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Rumor has it (I can't find the source again) that US embassies now report every passport application to the IRS.
> Pick a different number if your accountant tells you different.
My accountant? This is an example of the glaring "incompatibilities" between the US tax system and that of other countries. In my country nobody has an accountant unless they're a millionaire or owns a business. It's insanely expensive to have one. Using an accountant every year is not a solution. But I appreciate your input :-)
> 3) Here's what you're going to do for each year you filed: take a copy of your $NATION taxes. Find the gross earned income number. Convert to USD using the yearly average exchange rate, which you can find published on
Yes, but there's still the vast minefield that is non-earned-income money. This is a substantial amount in many European social democracies.
> (unless you're making over $85k a year, which I think is unlikely in Europe as a researcher unless I miss my guess)
Not at all. It's true in my case, but in the private sector $85k for a researcher would be considered low in my country. Again, it's an absolutely impossible situation to work from a fixed dollar amount that has no connection to the cost of living in a given country. Some European (an other) countries have an insanely higher cost of living than the US.
Your reading of the situation is pretty close to my first impression - "rather reasonable - just a lot of paperwork". But it's a vast minefield as soon as you start reading the fine print. I do really appreciate your input, though :-)
Sadly, it's not that simple!
Suppose you in the year 2013 have 200k units of Foreign Currency X (FCX) in your non-US savings account, and the money has never had anything to do with the US (it's all been earned and saved abroad, where you live and work). Let's say the conversion rate in 2013 is 2 FCX to 1 USD. OK, so you report 100k USD on your FBAR. Let's say 2013 is a bad year for you, so you haven't been able to put anything in your savings account - in 2014 it still stands at 200k FCX. But lo and behold, the value of the USD has fallen against the FCX, so the dollar equivalent in your account has now in 2014 become 150k USD. This means [1] that you have to put 150k USD on your FBAR and that the difference of 50k USD is taxable as capital gains. This is utterly, entirely, completely insane! It's nothing short of international robbery. (I repeat: I'm not talking about money earned in or brought into or out of the US here - I would understand if it were taxed. This money has never had anything to do with the US, and has never been converted from one currency to another, except on the FBAR form.)
This cannot be OK. Not at all. I understand that the laws were made for catching US money hid away overseas. That goal makes perfect sense. But the way it works now is just insane.
It's (sort of) that simple for earned income. In another country you may throughout your life receive money from a wide range of sources (health benefits, health recovery, child benefits, pensions, scholarships, the list goes on...) - the US tax status on these is incredibly complex at best. The punishments for making a mistake can be severe.
Some of us are US citizens born abroad. We are the children of one or two US parents, born outside the US. We have lived our entire lives as citizens of another country, and our ties to the US may be as slim as having been there on vacation a couple of times. We are still subject to all of this. And while it is true that most (all?) won't be double-taxed, the reporting requirements are so complex and so strict - and made all the more complicated by incompatibilities of the tax codes of our native countries and that of the US - that it's almost impossible not to make a mistake. And mistakes are punished severely - at least in theory. Even trying to evaluate whether university scholarships in my country is taxable by the US (an obscene idea on the face of it) seems to take a lawyer or accountant. Where does it end? What about child benefits? Pensions?
Yes, we could renounce our US citizenships when we turned 18. In my case, however, I was not told I was a US citizen. It's now more than a decade on, and I've never filed with the IRS because my US parent did not tell me I was a citizen until recently. What on Earth do I do? So far, I've frozen in place and not dared do anything. I am not a US person in any common sense of the word, but I feel entirely trapped by that foreign country. The benefits of a US citizenship that have come up in this thread have an entirely opposite sign for me: I'm a researcher, and would love to spend significant time at US institutions, but now I can't - I can't stay beyond a tourist visa as a foreigner because as far as the US is concerned I'm not a foreigner. And I can't travel on a US passport because I don't know what will happen to me if I get one and do. And I can't fix things with the IRS (which I'd love to do), because I have no idea how many laws I've accidentally and unknowingly broken. I'm sorry that I have, and I wish I hadn't, but how could I possibly have known? You might say that my parent should have told me - and I agree - but that didn't happen. While ignorance of the law is no excuse normally, I certainly am not going to do anything that places me in danger (financially or otherwise) from a foreign nation - so here I am, frozen in limbo. As for any social service the US might provide, I can tell you that every one of these is provided better and more generously by my liberal European homeland. I don't want anything from the US - I only want to either be let go and leave the club, or be treated fairly. Either one is fine by me, but the current situation is not.
Incidentally, any pointers from HN would be much appreciated. I know my status quo of "do nothing, sit still" won't be good in the long run, but I also have no damn idea on how to approach the matter.
Let me summarize again: I've never earned a dollar in the US. I've never received a dollar from any US entity, save the odd birthday present from relatives as a kid. I've never been to the US for more than a couple of weeks at a time - and only as a tourist. I've never voted in the US. I've never brought money into or out of the US - except ordinary tourist amounts. I pay (comparatively) high taxes where I live - in my country, my home, which is not the US. I never knew I was a US citizen. Now all of these benefits that people bring up apply to me with a negative sign. I'd gladly give up my US citizenship - but you can't unless you've proven that you're good with the IRS going back 5 years, and that you're not renouncing for tax reasons. As for that latter part - some might say I am... I am, afterall, trying to avoid being haunted by a foreign nation's tax collecting agency for the rest of my life. Is that renouncing for tax reasons? God knows...
(Sorry for the rant - this has just constanly occupied 10% of my head for a while, and it's not like there's a lot of people nearby in the same situation to talk to... any pointers from you guys would be great).
[1] https://en.wikipedia.org/wiki/International_taxation#Citizen...