[Dr. Howard]

I should probably keep these posts on the same thread as I've thrown out FATCA updates in the past.

If you are not familiar with it, its a system where foreign banks have agreed to act like US entities, reporting on and witholding tax on US persons' abroad.

Today I got a survey from my foreign bank asking if I was a US person and if I was to complete a W9 (aka provide my US social security #) form to them.

Its something good to remember for those US citizens abroad, the developed world is now essentially borderless when it comes to the US making sure its citizens pay tax and knowing where their assets are. This is the second step after requiring merchant companies like paypal and card processors to report income on behalf of clients via 1099-k forms.

[VincentVinturi]

Fuck.

So does this invalidate the foreign earned income exclusion?

I was literally going to go over to Hong Kong next month to set up a LTD corp and HSBC account to take advantage of the exclusion.

But if I'm not mistaken, you were already required to report foreign held moneys in banks abroad...

[Dr. Howard]

No, it doesn't invalidate the exclusion. HSBC will just be reporting on what you are doing, they may or may not withold tax on it and then you'd have to file a US return to get a refund of it via exclusion. There are some other guys on there that would know better than I .

[VincentVinturi]

Nice. So Uncle Sam can earn interest on my money that I earned abroad and I can suck it in the meanwhile. Time to start looking at second passports fellas.

[Soothesayer]

I've also looked into getting a Canadian passport (Perm. Resident here). I can see my g/f's passport has her place of birth, but...I've heard you can request this information to be left blank. Anyone else know? I would think having "Longview, Texas" as a birthplace on a Canadian passport will be a problem if opening an account overseas since a lot of banks will be flat out turning away U.S. citizens. No business, even banks, need to deal with the millions it'll cost to upgrade their software systems.

[Rubio93]

I was rejected by one bank here in Colombia, accepted flat out by another. But the recent changes to the tax code are affecting me big-time as well....

[VincentVinturi]

Ok, here are some of the facts about this law from a Forbes.com article:

Source: http://www.forbes.com/sites/greatspecula...tca-hoops/

Quote:

One of the most insidious measures to keep your capital from fleeing overseas became law in spring 2010. Almost no one noticed. It was tucked into a “jobs bill.”

Maybe you’ve heard of it by now, H.R. 2847, the Foreign Account Tax Compliance Act, or FATCA. Its stated aim is to crack down on moneybags “tax evaders.” One of its key provisions went into effect July 1, 2014.

Since one week ago, FATCA presents you a stark choice if you hold more than $50,000 in “foreign financial assets”: You can bank at a foreign bank that coughs up information about account balances, deposits and withdrawals to the IRS… or else you can subject yourself to a 30% withholding tax on the income and gross proceeds from any U.S. assets in your foreign account. Should any of this violate local laws, the bank is required to close your account.

It’s become challenging at best and impossible at worst for the 7.6 million Americans living overseas to maintain a bank account where they live. Even the German giant Deutsche Bank recently shut down the account of Carrie Walczak, a woman from upstate New York living in Germany. “If eventually other or all banks follow Deutsche Bank’s lead, it could make my life very difficult,” she tells the Reuters newswire.

Alas, that’s not all FATCA does. Effective with tax year 2011, the law beefed up the reporting requirements if you hold “bank, brokerage or ‘other’” accounts with a total balance of $10,000 or more. You have to put it on your Form 1040 Schedule B for the IRS, and you have to submit a Form TD F 90-22.1, otherwise known as a Foreign Bank Account Report, or FBAR, to the U.S. Treasury.

If your foreign assets total $50,000 or more, the reporting requirements are stiffer. You must report ownership of any non-U.S. securities, any non-U.S. financial instrument or contract held for investment from a foreign issuer (think life insurance or an annuity) and any ownership stake in a foreign entity.

“It’s not just the super-rich doing it,” affirms David McKeegan of Hong Kong-based Greenback Expat Tax Services. “We’re talking average, middle-class people, people teaching English as a second language and doing freelance jobs making $30,000–50,000 a year, simply because of the fact that they can’t open locked bank accounts.”

In early June, the Treasury Department issued a press release crowing that more than 77,000 “foreign financial institutions” have agreed to cough up information about their U.S. account holders to the IRS. Those banks and brokerages are located in nearly 70 countries — including one-time “tax havens” like Switzerland, the Cayman Islands and the Bahamas.

It seems like a lot of hoopla for not a lot of revenue. The congressional Joint Committee on Taxation figures FATCA will generate $8.7 billion over 10 years. So that’s an average of $870 million in a single year, or a whopping 0.18% of this year’s federal budget deficit.

I’m no conspiracy theorist, but upon examining the evidence it’s easy to conclude FATCA was never about raising revenue or cracking down on “tax cheats.” It’s about control. It’s about keeping you trapped in U.S. banks and the U.S. dollar if a Cyprus-like crisis comes America’s way.

If you want to park some of your assets overseas where you’re insulated from a sinking U.S. dollar and shaky U.S. banks but you can’t afford an army of lawyers and accountants, you have three choices.

#1 A small bank account. You can still keep a foreign bank account, (assuming you can find a foreign bank that will take your money), and as long as your total “foreign financial assets” are $10,000 or less, it’s not reportable

#2 Foreign real estate. This does not qualify as a “foreign financial asset.” There are no tax or reporting rules other than those that apply to your ownership of property stateside.

#3 Gold. If you keep it in a safe-deposit box in an overseas bank, this too does not qualify as a “foreign financial asset.”

[DaveR]

(07-09-2014 01:04 PM)VincentVinturi Wrote:  

I was literally going to go over to Hong Kong next month to set up a LTD corp and HSBC account to take advantage of the exclusion.

I don't think FATCA applies to foreign company accounts. I'm involved in that industry and won't be reporting anything to the IRS. I don't deal with personal accounts for that reason.

You can appoint a nominee owner and director if HSBC indicates that having a US citizen company owner would be a problem for them.

Are you using AsiaBS in HK?

[rekruler]

So let's get this straight. You don't live in the US. You don't earn money in the US. You don't own any assets in the US nor any assets denominated in the US currency. Yet you must still pay X% of your income/capital gains that is NOT earned in the US to the US government else face decades in federal prison. It kinda sounds you're a slave and the US government straight out owns you.

Thankfully, I was not born in the US and have dual citizenship, so I could theoretically just renounce this bitch once it becomes financially beneficial to do so. But who knows what the future will bring. As of today, the US is bullying the rest of the world to keep track of US passport holders' financial information and to extradite those who fall afoul of IRS dictums. The world is not complying with these demands because the demands are just, but because the US is applying bullying tactics. It is not a stretch of the imagination to think that in the future, the US gov. will change its criteria to apply not only to those who hold US passports, but also to those who have EVER held a US passport. The current system is already a fucking travesty, expanding it to cover those who renounce their citizenship is not such a huge change.

[Exiled Princeling]

If you're an American citizen, it behooves you to get a 2nd passport because things are only going to get worse. Once you've done that, it's fairly easy to avoid paying any taxes. Offshore corp in 1 location(HK) while living in another(Thailand).

I find the situation rather despicable frankly. Taxes are supposed to be the cost of public services rendered in your home country. If you're not living in America, then what services are provided? The only thing Unlcle Sam does for me is create ill-will towards Americans all over the planet. I don't tell me people I'm American anymore. I've even changed my accent to accommodate this.

[Peregrine]

(07-09-2014 04:14 PM)Soothesayer Wrote:  

I've also looked into getting a Canadian passport (Perm. Resident here). I can see my g/f's passport has her place of birth, but...I've heard you can request this information to be left blank. Anyone else know?

Yes, that is correct.

[SlickyBoy]

Getting a second passport does you little good in terms of avoiding FACTA unless you also renounce your US citizenship, since you would still also be a US citizen and subject to the IRS bullying. The USA, as you might imagine, makes this difficult to do.

Renouncing is not fast or easy and it cannot be for tax purposes (at least not officially, though Eduardo Sevarin essentially did this), so bear that in mind if you ever consider doing so. The last thing they want to do is deprive themselves of even a small revenue stream - someone has to pay for all of those newly arrived refugees and their benefits, right?

Sometimes I think I'd like to donate my citizenship to one of those new Islamic arrivals if they promise to live in a white liberal neighborhood and stir up some shit.

[Soothesayer]

I've looked into the 'leaving the birthplace blank' option for Canadian passports. It's a sham.

While the Canadian charter dictates that no one, including permanent residents, may be discriminated against due to national origin (or residence), leaving it blank causes untold headaches when flying internationally. It raises suspicion because that is the ONLY blank thing on the entire passport. The part that says 'place of birth' is still there. So like the anti-male prostitution law (protects the woman, punishes the man), Canada once again has made a bad situation worse.

The guy at the passport office also told me that you cannot use a town in your new country with the same name as the old. So say you were born in Bunkie, Louisiana, and there just so happens to be a town called Bunkie in Alberta. So you think, hey I'll just put that in there and howdy Joe everything is fine.

It won't fly since you have to lie on your passport application. A big no-no in Canada.

FATCA should be the first thing Trump repeals since at it's core it is taxation *without* representation, and I encourage anyone to fight it tooth and nail. Do not 'register' for anything related to FATCA because at that point you will be marked for life the same as any shop owner who gets a visit from Tony for his monthly 'protection' money. Better to hide from the Mafia than live under their boot.