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Old 20-08-2011, 19:24   #1
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IRS Out to Get US Citizens Living Offshore

If you are a US citizen, but live out of the US, be reminded you are responsible to report your taxes on your world income.

OK, most probably know that.

But what if you were born in the US (making you a citizen) and have lived outside the States the last 50 years since you were 1 year old? What if you have dual citizenship?

Uncle Sam still wants his pound of flesh.

The IRS has an amnesty program that expires on Aug. 31, 2011.

You need to disclose foreign bank accounts. Here is a news story that simplifies the official version.

You may not like it, but that is the US law. Due to tax treaties with various countries, even if you never want to go into the US, you may still be caught in the web.

Please let people you know who may fall under such a status know.... it may save them thousands.
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Old 20-08-2011, 19:53   #2
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Re: IRS Out to Get US Citizens Living Offshore

There have been financial stories in the news every year of more and more "dual-status" folks who live permanently in another country other than the USA - who renounce their USA citizenship to stop the IRS bugging them.
More Rich Americans Renounce U.S. Citizenship for Lower Taxes - DailyFinance
"As many as 743 people with American citizenship or legal resident status renounced their U.S. citizenship in 2009 -- three times as many as in 2008 -- which resulted in a waiting list for people to say farewell to the red, white and blue at the U.S. Embassy in London, according to the Financial Times."
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Old 20-08-2011, 22:03   #3
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Re: IRS Out to Get US Citizens Living Offshore

I don't think that the US recognizes dual citizenship?
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Old 20-08-2011, 22:08   #4
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Re: IRS Out to Get US Citizens Living Offshore

It does, my wife has dual citizenship. She was born in another country and was not required to renounce citizenship in her country of birth in order to become a citizen here.
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Old 20-08-2011, 22:11   #5
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Re: IRS Out to Get US Citizens Living Offshore

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I don't think that the US recognizes dual citizenship?
They do if it's Canadian! The USA and Canada even share Social Security obligations under certain conditions. My wife has two passports.
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Old 21-08-2011, 06:59   #6
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Re: IRS Out to Get US Citizens Living Offshore

I have even met friends with "triple" citizenships. You would be hard pressed in these modern days to find a country that does not allow "dual' or more citizenships. That said, there are obviously logical restrictions in that you cannot maintain a citizenship and actively be fighting (armed type) against that citizenship.
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Old 21-08-2011, 07:15   #7
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Re: IRS Out to Get US Citizens Living Offshore

Quote:
Originally Posted by avb3 View Post
If you are a US citizen, but live out of the US, be reminded you are responsible to report your taxes on your world income.

OK, most probably know that.

But what if you were born in the US (making you a citizen) and have lived outside the States the last 50 years since you were 1 year old? What if you have dual citizenship?

Uncle Sam still wants his pound of flesh.

The IRS has an amnesty program that expires on Aug. 31, 2011.

You need to disclose foreign bank accounts. Here is a news story that simplifies the official version.

You may not like it, but that is the US law. Due to tax treaties with various countries, even if you never want to go into the US, you may still be caught in the web.

Please let people you know who may fall under such a status know.... it may save them thousands.
What you say is true about income taxes but this is more about reporting any foreign bank accounts you have control over ... this form http://www.irs.gov/pub/irs-pdf/f90221.pdf

We in the profession (CPA's) have been hearing about this the last couple years. I haven't had it happen to any of my clients but the word is the penalties can be very, very steep. And you don't have to live overseas at all, you just need to have control of an overseas account. And control means even accounts that are not yours but you have signature authority over.
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Old 21-08-2011, 07:16   #8
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Re: IRS Out to Get US Citizens Living Offshore

Or you could just pay your taxes.

Hmmm... renouncing my citizenship and hoping for something better, or just pay taxes like everyone else.

Newsflash, folks. Other "Western" countries will and do tax you too. In fact, most tax way more than the US. But I'm sure the cruisers on here already know this.
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Old 21-08-2011, 08:34   #9
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Re: IRS Out to Get US Citizens Living Offshore

The U.S. tax code allows citizens living and working abroad to exclude a substantial portion of overseas-earned income from taxation provided certain conditions are met. The amount changes from year to year, but was $91,400 in 2009.

Additionally, the requirement to report funds held in bank accounts overseas doesn't apply if the account balance never exceeds $10,000.

My wife holds dual citizenship (U.S. & Brazil) but hasn't lived in the U.S. since she was five years old. She was blissfully unaware that she was required to file tax returns until she received a notice from the IRS a couple of years ago. We had to file several years-worth of returns, but there was no tax liability and no penalty as all of her income came from overseas sources.

The IRS agent we spoke with about this was very professional, very courteous and gave us clear instructions on how to proceed. At no time did I ever feel that he was "out to get" us.

I've lived and worked abroad for the past 12 years and have always been scrupulous about observing qualifying requirements and filing accurate, timely returns. While I may be on some sort of "watch this guy" list as a result of my expat status, I have to assume the IRS is more interested in identifying real tax cheats rather than trying to punish those claiming legitimate exemptions.

This does not, of course, explain those black helicopters hovering outside the house...or does it...
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Old 21-08-2011, 08:35   #10
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Re: IRS Out to Get US Citizens Living Offshore

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It does, my wife has dual citizenship. She was born in another country and was not required to renounce citizenship in her country of birth in order to become a citizen here.
Right, but doesn't the USA consider her an American citizen no matter where else she can claim it?
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Old 21-08-2011, 09:26   #11
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Re: IRS Out to Get US Citizens Living Offshore

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Right, but doesn't the USA consider her an American citizen no matter where else she can claim it?
Huh? Dual citizenship means you ARE a citizen of each country and obligated to follow the requirements of each country.
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Old 21-08-2011, 09:54   #12
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Re: IRS Out to Get US Citizens Living Offshore

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Right, but doesn't the USA consider her an American citizen no matter where else she can claim it?
Yes, she is both. Romania is her country of birth and would be subject to US taxes if she and I were to move to Romania, which we are actually considering doing after retiring. The cost of living is much less there and there are freedoms and things which can be done there which have been legislated out of existence in the US. I can become a Romanian citizen after five years of living there because I am her husband. We would then both renounce our US citizenships so we cannot be taxed by the US. This is a big maybe, but still a consideration.
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Old 21-08-2011, 10:01   #13
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Re: IRS Out to Get US Citizens Living Offshore

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Yes, she is both. Romania is her country of birth and would be subject to US taxes if she and I were to move to Romania, which we are actually considering doing after retiring. The cost of living is much less there and there are freedoms and things which can be done there which have been legislated out of existence in the US. I can become a Romanian citizen after five years of living there because I am her husband. We would then both renounce our US citizenships so we cannot be taxed by the US. This is a big maybe, but still a consideration.
Right. Good luck with all that. Big decision.
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Old 21-08-2011, 10:25   #14
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Re: IRS Out to Get US Citizens Living Offshore

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Yes, she is both. Romania is her country of birth and would be subject to US taxes if she and I were to move to Romania, which we are actually considering doing after retiring. The cost of living is much less there and there are freedoms and things which can be done there which have been legislated out of existence in the US. I can become a Romanian citizen after five years of living there because I am her husband. We would then both renounce our US citizenships so we cannot be taxed by the US. This is a big maybe, but still a consideration.
Dont see how anyone could put a price on not being American!......Not even a consideration.No amount of money for the love of my country..and im native american and at the very bottom of the pecking order of socio-status ie,highest un-employment,highest alcoholisum rate,most uneducated,most of all the negative things you can think of per-capita and we (native americans)have it...but its better to be the lowest american than the highest of anyone else...of course my thoughts might have something to do with the highest per-capita of the un-educated...DVC
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Old 21-08-2011, 10:32   #15
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Re: IRS Out to Get US Citizens Living Offshore

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. . . I can become a Romanian citizen after five years of living there because I am her husband. We would then both renounce our US citizenships so we cannot be taxed by the US. This is a big maybe, but still a consideration.
Although there are an increasing amount of people doing just that there are considerable "other" considerations involved beyond just the tax reporting hassles. One major advantage of holding a USA citizenship is the freedom of movement internationally compared to citizens of other countries. And if ever you wish to (god only knows why) visit or return to the USA it really gets complicated. Then there are things like social security, medicare, and a raft of other seemingly "minor" things that can combine together to maybe make the permanent decision to "renounce" not be so advantageous after all. It obvious takes a lot of careful research and decisions before "burning that bridge."
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