous that it is one of only two countries in the world that does citizenship-based taxation rather than residency-based. It is such a hassle and really in the end must be a huge waste of money to process a ton of tax declarations for people who don't actually have to pay any taxes because they live and work in another country and are under the limit. Unfortunately my bank is very well aware of the fact that I'm American.

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  4. I thought Fatca only applied to certain types of accounts (though since I have pretty much every type, I'm sure I'll get a letter soon from my bank!)

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    1. I believe FATCA applies to all bank accounts over which an American citizen / resident / person has signatory authority. So all personal accounts from what I understand. Unfortunately.

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  5. the FATCA applies to all accounts (current account, any savings long or short term, investment accounts...) believe me I whined the whole time I was filling out the stupid form. But I did it since it was due the end of June (no extensions possible). I could have dragged my feet (am French and registered with my bank as a French citizen, born in Switzerland so no way to trace me back to the US) but the minimum fine of $10,000 for not doing it (without malicious intent, if you avoid doing it the cost skyrockets!) scared me so I did it.
    Not only do you have to declare ALL accounts held in your name but you also have to declare any joint account AND any accounts where you are a signatory (mandataire)!! Completely insane if you ask me. Why should the US government know how much money my French partner has? Anyway once I figured out the website (Chrome isn't adaptable so don't spend hours trying to figure out why Adobe doesn't work even though you've just gotten the newest version) it didn't take me more than 15min to do.

    Still peeves me to know end that even though I have no ties to the US anymore (aside from my passport) I'm still legally required to declare taxes and bank accounts. Honestly trying to hunt down the tax evaders is just going to make more people give up their citizenship ... although since you have to pay a tax to give up your passport maybe they don't care afterall?

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    1. I agree. It really makes me angry that I have to declare taxes and my bank accounts every year even though I don't live or work in the US. Yes, I have more ties to the US than you do since my family is there, but that shouldn't be a reason why I need to declare taxes for income earned abroad while living abroad and on which I already pay taxes in my country of residency.

      Luckily Lionel and I closed our joint French account when we moved to the US and we haven't opened a new one since we moved back to France. At this point, I have no intention of opening another joint account. I'm going to do everything in my power to protect him from the overreaching arms of my government. Falling in love with and marrying an American shouldn't be used as some sort of money-grabbing, overtaxing punishment on the part of the US to make even those who are not citizens suffer.

      I also made sure to get my form filled out online before the end of June to report my bank accounts because I, too, am terrified of the minimum fine. I don't want my US birth and inevitable citizenship to destroy our financial security!

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  6. My family is still in the states too, I meant to financial ties.

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  7. Hi

    This FATCA by Obama is so stupid. It is like communism.
    We need to let Americans knows this is not only about expat and fat cats. It is about average Americans and the big brother is spying on your bank balances.
    Vote Republican for President in 2016 as only Republican like Rand Paul will kill this law.

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