There’s a question though about whether voting in state and local elections might make you liable for state and local taxes. It varies from state to state. When I left California for Ireland 14 years ago I looked into it and was advised that I could incur tax liability if I continued to vote in state and local elections, so I don’t. If you’re not planning on ever going back it’s probably no biggie, but my desire to vote in those elections doesn’t outweigh my desire not to be hit with a tax bill when I do eventually go back, so I don’t.
I honestly didn’t know about this. In 1996, shortly after I’d returned from 2 years living overseas, I got a call from the IRS asking why I hadn’t filed taxes for 1995. I explained I had not once set foot in the USA during that year, and I had made no income in the USA during that year either. They were like, oh, OK. We hung up, and that was it! They never mentioned it to me again.
My state residency for voting purposes is Texas, which has no state income tax. But I’ve never heard of anyone over here encountering problems with being liable for state or local taxes just for voting.
Good to know. Just in case, maybe I’ll give this year’s gubernatorial election a miss.
How about an accountant or other adviser, non-lawyer, familiar with US tax matters? Would they cost the same? Other than that, I’m afraid I’ve got nothing. I’m not sure I would contact the IRS directly like Harry Rolnick in an earlier post above did (he just went ahead and backfiled without consulting the IRS, but he had an accountant help him get it all together.)
Update: Fatca took effect this past Tuesday. For those months that I use one of my American credit cards, I buy a bank draft in US dollars from a local bank and mail it to my credit-card company in the US. Now because of Fatca, there are extra forms to fill out even if you don’t even have an account at the bank but instead just walked in off the street. On one form, you must detail if you are an American and give details about what you need these dollars for and whether you are liable to US taxes. If you are an American, there’s another form to be filled out. All go to the US authorities.
I’m all for catching tax cheats, but this really is madness.
Ownership of a property may not be a problem at all…it’s the income you receive that counts. All income-- from all sources-- has to be reported to the IRS, whether it’s a simple salary ,interest income, stock dividends, rent, or even illegal income like drug dealing. If you are receiving rent payments from tenants on your property —that’s income, and it has to be reported (unless it’s very,very small–like under $1000 per year, or so.)
For the past 30 years, it’s been easy to slip under the radar, and the IRS ignored small fish.
But the world is computerized now, and data bases talk to each other easily, in a way that was unknown just a few years ago.(Unlike the old paper 1040 forms, the new FACTA form(called FBAR form 114) cannot be filed on paper—it is online only.)
Because of FACTA, your bank- in whatever country you live in- is almost certainly notifying the IRS that you exist and your accounts have a value of $XXXX.
The IRS computer will notice a discrepancy what the bank has reported, and what you have reported (or not reported at all).
You don’t need a tax lawyer–but you do need a professional accountant with American accreditation and experience in filing IRS tax forms for overseas residents. Don’t panic—but do get professional advice. The accountant will know how to file using a special procedure for citizens who haven’t filed in the past.
FACTA also has to do with reporting assets held abroad. A USA property may not be of interest to the IRS in that regard. Or any case… Unless, as mentioned, it generates income. - IANAAccountant - But generally you can arrange mortgage, maintenance costs, etc. such that the cash income out of the property is $0?
Canada apparently came to some agreement with the USA where they passed their own law to enforce FACTA, thus exempting the banks from any liability for sharing private information with a foreign government.
It is only true if there is an agreement with American authorities. This is the case in some of the EU but in many of the jurisdictions the banking laws forbid this and there is not yet the agreement with US, so the data sharing would be in violation of the national laws, whatever the Americans want. A local bank can not risk to comply with American laws when it place it in jeapordy with national law.
It is for this reason many of the institutions would prefer to rid themselves of anyone who seems American, for it is not the usual case that they verify if someone is American and the reporting systems for the compliance with the Americans is highly expensive for little value to them.
Why the american government is blind to the problems it is causing over small accounts is puzzling to many who see this happening. They had no care or no understanding of others banking and privacy laws in the applicaiton of their law to foreign countries. It is hard to imagine what american reaciton would be to this if in another direction.
This story seems to indicate that every country has now signed an agreement with the US (or at least, every country that wants to do banking business with the US):
“Many countries strongly objected to these regulations and put up a lot of resistance when the IRS began to discuss enforcing Fatca globally. However, every country has now caved in after venting their displeasure.”
It also contains the interesting fact that the US and Eritrea are the only two countries in the world that tax their citizens who are living abroad.
The United States is one of the only countries that grants unconditional birthright citizenship. Consider the OP’s great-uncle. He was born in the United States, lived here for three days, departed when he was only four days old, and never returned to the United States. But under American law, he was entitled to claim American citizenship at any point in his life. He could have shown up in the United States on his hundredth birthday and invoked his lifelong citizenship.
So while many countries don’t tax their citizens living abroad, they often don’t give citizenship to people living abroad either. If Great Uncle Drake had been born in Thailand, he wouldn’t have owed any taxes. But he wouldn’t have been a Thai citizen either.
I’m not sure this is the same thing. We’re talking about people who are citizens, not people who could have or would have been citizens. If you are a British citizen, today, you’re not going to be taxed for money made abroad. Same with every other country but two.
Correction. It’s not “many countries” that don’t tax their citizens living abroad. It is all countries. Except two. US and, IIRC, Eritrea.
IIRC? Has it been that long since you read post #50?
Missed it. You get the kudos for mentioning it first. 'Grats.
Eritrea has come under fire in Canada for extorting, or taxing as they call it, their ex-residents even when they are now Canadian citizens. Apparently, if they fail to pay the necessary “taxes”, despite no longer living in Eritrea, the authorities take it out on their extended family back home. At least the USA does not seize the assets of relatives, yet - unless they can presume the money came from a source who owed taxes.
Canada grants unconditional citizenship to those born in Canada, but does not tax them abroad. So if the situation were reversed, and Great-uncle Drake had been born in Canada and left after 3 days, never to return, Canada would not attempt to tax his income.
So are you guys arguing that many means a lot and a few means more than one? If so, I’m not disagreeing.
Couple issues to clarify. Tax is owed on income generated by property, true.
FATCA and FBAR are two different things with different forms to fill out, thought some of the information may be overlapping. FBAR filings are made on form 114. FATCA filing is on form 8938.
FATCA and FBAR require disclosure of assets held in a foreign financial institution (outside of US) regardless of whether it generates income or not. Failure to make proper disclosures could result in civil and criminal penalties even if no tax was owed.
If you are a US citizen residing abroad you do not need to disclose assets held in the US on a FBAR or FATCA filing. You only need to disclose income generated by such assets as a normal part of filing your income taxes.
There are two systems of compliance that foreign financial institutions might use. One system has the bank reporting directly to the US IRS. The other system has the bank reporting to a government agency in its country. That agency then makes the report to the IRS on behalf of financial institutions in its country. Generally the decision of which system to use is made on a national level - the individual financial institution having no choice in the matter.
That is not at all true.
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False, it is very common to be able to claim a descent based citizenship among the EU and even many of the Maghrebine countries, and this claim without residency back to the grandparents or sometimes even farther. And not taxation comes from this unless resident.
There are many myths about other countries it seems.