This is my first year to be “self-employed.” I guess now have to see how to manage this new phase of taxes.
I can’t even hope for RBT. We are so far down the priority ladder…and we are all lumped into “tax avoiders” so no one wants to listen.
Ahhhh no wonder it got you by surprise, lucky your accountant also knows his stuff, that is great! But yes, I am sure it was an unpleasant surprise that you are living abroad and still have to pay US taxes on money earned in Taiwan! It made me go WTF years ago as well. Don’t know if I will see anything from social security like you said, and medicare cannot use that overseas I think, so 7.5% down the drain, and the other 7.5% may very well be down the drain too… Kind of makes you wonder…
RBT is a pipe dream. The good thing is many people are finally starting to realize the problems, and many lawsuits over FATCA. Not sure what will become of it all, but glad to see some people standing up for us and against unconstitutional laws.
Jeff,
Just a quick question that I am curious about. I am not self employed, but was astounded that those in Taiwan that are self=employed have to pay Social Security withholding tax !!! Now, before I moved here, I was self employed in the US. I had to pay the withholding tax there, but had to do it QUARTERLY ( along with the other taxes ). Do they require those living abroad that are self employed to file quarterly ? If they don’t make a specific exemption for those living overseas, this may be another trap they have set. People living overseas that are self employed are filing once a year, all the while believing they are following the law. Then , all of a sudden the IRS informs you ( years later ) that you have not been filing quarterly, as required, and hits you with a huge fine.
[quote=“cryptomc”]Jeff,
Just a quick question that I am curious about. I am not self employed, but was astounded that those in Taiwan that are self=employed have to pay Social Security withholding tax !!! Now, before I moved here, I was self employed in the US. I had to pay the withholding tax there, but had to do it QUARTERLY ( along with the other taxes ). Do they require those living abroad that are self employed to file quarterly ? If they don’t make a specific exemption for those living overseas, this may be another trap they have set. People living overseas that are self employed are filing once a year, all the while believing they are following the law. Then , all of a sudden the IRS informs you ( years later ) that you have not been filing quarterly, as required, and hits you with a huge fine.[/quote]
Yep, we have to pay self-employment and medicare, it’s around 15%. Self-employment tax is on world-wide income, including even if your business account is in the US but living in another country.
As to your question, yep you still have to do the quarterly stuff. I always forget so I end up paying a small penalty and interest on it. It’s not terrible, but still. I always forget. But to those in Taiwan who are self-employed, I would recommend signing up for the EFTPS, because you can pay online instead of sending a check. I am not sure that I would call it a trap, but, I do think the IRS needs to send a letter to EVERY tax payer living abroad and EXPLAIN clearly the tax rules, but of course they won’t do that. I tell my accountant when I make a payment, so he already knows that I will end up paying interest and penalties for not paying quarterly. As I don’t know my income every year, I have to estimate how much I will make so that I can make an appropriate payment. I have gotten to the point where the beginning of next year I will pay 50-75% to the IRS in advance so I don’t have to pay those fees anymore. It’s quite a bit of money, but… in the end, at least I am not forgetting to do it.
It is possible that they could come back and slam you years later for not paying quarterly if your accountant doesn’t catch it. I’ve been self-employed for years, and I think I’m usually hit with those penalties because I fail to remember to pay quarterly. But you are right, it is something for people to consider.
Yesterday I went to NanShan insurance office to change my address. The service lady had instructions to check with the main office to see if I (an American) needed to fill out any FATCA related documents. I had to wait while the main office checked what type of insurance I bought. Seems the insurance I have has no investment related elements so I was not required to fill out any other documents beyond changing address.
I’m just curious why you are asking these sorts of questions at all? They don’t ask you probably shouldn’t ask either… If you are supposed to do it and they didn’t ask you then it is the bank’s issue not yours, and FATCA has nothing to do with your filing requirements. You only need to worry about FBAR as far as I know. If in doubt ask your accountant. 
JeffG…are you referring to my insurance case? I did not ask them anything. I just went to change my address to my new house and the service lady said she had instructions from main office to check any American’s details to confirm no FATCA related documents need to fill out.
Oh sorry I misread that, it was her that asked you not you that asked her, sorry about that, my mistake. 
But seems there weren’t any documents to fill out, which is good news.
No problem.
Just is discouraging to bump into FATCA again.
We will be bumping in to it everywhere unfortunately. If you are not a member of ACA yet, I encourage you and all others to do it, they could use money to continue our cause. And force in numbers!
I found this article some time ago. Seems to me there are still options with banks that have no US investments. If a bank doesn’t invest there, they can’t be penalized:
m.chinapost.com.tw/taiwan/2014/0 … utions.htm
Yes, I have talked about this article before. The problem is from what I understand is that these five banks are now getting together and trying to figure out how they can comply with FATCA. All of these banks can offer US dollar accounts, so in some ways they are still doing business in USD, how they are able to get around FATCA I am not quite understanding. But things might eventually change if and when Taiwan signs the IGA.
My understanding is that the only penalty for not complying is a 30% tax on US assets. If the bank has no assets in the US, then no penalty is possible; therefore, they have no incentive to comply, so I’m not sure why they would try to, especially given that the Taiwanese government says they are exempt.
My understanding is that the only penalty for not complying is a 30% tax on US assets. If the bank has no assets in the US, then no penalty is possible; therefore, they have no incentive to comply, so I’m not sure why they would try to, especially given that the Taiwanese government says they are exempt.[/quote]
Well that is not quite true, although with how complicated FATCA is no one really knows for sure how it will all work, but as I have been looking at this for a few years it appears to me that any payments made will be docked 30% if the bank is not in compliance with FATCA regulations. bloomberg.com/news/2014-06-3 … banks.html
In addition, I would assume that these five banks don’t want to become part of the Tax haven that might be created in Taiwan if they don’t comply.
My understanding is that the only penalty for not complying is a 30% tax on US assets. If the bank has no assets in the US, then no penalty is possible; therefore, they have no incentive to comply, so I’m not sure why they would try to, especially given that the Taiwanese government says they are exempt.[/quote]
Well that is not quite true, although with how complicated FATCA is no one really knows for sure how it will all work, but as I have been looking at this for a few years it appears to me that any payments made will be docked 30% if the bank is not in compliance with FATCA regulations. bloomberg.com/news/2014-06-3 … banks.html
In addition, I would assume that these five banks don’t want to become part of the Tax haven that might be created in Taiwan if they don’t comply.[/quote]
I don’t see how what I wrote conflicts with the Bloomberg article. Did you mean it’s not true that those 5 banks have no assets in the US? Because my larger point is that if a bank has no money tied to the US, and it’s reasonable some smaller banks would not, then there is nothing for the US to withhold and no penalty it can impose on a bank. The penalty from the US requires that a bank actually uses the US banking system. If they don’t, then there’s nothing to penalize.
I certainly know very little about the mechanisms with which the U.S. IRS and U.S. govt will try to penalize banks. However, I have read articles which imply there are very indirect methods which the U.S. will try to use to reign in as many banks as possible. One article said that one method is that the U.S. will try to require banks to use “FATCA compliant institutions” as partners on projects or as part of their client base (or deal with any bank which has non-FATCA compliant customers. In other words, they are going to threaten banks to create a “FATCA compliant” level one bank base worldwide so that only smaller banks can survive outside the FATCA compliant circle.
All of this effects any transactions with any U.S. institution or U.S. person…or even very indirect relationship. Say local Taiwan bank buys into a local fund from another Taiwan bank…but that fund includes some bonds from U.S. banks…then the indirect relationship will exist that U.S. wants to track and limit for non-compliant banks.
I would not be surprised if those other banks eventually fall in line, but I talked with my bank yesterday and after our conversation, most of us have very little to worry about. Basically, I was told they are not actively pursuing compliance. They are handing over very basic data, but I was told that no bank would hand over the details of an account without first contacting the customer to try to fix the situation first. Apparently, there are ways they can get you out of the need to be reported. Also, she said they contacted anyone who was at risk long before the deadline in July. My conversation basically gave me the impression that they are going to do as little as humanly possible and just enough to avoid being penalized, which means handing over any ‘big fish’ (her words). Only very basic information is initially given and she said they have not handed over details of anyone’s accounts yet (and this is one of the very big banks which I won’t name because I wouldn’t want to put them in that position). At the end of the day, this is Taiwan-so I see them doing what they do, which is keep the ‘mafan’ at minimum levels.
Having said all of that, I don’t want to give the impression that I support this law. It’s definitely overreach by the US government, pressuring outside of their own jurisdiction and asking countries to violate their own laws. In the end, I think this law will be a huge failure. There will be a few high profile cases of very wealthy people getting screwed. But what I got was basically keep your account below 50kUSD and you won’t even be on any list. If you have less than 250k but more than 50k, start a shell company. If you have more than 250k and haven’t been paying your taxes and didn’t take advantage of the amnesty, better look into that or look into renunciation.
Two bank managers from different banks discussed FATCA with me. Both told me that according to the training they received about complying with FATCA the current requests from IRS were considered to be just the beginning…they were informed that later IRS said they would be asked to provide more information to IRS as part of “data mining” (my words to describe what I heard) to find local Taiwanese. Well, the general gist of the situation is that the bank manager felt the current requests from IRS was about all they could handle right now anyway…but were scared of the future possible requests which IRS has already informed them about.
One of my native Taiwanese relatives recently opened a bank account and was asked if she was a US citizen. So, this appears to be a standard question for everyone now.
Heartbreaking news today:
[quote]Internal Revenue Service Commissioner John Koskinen was prepared for the worst and that was pretty much what he got from the House. With just weeks remaining before the new tax season opens, the House walloped the embattled agency with $350 million in budget cuts. That’s in addition to earlier slashes to the IRS budget of more than $1 billion since 2010, resulting in nearly 13,000 employee layoffs. More cuts, the Commissioner had warned previously, would make upcoming tax season “miserable,” a sentiment echoed by the National Taxpayer Advocate Nina Olson.
Representatives touted the cuts as much needed but it looks like something else: revenge. Many in Congress are still fuming about the tax-exempt organization scandal and those missing Lerner emails. Others are angry about reports of wasteful spending. And still others see this as a great opportunity to keep IRS from properly implementing pieces of the Affordable Care Act – yes, the same Act that Congress pushed through a few years ago, tasking IRS with related administrative responsibilities.
Rep. Peter Roskam (R-IL), the newly elected Chair of the Oversight Subcommittee of the House Ways and Means Committee, minced no words about the agency’s budget, referring to the IRS as a “rogue operation” earlier this year. [/quote]